Original Title: "LD Capital: Mobile 7 Days Tenfold DePin Track Breaks Through Before Old Money Enters the Game"

Original Author: Yilan, Lisa, LD Capital

One, DePin's track of breaking through the circle on the eve of Lao Qian's entry

DePin is the abbreviation for Decentralized Physical Infrastructure Networks, a centralized physical infrastructure network. At the end of 21, IOTEX referred to this track as MachineFi. By the end of 2022, Messari introduced the new concept of DePIN for the first time and stated that it is one of the most critical investment tracks in the next decade. In the next decade, we can expect traditional institutions to inject incremental funds, and the involvement of traditional funds will overturn the preference for fully on-chain economic speculation around native cryptographic applications in the past, turning to investment opportunities with more off-chain logic and real impact. The importance and investment potential of DePin in the development process of encryption meet the needs of finding new narrative funds in the encryption world.

The core concept of DePin is to use tokens to incentivize users to deploy hardware devices to provide real-world goods and services or digital resources. DePin can be understood as consisting of two parts: Physical Resource Networks (PRN) and Digital Resource Networks (DRN). PRN refers to users providing services such as WiFi, 5G, VPN, geographic data, and information sharing through hardware distributed around the world. DRN refers to the physical infrastructure network that provides digital resources through hardware facilities, including broadband networks, storage networks, and computing power networks.

Simply put, DEPIN uses hardware to provide resources such as software, bandwidth, and computing power to incentivize token-based services in the real world that would otherwise require centralized management. By deploying nodes in a more flexible and decentralized manner, DEPIN aims to lighten the load of heavy asset services, decentralize them, and solve the cold start problem. In the early stages, DEPIN adopts a dynamic mechanism of spiral ascent, allowing users, providers, and platforms to participate with relatively low risk. However, hardware participation means that DEPIN requires sufficient initial capital support to ensure widespread hardware reach and establish a strong network coverage. At the same time, both off-chain and on-chain marketing strategies need to keep up, and the full integration of these elements can lay a solid foundation for the success of a DEPIN project.

二、DePin on Solana The Strongest Ecology and Narrative Double Buff

DePin on SOL is sorted by market value from small to large, representing specific software applications (decentralized maps, IOT services, 5G services), IoT infrastructure (decentralized wireless and 5G service platforms), and point-to-point rendering algorithm matching AI platforms, respectively. The specific projects are HONEY (Hivemapper), IOT (Helium IOT), Helium Mobile (Helium Mobile), HNT (Helium Network), and RNDR (Render Network). In the storage-related projects (also known as DePin), Arweave is a project that is closely tied to the Solana ecosystem because most of Solana's NFTs are stored in Arweave. The following will focus on Helium and Mobile in the Helium and DIMO ecosystems.

2.1 HONEY(Hivemapper)

On Solana, Honey (Hivemapper) is a low market value and highly endorsed DePin track Alpha with strong investment background and project endorsement.

Hivemapper is a blockchain-based map network that has created a decentralized global map that rewards contributors. Contributors can collect data by installing Hivemapper's dashcam and earn Native Token HONEY as a reward. In Hivemapper's setup, the dashcam is equivalent to a "mining rig". It seamlessly integrates with the Hivemapper network through a mobile application and maps are placed on the autonomous vehicle and automatically uploaded. By installing the Hivemapper dashcam, you can mine HONEY tokens as a reward while driving, collect 4K street-level images, and map the world.

The project team's designed incentive goal is to obtain better map data. The quality, timeliness, and city density of uploaded data are dimensions for judging incentive rewards. In terms of quality, the Hivemapper project team has created a reputation score driven by the quality of uploaded data. When users install cameras outside their vehicles to capture higher quality images, they can receive higher reputation scores. At the same time, the rewards users receive are linked to their reputation scores, with higher scores resulting in higher rewards.

