The Emerging Narrative: A Glimpse into the Present and Future of DePIN

Introduction

The internet, as a symbol of globalization, is actually a product of the peak period of the Cold War. In 1969, the U.S. military developed the prototype of the internet, "ARPAnet," to create a network that could avoid single points of failure and autonomously recover in the event of a nuclear strike, (ARPAnet). It adopted a decentralized, fully distributed architecture, reflecting the original intention of "end-to-end connectivity."

However, over the past 55 years, from Web1 to Web2, the rapid development of the internet has instead given rise to a centralized architecture of "terminal link servers," which is contrary to its original intention. Web2 giants dominate the absolute discourse power and value distribution rights in the online world.

In recent years, the wave of Web3 has emerged, championing decentralization and the deplatforming movement. However, mere application of decentralization struggles to address fundamental contradictions, as issues such as efficiency bottlenecks and security risks still persist. The key lies in how to fundamentally transform the underlying technology stack of the internet and disrupt the overly centralized Web2 model.

In this context, DePIN offers a new direction worth noting: by combining the financial attributes and incentive mechanisms of Web3, DePIN can build an efficient P2P physical resource network, create a "decentralized physical network infrastructure", and endow the network with programmable capabilities, achieving an upgrade of "DePIN+" and constructing a brand new internet architecture.

At the same time, the explosion of AI in Web3 not only injects new vitality into it but also witnesses the trend of blockchain applications expanding from on-chain to the real world, such as RWA, AI, and DePIN. The rise of DePIN means that the boundaries between physical reality and the blockchain world are gradually becoming blurred. Next, let us explore the present and future of DePIN together.

Part.1 Overview of DePIN: What & Why

What is DePIN?

DePIN(Decentralized Physical Infrastructure Network is a model that integrates physical infrastructure resources with blockchain technology, coordinating global resource collaboration through distributed ledgers, Token incentives, and smart contracts.

In short, DePIN creates a "resource sharing + economic incentive" bilateral market by linking hardware with blockchain. This community-driven model is more flexible than traditional point-based resource management and also has greater scalability and robustness.

Generally speaking, a complete DePIN network consists of project parties, off-chain physical devices, suppliers, and demanders, and the basic operating model is divided into five steps:

1. Off-chain hardware devices: usually provided or required by the project party, mainly divided into:

• Customized dedicated hardware: For example, Helium requires users to purchase Helium hardware hotspots manufactured by third-party manufacturers )Hotspot( to provide hotspot signals for nearby IoT devices and earn mining rewards; Hivemapper encourages users to contribute to the mapping network through its dedicated dashcam )HiveMapper Dashcam(.

• Professional-grade hardware: Idle computers equipped with GPU and CPU chips can start participating in the supply of computing power/data by simply downloading a browser plugin. For instance, with Heurist, all owners of idle GPU devices only need to download its miner program and set up a miner node to start earning mining rewards by sharing their computing power. The entry threshold for connecting devices in the participation method on io.net is clearly defined as NVIDIA GeForce RTX 3050.

• Smart mobile devices: manifested as lightweight mobile devices such as smartphones, smartwatches, wristbands, and even rings, joining the DePIN network in two ways: running node programs to become the control end of DePIN hardware; directly providing sensor data or computing resources. For example, Silencio uses the built-in microphones of people's smartphones to create dynamic maps of noise pollution around the world; Acurast utilizes the storage space of old phones to build a decentralized cloud that anyone can contribute to.

2. Proof: Data generated by physical devices needs to be uploaded to the on-chain record on a tamper-proof blockchain ledger through off-chain infrastructure, providing stakeholders with transparent and auditable infrastructure operation records, to demonstrate that they have put in a certain amount of work as required to obtain incentives. This verification method is called Proof of Physical Work ) PoPW (.

3. Identity Verification: After the data is verified, it is necessary to check the on-chain account address of the device owner, generally using public and private keys for identity verification. The private key is used to generate and sign physical work certificates, while the public key is used by external parties to verify certificates or as an identity tag for the hardware device )Device ID(.

4. Reward Distribution: After verifying the data, the token rewards obtained from the off-chain physical devices will be sent to the on-chain address, which involves the token economics of DePIN. Token economics, as the economic foundation of the data value network, is key to the successful operation of the DePIN project.

• BME: Token burning mechanism, users on the demand side will destroy tokens after purchasing services, and the degree of deflation is determined by demand; in other words, the stronger the demand, the higher the value of the tokens.

• SFA: Requires supply-side users to stake tokens to become qualified miners. The supply determines the degree of deflation; that is, the more miners providing services, the higher the value of the tokens.

5. Demand Matching: A DePIN market platform where both buyers and sellers can purchase, sell, and lease to complete the exchange and matching of resources; meanwhile, the DePIN market provides real-time market data, including asset prices, historical performance, and energy production data, which helps ensure fair pricing and is typically managed by the decentralized autonomous organization )DAO(, allowing stakeholders to participate in the decision-making process.

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) Why do we need DePIN?

Let me give you a simple example. Noise pollution is a particularly common phenomenon in urban life. The quantification of noise pollution data has commercial value not only for real estate developers, hotels, restaurants, and other businesses, but also has reference significance for urban planning and academic research. However, would you be willing to allow a private company to install microphones all over your city? Or imagine the initial costs of doing so, how far its coverage could expand, and how quickly the expansion would occur?

