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MT Capital Research Report: DePIN reshapes the decentralized future of physical infrastructure

MT Capital

24-05-27 16:07

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Original title: "MT Capital Research Report: DePIN Reshapes the Decentralized Future of Physical Infrastructure"

Original author: Ian, Xinwei, Severin, MT Capital

TL;DR

1.DePIN Overview: Decentralized Physical Infrastructure Network (DePIN) combines the physical world with Web3, reduces costs and improves efficiency through decentralized technology, and is widely used in computing, storage, wireless networks and other fields, from traditional fixed devices to new generation portable and wearable devices, with broad market prospects.

2. Investment Trends and Projects: DePIN projects have shown significant growth in both bull and bear market cycles, and project types cover wireless networks, maps, Internet of Vehicles, agriculture, drones, weather, energy and other aspects. Investment institutions have expanded from Europe and the United States to Asia, and the number of participating institutions and investments has continued to increase, showing a strong interest in the DePIN field.

3. Market demand and potential: The emerging DePIN market is diverse, including health data, meteorology, energy, bandwidth, AI and mobile phones, with huge market space and high growth rate. In particular, the energy and mobile phone markets have great potential, and the year-on-year growth rate of the health data and AI markets is also very impressive.

4. Project ecology and blockchain selection: Ethereum and Solana have become the main choice chains for existing DePIN projects and emerging DePIN projects respectively. Solana has attracted a large number of new projects with its high performance, low cost and strong community support, and has gradually become the preferred platform for DePIN projects. Representative projects such as Render, Helium, Hivemapper, etc. have demonstrated the diverse applications of DePIN. Core players such as Solana, IoTeX and other platforms have provided strong technical support and ecological environment for DePIN projects, promoting the rapid development of DePIN.

5. Modular blockchain trend: Modular design significantly enhances the scalability and adaptability of DePIN. Through standardized interfaces and interchangeable components, DePIN can flexibly adapt to different application scenarios and technical requirements, thereby promoting the rapid deployment and maintenance of the network.

6. Evolution of the token economy: From the early fixed incentive model to the current dynamic incentive mechanism, DePIN projects such as Helium have ensured the continued growth and healthy development of the network by adjusting incentives for new and old equipment, regional incentive policies, and time period incentive adjustments.

Definition of DePIN

DePIN, the full name of Decentralized Physical Infrastructure Network, literally means "decentralized physical infrastructure network". Among them, "De" stands for decentralized, "P" stands for physical, "I" refers to infrastructure, and "N" stands for network.

The core definition of DePIN is to bring real-world users into Web3 and achieve low cost and socialization through decentralized networks. In the current world, especially in the field of physical business, DePIN achieves the goal of reducing costs and increasing efficiency through decentralized technology.

In previous studies and reports, DePIN often focuses more on infrastructure, while this report (PDF full version please go to the official website to download) focuses more on the decentralized part, trying to show the diverse DePIN market and investment opportunities in the future.

DePIN project types

Classic DePIN devices:

Features: These devices are usually immobile and are usually fixed in a certain location.

Main business: Including computing, bandwidth and storage.

Market characteristics: The market of classic DePIN projects tends to be technology-oriented, especially in areas such as AI computing power, which are more sought after by funds and traffic. This type of market is large in scale, but the competition is fierce and it is a red ocean.

Representative projects: Filecoin, RNDR, etc.

New generation DePIN devices:

Features: These devices are small and flexible, can be carried around, and can even be worn.

Main business: Life-related services, such as health monitoring, weather forecasts, and mobile phone functions.

Market characteristics: The market of the new generation of DePIN projects is more life-oriented and low-cost, suitable for daily applications. This type of market is diverse and has a wide range of applications. It has yet to be further explored and is a blue ocean with huge potential.