Timeliness is to ensure that street information is up-to-date. The project team has created a so-called freshness score. Essentially, they have created a function that increases with time intervals. Assuming that no one collects data for a whole year, the next person who tries and uploads new data will get a higher multiplier. This promotes timely updates of map data.

Regarding data density, the project team hopes to increase the density of map nodes in several major cities. Therefore, a huge bonus reward system is established in the selected 35 cities to give these places higher reward weights.

Source:Hivemapper

Regarding financing and project background, Hivemapper received a Series A financing of $18 million last year, led by Multicoin Capital, with participation from Craft Ventures, Solana Capital, Shine Capital, Spencer Rascoff's 75, and Sunny Ventures. The previous round was invested by Spark Capital, Founder Collective, and Homebrew. Hivemapper's total financing amount is $23 million. Amir Haleem, CEO and founder of Helium, has joined the project's board of directors.

Regarding token distribution, the release rules for Honey are similar to those of Helium. The maximum supply of HONEY tokens is 10 billion, which is a fixed upper limit. The initial allocation is as follows:

Hivemapper has started minting and distributing 4 billion HONEY tokens as rewards to contributors. The exact amount of tokens minted each week is determined by the progress of the global map. Currently, the circulating supply has increased by approximately 1.6 million Honey tokens in the past day.

2.1 DIMO

DIMO and Hivemapper both belong to the Drive to Earn track and are competitors of Hivemapper.

Compared to Hivemapper, which also uses car networking as its application scenario, DIMO's design is more in line with user needs. It facilitates the collection and use of data by incentivizing decentralized ownership of driving data, making it easier for consumers to collect data and meet their needs for automatic parking/finding parking spaces (rewarding car owners). The vehicle data collected and shared by car owners can be used in more scenarios. Hivemapper, on the other hand, leans towards B2B products (providing more detailed maps for car companies/related service providers).

The business logic behind it lies in the huge market of monetizing global automotive data, which is worth $450 billion to $700 billion as a whole (by 2023), backed by the car networking track. DIMO links cars and drivers to tokenize driving data, entering the global supply chain of data production for 250 million connected cars, making users the beneficiaries of driving data profits.

On the use of data, Hivemapper and DIMO are relatively close in terms of user numbers, but FDV shows that DIMO is smaller. DIMO is an ERC-20 token on the Polygon and Ethereum blockchains, with slightly inferior project endorsements and not in a hot ecosystem, so DIMO started to discover its value later compared to Honey.

Source: LD Capital

Looking at the token distribution, the total supply of DIMO is 1 billion, with baseline rewards accounting for 38%, which means 380 million DIMO will be distributed over 40 years. In the first year, 1,105,000 DIMO will be issued to users each week, and mining rewards for each user will be distributed according to the rules shown in the figure below. The issuance will decrease by 15% each year. The DIMO treasury accounts for 22%, and teams and individuals who contribute to the network may receive $DIMO as a reward or grant. The team accounts for 22%, and token distribution will be locked for two years, then linearly unlocked each month until fully unlocked after three years. Investors account for 8%, and token distribution will be locked for two years, then linearly unlocked each month until fully unlocked after three years. Airdrops account for 7%.

Source:DIMO

Currently, there are 194 million tokens in circulation (including 70 million airdropped tokens, 57 million tokens distributed as baseline rewards, and 67 million tokens allocated to the treasury). The initial airdrop was actually a large-scale distribution of baseline rewards (understood as mining income) with 70 million tokens. There are still 382,491,185 DIMO tokens remaining in the pool, which will be distributed over a period of 40 years. In the first year, 1,00,1050 DIMO tokens will be issued to users every week, with a 15% reduction each year. From a chip structure perspective, it is relatively good.

2.1 Helium

Helium is a centralized wireless network project (distributed IoT). Founded in 2013, it is a pioneer in the DePIN track. As the most authentic DePin project in the Solana ecosystem, Helium's ecological network is the most mature and relatively stronger compared to other IoT ecosystems. With the support of Helium, its ecological project MOBILE achieved a tenfold increase in just seven days.