If this is a user-initiated noise detection network, then everything becomes much simpler. For example, Silencio deploys noise pollution sensors through its application downloaded on users' phones. Mobile users establish a global measurement network by providing accurate, hyper-local noise pollution data, and in return, they earn token rewards. Meanwhile, the platform profits by selling noise pollution data.

This is one of the meanings of DePIN. In traditional physical infrastructure networks ### such as communication networks, cloud services, energy networks, etc. (, due to the huge capital investment and operation maintenance costs, the market is often dominated by large companies or giants, and this centralized industrial characteristic brings several major dilemmas and challenges:

• Centralized control: Controlled by centralized institutions, it has the risk of single points of failure, is prone to attacks, and has low transparency, with users having no control over data and operations.

• High entry barriers: New entrants need to overcome significant capital investment and complex regulatory hurdles, which limits market competition and innovation.

• Resource Waste: Due to centralized management, there is a phenomenon of idle or wasted resources, resulting in low resource utilization.

• Insufficient Incentive Mechanism: There is a lack of effective incentive mechanisms, resulting in low enthusiasm among users to participate and contribute network resources.

The core value of DePIN can be summarized in the following four points:

• Resource sharing and digitization: Transforming idle physical resources ) such as storage, communication, and computing power ( into tradable digital assets in a decentralized manner.

• Decentralized Governance: Based on open protocols and cryptoeconomic models, users contribute capital, assets, and labor towards a common goal, and are incentivized in a transparent and fair manner.

• On-chain settlement: Blockchain reduces costs by becoming a single source of a shared ledger for all market participants;

• Innovation: In an open, permissionless global medicine system, the speed of experimentation is an order of magnitude higher than that of centralized infrastructure.

) Current Status of DePIN Development

Track: As an early field in blockchain development, DePIN has a long development history. The earliest established projects, such as the decentralized network Helium, and decentralized storage solutions like Storj and Sia, have primarily focused on storage and communication technologies.

However, with the continuous development of the Internet and the Internet of Things, the requirements for infrastructure and the demand for innovation are increasing. The DePIN projects mainly expand into computing power, data collection and sharing, wireless, sensors, energy, and so on. However, looking at the current market value rankings of the top 10 projects in the DePIN field, most of them belong to the storage and computing power sectors.

AI is the keyword for DePIN in this cycle. Due to the natural suitability of DePIN for the decentralized sharing needs of AI data and computing power, a number of AI DePIN projects have emerged, aiming to integrate resources such as computing, storage, networks, and energy on a global scale, providing underlying infrastructure support for the training, reasoning, and deployment of AI models.

Market Size: According to DePIN Ninja, the number of DePIN projects that have been launched has reached 1561, with a total market value of approximately 22 billion USD; regarding the total potential market size of the DePIN sector, Messari has made a prediction: by 2028, the DePIN market size could exceed 3.5 trillion USD, while potentially adding 1 trillion USD to global GDP over the next decade, reaching 10 trillion USD ### a decade later.

L1/L2: Due to high throughput and low gas fees, current DePIN projects are mainly focused on deployment on the Solana public chain, as well as DePIN-specific chains like IoTex and Peaq. Meanwhile, Polygon and Arbitrum are gradually emerging as rising stars.

As the hardware supply chain has matured significantly, project teams do not need to invest a large amount of research and development effort. Therefore, according to the focus direction, current DePIN projects are divided into two directions: one focuses on the intermediate layer of DePIN, while the other focuses on the expansion of the DePIN demand side.

Part.2 DePIN Middleware

DePIN-related IoT devices must be integrated into the blockchain on a large scale, facing technical challenges and liquidity pressures, such as hardware design and production, how to achieve trusted transmission and data processing of off-chain data on-chain, and token economics design. As a result, the DePIN track has given rise to middleware that connects devices and the DePIN network, involving connectivity and bidirectional services, aimed at helping project parties quickly launch DePIN application projects, providing them with development frameworks, developer tools, overall solutions, and more.

It not only includes developer-friendly tools and one-stop services like DePHY and Swan; there is also the re-staking protocol Parasail specifically serving DePIN, aimed at enhancing the liquidity and value utilization of the native tokens in the DePIN network.

( DePIN infra

• DePHY: Aims to provide open-source hardware solutions, SDKs, and tools for DePIN projects, and reduce the manufacturing and network messaging costs of bridging hardware products to the blockchain through synchronized blockchain-operated 500ms-level off-chain network nodes.

• W3bStream: The off-chain computing protocol W3bstream allows IoTeX DePIN projects to easily generate logic based on smart device data, triggering blockchain operations. Some well-known IoTeX-based DePIN projects include Envirobloq, Drop Wireless, and HealthBlocks.

Currently, with the increase in DePIN projects that provide frameworks and solutions, DePIN application layer projects based on their infrastructure are also gradually emerging, such as EnviroBLOQ from Pebble based on IoTeX, Dimo and Drife based on W3bstream, and Starpower and Apus Network based on DePHY, among others.

) liquidity plan

• PINGPONG is a DePIN liquidity and service aggregator that optimizes and maximizes mining yields across multiple networks through innovative tools and solutions.

• Parasail is a re-staking protocol specifically designed for DePIN services, which activates idle assets in mature networks such as staked or re-staked tokens ### to provide DePIN services.