Introduction

DePIN, which stands for Decentralized Physical Infrastructure Network, is one of the emerging trends in the past year. The core promise of DePIN is to bring the principles of blockchain applications - community ownership, public verifiability, and incentive alignment - into the world of physical infrastructure, whether it's WiFi sites, security cameras, or computing servers. In this article, we will explore some of the core principles of DePIN, delve into some of the most representative DePIN projects, and finally discuss the broader impact of DePIN on the blockchain industry.

Conceptualization of DePIN

DePIN covers a wide range of project types. From decentralized storage networks like Arweave and Filecoin, to decentralized WiFi connections like Helium, to community-provided software applications like Hivemapper, all of these are classified as "DePIN". Messari made this observation in their groundbreaking DePIN report released in January 2023, which categorizes DePIN into four main areas: decentralized servers, wireless, sensors, and energy networks, with innovative properties.

Source: Messari. Retrieval date: November 11, 2023

From the projects and fields outlined by Messari, we can see that the initial definition of DePIN largely emphasizes the "physical" characteristics of the project - that is, building a decentralized internet stack from the hardware level up using sensors, servers, and routers. However, since then, this common concept of DePIN has gradually expanded to include more consumer-oriented applications, such as TRIP, which aims to create a "decentralized Uber". Therefore, this raises a question: how should we begin to understand the concept of "DePIN"?

Therefore, our first task is to pay attention to the conceptual similarities of this series of projects in the original Messari report and the evolution of this term. Many of these projects share some similarities, including collective ownership, distributed infrastructure costs, and economies of scale that gradually expand as more users enter the ecosystem. In fact, this can be summarized in Messari's DePIN flywheel, which explains that this is facilitated through token incentives.

Source: Messari. Retrieval date: November 11, 2023

The DePIN flywheel mentioned above was initially conceived to cover "physical infrastructure" networks such as Filecoin and Helium. Users provide resources (disk space or WiFi connections) to the network and receive token rewards in return, thereby increasing the network's capacity and attracting more users.

However, this flywheel is not limited to hardware infrastructure; there is a similar argument for data infrastructure. This will include projects that focus primarily on consumer data collection and coordination, using blockchain and tokens as a common interface for coordinating new data-based economies. Examples of this scenario include consumer-facing applications such as the "sensor network project" highlighted by Messari, as well as projects like "decentralized Uber," and potential enterprise use cases for blockchain in supply chain or logistics management (although here, there is less emphasis on tokenization).

Therefore, one possible way to conceptualize the trend of DePIN is to integrate the decentralized hardware layer with all the new data economy owned by the community.

DePIN Case Study

Based on the general description of DePIN, we can now explore some of the most distinctive projects in this field.

Helium

Helium is one of the oldest and most notable DePIN projects, launched in 2013. It is a company aimed at expanding broadband infrastructure through decentralized deployment of LoRa gateways by users. In 2017, the network decided to follow the trend of cryptocurrency and began offering cryptocurrency payments through its own L1 blockchain network.

Over the years, this approach has not only made Helium one of the representative projects of DePIN, but also a representative of the cryptocurrency industry more broadly. Many refer to it as the "People's Network" because it is a major project where people can clearly see how tokens incentivize socially beneficial behavior. However, over time, the Helium network and protocol have faced liquidity and adoption issues, with weekly network revenue steadily declining. Critics also point out that the network's use cases have been exaggerated and the incentive mechanism is not sustainable.

Data is from Coinmarketcap, time range is from February 2022 to March 2023, retrieval date: November 2023.

In April 2023, Helium completed the transition from its own L1 blockchain to becoming an application on Solana, hoping to enhance its user coverage and liquidity, and leverage Solana's high transaction throughput for expansion.

This example of Helium highlights some key opportunities and risks within the DePIN industry. Tokens can be very effective in driving actual use cases, but maintaining sufficient legitimacy and interest over a longer period of time can be quite challenging. Additionally, as L1 and L2 continue to solidify, it is difficult to make a case for an independently operating chain rather than leveraging the scalability, infrastructure, and liquidity of another more widely adopted chain.

Hivemapper

Hivemapper is another outstanding DePIN project on the Solana network, aiming to create a decentralized "Google Maps". Basically, users of the project install dashcams on their cars and share real-time images with Hivemapper in exchange for HONEY tokens. The company then uses all of this distributed data to build a decentralized map with an application programming interface (API) interface.