HNT is the primary economic asset in the Helium ecosystem, and the only way to pay for network data transmission fees is to burn HNT. Helium's revenue is tied to the growth of HNT prices, reaching $9k/day, but still in a state of insufficient demand, which may be one of the reasons why Helium is vigorously promoting its sub-DAOs. More sub-DAOs have a driving effect on HNT prices. The second phase of HIP 51 implemented the Helium DAO, which oversees and maintains various sub-DAOs, and as more sub-DAOs emerge (currently only the IOT subDAO and 5G subDAO), there will be more competition between protocols to compete for the fixed amount of HNT produced each day (currently 1.23 million HNT net released per month, 40,000 per day).

Helium combines web3 technology with IoT networks to solve the problem of high capital threshold in the IoT network market (similar to mobile operators like China Unicom). By expanding 5G business, it aims to improve the pain points of inefficient coverage of signal in the middle area by Wi-Fi and centralized operators. Through everyone's participation, the heavy cost of early IoT construction can be shared among each user, thus achieving lightweight startup. Currently, some indoor and outdoor positioning devices, smart farms such as Abeeway and Agulus have started to adopt Helium. T-Mobile began working with Helium Mobile last year.

The Helium network and its related tokens are based on the Proof of Coverage (PoC) mechanism, which is fundamentally different from Proof of Work (PoW). Unlike GPU mining, which consumes a lot of energy, Helium hotspots only require as much energy as a 12-watt LED light bulb to operate. The biggest cost for miners is the one-time hardware purchase expense.

The specific process of hot mining is that miners purchase special LoRaWAN routers, such as Bobcat 300, and place them on the roof or balcony. They then maintain the network and receive HNT tokens as rewards. These tokens will automatically appear in the Helium App, which is connected to the miner's device. PoC continuously checks whether the hotspot is actually located at the provided location and whether it generates wireless network coverage at that location.

Development Status

Currently, the two sub-DAOs represent the narrowband network for IOT devices (Helium IOT) and the 5G hotspot network compatible with HNT mining machines (Helium Mobile).

Source:Swissborg

In terms of 5G, although Helium's development is constrained by the dual challenges of compliance and market ceiling, Helium Mobile's collaboration with T-mobile is helping Helium Mobile truly achieve mass adoption. Turning to the high-performance public chain Solana highlights Solana as the fertile ground for the development of the DePin project.

Regarding compliance, the allocation and licensing of frequency bands in the United States are subject to strict regulation by the Federal Communications Commission (FCC). T-Mobile, which has been authorized, uses the 600MHz frequency band to deploy 5G, while Verizon uses the 700MHz frequency band to deploy 5G. As a newcomer, in order to reduce deployment costs and solve compliance issues, Helium chose the unlicensed CBRS GAA frequency band, which has a slightly smaller coverage area compared to the mid-frequency band and has not shown significant advantages compared to US operators.

Source: Helium

Source: Helium

2.3.1 MOBILE

Source: Helium

The value of MOBILE token comes from two parts. Firstly, it can be redeemed for HNT through programmatic treasury. Each subnet in the Helium Network is allocated a certain amount of HNT pool based on network utility score, and the exchange rate is set by the contract based on this score algorithm. Secondly, it has governance utility in subDAO. In the future, there may be more utilities, such as using staking to improve hotspot participation proof.

The redemption price calculation for MOBILE is based on the following rules. All HNT rewards earned by 5G hotspots within a specified time are allocated to a pool, and MOBILE holders can burn their MOBILE to receive HNT distributed proportionally from the pool. For example, if all 5G hotspots collectively earn 100 HNT and there are 10,000 unused MOBILE, it means that 100 MOBILE can be burned to receive 1 HNT from the pool. This architecture provides a floor value for MOBILE, which can be traded above its floor price based on its utility.

Helium Mobile currently has a payback period of 209 days

Source: Depinscan

2.3.2 IOT

Helium IOT Subdao incentivizes IoT devices connected through LoRaWAN network and balances the relationship between users and device providers. It can be understood as inheriting the use cases of the original Helium IoT part.