By comparing these two generations of DePIN projects, it can be seen that DePIN technology is constantly developing and its application scenarios are continuing to expand. From traditional fixed equipment to today's more flexible and portable equipment, DePIN's market prospects are becoming more and more broad, covering a variety of needs from high-tech fields to daily life. The traditional DePIN market is large in scale and is a red ocean with fierce competition; while the innovative DePIN market is diverse in variety and has a wide range of applications. It has yet to be further explored and is a blue ocean with huge potential.

DePIN investment new ecological landscape

The number and types of DePIN projects have increased significantly in this bull market cycle, and new-generation lightweight DePIN projects have emerged frequently, with new wearable devices that collect health data such as AI, bracelets, and watches, as well as a large number of portable lightweight physical devices DePIN.

2022.1.1 - 2023.1.1

A total of 19 DePIN projects have been financed, with an average financing amount of 18M disclosed. Excluding Helium's 200M large financing in Round D, the average financing amount is 5.9M.

The types of projects are wireless networks, maps, Internet of Vehicles data, agriculture, drone images, weather, power markets, and DePIN infrastructure. Among them, the number of wireless network projects is the largest, up to 7.

2023.1.1 - 2024.1.1

A total of 9 DePIN projects were financed, with an average disclosed financing amount of 7.2M, which was significantly lower than in 2022 (bear market), and the amount increased by 22% compared with 2022.

Project types include wireless networks, decentralized computing power, maps/geospatial data, weather, and DePIN infrastructure, and the number and categories of financing have decreased significantly. (The bear market requires more reasonable business scenarios and models)

2024.1.1 - 2024.5.20

A total of 26 DePIN projects were financed, with an average disclosed financing amount of 6.5M, a significant increase in the number of financings, and a decrease in the amount of financings.

Project types include decentralized computing power, Internet of Vehicles, Internet of Things, wireless networks, FHE, maps, meteorology & environment, bandwidth, DePIN infrastructure, mobile phones, energy, storage, mixed reality

New first-level financing types that have not yet been disclosed: AI, VPN, bracelets/watches and other wearable and portable device type projects (health data)

source: MT Capital

Number of DePIN projects and institutions

The participating institutions of DePIN in the last cycle were dominated by Europe and the United States. In this round of DePIN cycle, more Asian institutions have gradually emerged, showing the strong interest of Asian institutions in DePIN. The number of DePIN projects has also increased significantly, with a total of more than 135 second-level DePIN projects and more than 130 first-level DePIN projects.

Projects:

• Secondary Market Projects: 137

•>$1B FDV: 20

•$500M - $1B: 19

•$100M - $500M: 48

•$50M - $100M: 16

•$30M - $50M: 14

•$10M - $30M: 12

•<$10M: 6

• Primary Market Projects: 133

• Since the start of the current bull cycle (from October 2023 to date), a total of 8 projects have raised more than $2 million in funds, and 6 projects have raised more than $10 million in funds.

source：MT Capital

Institutions:

Last cycle:

•Andreessen Horowitz (A16z)

•Multicoin Capital

•HashKey Capital

•IOSG Ventures

•Spartan Group

•Borderless Capital

•Lattice Ventures

•Variant Fund

•Delphi Digital

•Big Brain Holdings

•Cogitent Ventures

Current cycle:

•OKX

•Animoca Brands

•JDI

•IoTeX

•FMG

•Waterdrip Capital

•MH

DePIN Market Demand

In the last cycle, there are still emerging projects in the DePIN sub-track represented by computing power, storage, wireless network and map. In this cycle, new emerging sub-track categories such as wearable devices, meteorology, energy, bandwidth, AI and mobile phones based on health data have been added.

From the perspective of market demand, the energy market and the mobile phone market have huge market space. The health data market and the AI market not only have a large market space, but also have a very high year-on-year growth rate. The market size is very objective.

