Everyone can become a base station! A Plain Explanation of “DePIN”
As 5G networks gradually become mainstream, some users complain that their phones often fail to detect a 5G signal and revert to 4G, which wastes money and consumes more power. The limited coverage of 5G base stations is mainly due to the fact that the construction of these stations is concentrated in the hands of specific telecom operators, resulting in limited construction speed.
But what if everyone could participate in building the network base stations and even earn money from it? Would that significantly increase the speed? This concept is exactly what the recent popular Web3 project “DePIN” aims to achieve.
DePIN, short for “Decentralized physical infrastructure networks,” is a concept that uses tokens as incentives to encourage people to participate in building real-world physical infrastructure. One example is the decentralized wireless service, Helium Mobile, which not only provides its own telecom service but also allows the public to purchase hotspots for indoor or outdoor installation, ensuring network connectivity for telecom service customers wherever they go.
As hotspot providers, users can also earn token rewards when their network is connected. As more and more people own hotspots, the network coverage can expand.
DePIN extends the decentralized spirit to tangible infrastructure, and many experts believe that it has a higher chance of entering people’s lives, serving as an excellent channel for breaking barriers.
According to the analysis and research firm Messari, DePIN is mainly divided into two types: Physical Resource Networks (PRN) and Digital Resource Networks (DRN).
PRN incentivizes participants to provide geographically limited goods and services, such as local energy, geographic spatial data, and local wireless networks, using hardware based on location, such as GPS devices.
DRN incentivizes participants to provide digital resources that are not limited by geographical location, such as computing power and storage space, using hardware.
To ensure the smooth operation of DePIN, four key components are necessary: physical network infrastructure, off-chain computing system, blockchain framework, and token reward system.
The physical network infrastructure comprises the concrete components or elements that make up the network, including all the physical assets required for the network to function properly, such as servers and transportation systems.
The off-chain computing system tracks and records the activities or contributions of participants in the real world and integrates this data into the incentive system of the blockchain.
The blockchain framework is a transparent and tamper-proof distributed ledger that uses smart contracts to manage network transactions. It can accurately record the workload and reward distribution of each contributor, as well as transaction records between the demand and supply sides.
The token reward system encourages contributions to the infrastructure, promoting early project development. It is a crucial factor in encouraging people to start participating.
DePIN can be applied in various areas, such as cloud and storage networks, wireless networks, sensor networks, and energy networks. For example, Filecoin is a decentralized cloud network where participants can rent out their computer storage space and receive cryptocurrency rewards in return.
However, DePIN also faces some challenges. Firstly, it is susceptible to hacker attacks due to its blockchain-based system, which can potentially compromise the funds circulating on the network. Secondly, the fluctuation of token prices can affect participation, as a decrease in price may lead to contributors leaving the network. Lastly, as a nascent technology, DePIN may struggle to compete with established centralized enterprises in terms of providing high-quality products.
Despite these challenges, DePIN is still a promising field to watch. According to Messari’s report, by 2023, the number of DePIN projects is expected to exceed 650, with a total market value of over 20 billion USD.
Source: Techopedia, Crypto.news, CoinTelegraph
Edited by: Gao Jingyuan