DePIN: An Essential Infrastructure for Web3

Decentralized Physical Infrastructure Networks (DePIN) are an innovative model for the deployment and maintenance of infrastructure. They are built in a decentralized manner by individuals and businesses from around the world for public use. In return, contributors to these infrastructure nodes can receive economic compensation and token incentives. DePIN leverages cryptography, the internet, the Internet of Things, and blockchain technology to achieve a more efficient, decentralized, and equitable method of infrastructure deployment.

The Importance of DePIN to Web3

Despite the rich application scenarios that have developed based on various layers of blockchain, such as decentralized finance, gaming, non-fungible tokens, social interactions, and physical assets, Web3 still has vulnerabilities. These applications still rely on traditional internet infrastructure such as centralized cloud services and data centers.

There have been incidents in the industry where data loss for certain Web3 projects occurred due to large cloud platform outages, and there have also been situations where centralized service providers were unable to offer services to specific Web3 projects due to regulatory sanctions. Even code repositories and official websites may face access restrictions.

Therefore, DePIN has become an indispensable infrastructure for achieving true Web3. Although these DePIN projects may not occupy a significant market share and may not have performance advantages, their existence can ensure the normal operation of Web3 and crypto projects, enhancing their robustness.

Advantages of DePIN

Compared to traditional centralized physical infrastructure networks, DePIN has the following advantages:

1. Low participation cost: By utilizing the collective resources of network participants, management costs and expenses are reduced.
2. Network Robustness: Provide a more resilient and secure infrastructure that is less susceptible to single points of failure.
3. Open competition and innovation: Eliminating the high capital and large-scale entry barriers of traditional infrastructure networks is beneficial for attracting more small-scale new participants.

Characteristics and Classification of DePIN

The industrial logic of DePIN mainly involves the following roles:

• Device providers: Provide physical device resources and receive token rewards.
• DePIN Protocol: Build a distributed network, design a token incentive mechanism, and provide services for network users.
• Network users: Access the DePIN protocol, use the services, and pay fees.

DePIN projects can be broadly categorized into the following types: decentralized storage, decentralized computing, content delivery networks, virtual private networks, Wi-Fi, and 5G networks, etc.

Most DePIN projects have three basic components:

1. Physical Infrastructure: Build and maintain a distributed physical infrastructure network in the real world.
2. Off-chain computing infrastructure: capturing and analyzing real-world data for calculating user contributions.
3. Blockchain and Tokens: Serving as a tamper-proof ledger, device registry, and task scheduling platform, while also providing incentive mechanisms.

DePIN Project Case

decentralized storage network

The world's largest distributed storage network, with over 3,800 storage providers contributing more than 17M TB of storage capacity. The project aims to introduce open and verifiable features into the three core pillars of the data economy: storage, computing, and content distribution.

Decentralized GPU Rendering Platform

This is a decentralized GPU rendering platform that connects users who need rendering jobs with users who have idle GPUs, primarily serving the distributed GPU computing needs of the 3D rendering and AI industries. The platform employs a rendering power-based unit standard, categorizing participating GPUs into three tiers and providing different token incentives based on the rendering speed of each tier.

Decentralized Wireless Network Protocol

This is an open-source protocol that incentivizes global users to collaboratively build a wireless network. The protocol's native cryptocurrency can be used to generate data credits, which are vital for transmitting device data. The project has deployed nearly 1 million hotspots in just three years, covering over 77,000 towns in 192 countries.

Decentralized Live Video Broadcasting Platform

This is a video infrastructure network for live and on-demand streaming, designed to provide developers with innovative freedom and creators with platform autonomy. The platform incentivizes nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through a cryptocurrency economic protocol.

decentralized video streaming network

This is a decentralized video streaming platform based on blockchain technology, which incentivizes individual users to share surplus computing power and bandwidth resources through tokens, serving as cache or relay nodes for video streams, thereby improving video stream quality and reducing video distribution costs.

Summary

DePIN is a track that has been gradually developing since the early days of the industry, with significant expansion in the past two years. According to research, the total potential market size of the DePIN industry is approximately $2.2 trillion, and it could reach about $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5 billion, indicating a huge growth potential.