Source: Helium

Subdao, derived from the Helium ecosystem, is actually a continuation of the potential post-distribution phase where HNT may face a situation of no more mining. This is beneficial for the continued development of the entire Helium ecosystem, as the main value capture is currently still on HNT. At the same time, it expands the narrative with two significant sub-DAO tokens for HNT, Mobile, and IoT, which is a win-win situation.

Three, what other DePin projects are worth paying attention to in the secondary market?

除了 Solana 生态上的 DePin, 其他生态中也有生态和项目发展较成熟的项目，包括上文和 Honey(Hivemapper) 进行对比的 Dimo, IOTX(IOTEX), Streamr(DATA), WIFI Map(WIFI) 等。从 Depinscan 提供的热点分布图可以看出，Helium 生态（IOT，5G）热点分布最广泛，Helium IOT 有 363k 的设备部署，Helium 5 有 38k, 其次是 Streamr 部署了 83k 设备。

Except for DePin in the Solana ecosystem, there are also mature projects in other ecosystems, including Dimo, IOTX(IOTEX), Streamr(DATA), WIFI Map(WIFI) that were compared with Honey(Hivemapper) in the previous section. According to the hotspot distribution map provided by Depinscan, the Helium ecosystem (IOT, 5G) has the widest distribution of hotspots, with 363k devices deployed in Helium IOT and 38k in Helium 5. Streamr comes in second with 83k devices deployed.

Source: DePinscan

IOTEX's applications in the ecosystem are not as prominent as Helium's, but it has been continuously onboarding various DePin applications. Helium's sub-DAOs focus more on building a complete ecosystem internally. With Helium's migration to Solana, IOTEX, as an L1 with a unique layered architecture, is considered a more authentic DePin infrastructure with more use cases for its token. Currently, IOTX has a market cap of 520 million and a fully distributed supply, giving it an advantage over Helium's market cap. However, IOTX is an older project with less incentive measures and ecosystem vitality compared to Helium's ecosystem.

In September of this year, Drop Wireless (formerly known as Nesten) transitioned to IoTeX's DePIN infrastructure. Drop Wireless operates a global LoRaWAN network with 1,000 nodes spread across 17 countries/regions. The company's focus extends far beyond remote medical services offered in India and plans to continue expanding into Africa to meet significant healthcare needs. IoTeX supports Drop Wireless' native token, which is launched on the IoTeX chain as XRC20 and facilitates decentralized data storage and transmission through W3bstream. This transition highlights IoTeX's role as the center of DePIN.

Four, Summary

Mid-term, the leader in this industry needs to reach a market value of at least 3 billion to enter the top 30. Currently, according to market value rankings, RNDR is at 1.6 billion and ranked 48th, Helium is at 1.3 billion, Theta is at 1.1 billion, IOTA is at 860 million, and Mobile is at 550 million. The entire industry is undervalued.

HNT, as the flagship project on Solana, has a strong ecosystem. Although its chip structure is not as good as Mobile, it captures more value and will also benefit from the prosperity of sub-DAOs. IOTX, as an Ethereum-compatible infrastructure target, has not touched the market hotspot (Solana), but has an advantage in the subsequent Ethereum rally after the BTC spot ETF is passed. And the current price is relatively cheap (MC 500mln). DIMO MC still has room for growth, and the car networking track also has a grand narrative space. The cooperation between Mobile and T-Mobile may bring real external income and lead the entire track.

Depin Raceway, as a Mass Adoption channel linking the AI sector, is a breakthrough track that can have a grand narrative and be chosen by capital. In the next decade, we can expect traditional institutions to inject incremental funds, and the involvement of traditional funds will overturn the preference for fully on-chain economic speculation around native cryptographic applications, turning to investment opportunities with more off-chain logic and real impact. The importance and investment potential of DePin in the development of cryptography meets the need for funds to find new narratives in the crypto world.

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