Market: (number of primary market projects + number of secondary market projects)

Health (5+/), Weather (9+1), Energy (15+10), Computing Power (17+29), Storage (7+19), Wireless Network (9+11), Bandwidth (6+4), Map (3+2), AI(8+13), Mobile Phone (5+)

Number of Market Projects in the Last Cycle

• Computing Power: 17+29

• Storage: 7+19

• Wireless Network: 9+11

• Map: 3+2

Number of Emerging Market Projects

• Health Data (Wearable Devices): 5+ /

• Weather: 9+1

• Energy: 15+10

•Bandwidth: 6+4

•Mobile phones: 5+

•AI: 8+13

source：MT Capital

Market size and growth rate

•Health market: $243B, CAGR 17%

•Weather market: $7B, CAGR 7%

•Energy market: $880B, CAGR 8.4%

•Computing power market: $95.7B, CAGR 6.8%

•Storage market: $108B, CAGR 22%

•Wireless network market: $500B, CAGR 12%

•Bandwidth market: $8.6B, CAGR 13.75%

• Map market: $19B, CAGR 12.5%

• AI market: $150B, CAGR 36.8%

• Mobile phone market: $484B, CAGR 7.3%

source：MT Capital

Public chain selection and device type

source：MT Capital

Currently, the number of DePIN projects in the secondary market is the largest on the Ethereum chain, with a total of 70 DePIN projects choosing to build on Ethereum, accounting for 81% of the total.

Among the collected primary projects, the number of Solana ecological projects is 28, accounting for 62% of the total. Solana is gradually becoming the first public chain of the new round of DePIN projects.

source：MT Capital

From the perspective of device type, there are more new energy and sensor device projects. And more projects with Wearable, Portable, and Home Device as physical hardware are beginning to emerge in the primary market.

DePIN Full Industry Chain

Upstream Supply Chain

1. Hardware Manufacturing and Supply

Hardware Suppliers: Produce various devices and sensors for DePIN networks, such as GPUs, servers, IoT devices, wireless devices, etc. For example, LoRaWAN hotspots for the Helium network and dashcams for Hivemapper.

Professional Hardware Manufacturers: Some professional hardware manufacturers provide customized hardware for specific DePIN projects, such as storage miners for Filecoin and GPUs for the Render network.

2. Chips and Semiconductors

Chip Manufacturers: Such as NVIDIA and AMD, provide high-performance GPUs for computing networks such as Render and Akash. These chips are the core for processing AI workloads and complex computing tasks.

3. IoT devices

Sensor manufacturers: provide sensor devices required for environmental monitoring, traffic data collection, etc. For example, Bluetooth sensors in the Nodle network and noise pollution detectors from Silencio.

Smart devices: such as smartphones and other mobile devices, which can be used as part of a sensor network for data collection and transmission.

4. Power and energy equipment

Energy equipment suppliers: Provide solar panels, wind turbines, energy storage batteries and other equipment for decentralized energy networks. Such as the solar panels and battery systems in the Daylight Energy network.

Midstream industry chain

1. Network operation and maintenance

Network operators: Such as Helium and Hivemapper, manage and maintain the normal operation of decentralized networks, including node management, data transmission and storage.

Service providers: Provide network infrastructure services, such as cloud computing services, storage services, etc.

2. Software and platform development

Blockchain platforms: such as Solana and IoTeX, provide basic blockchain technology support for the DePIN project, including smart contract execution, data storage and verification.

Software developers: Develop software platforms and tools for managing and operating the DePIN network, such as the distributed storage management platform provided by Filebase and the video streaming management tool provided by Livepeer Studio.

3. Data processing and analysis

Data analysis companies: Process and analyze data collected from sensor networks to provide users with valuable insights and services.

AI and machine learning services: such as Beam, which provides cloud-based AI computing services and distributes model training and inference workloads to a decentralized GPU network.

Downstream Industry Chain

1. Applications and Services

Enterprise customers: Use the services provided by the DePIN network to enhance their business efficiency, such as logistics companies using Hivemapper's map data and agricultural companies using Geodnet's high-precision positioning data.

Consumer applications: Such as Teleport's shared travel application and DIMO's vehicle data platform, which provide consumers with convenient services and obtain rewards through user-contributed data.

Smart cities and public infrastructure: Use the data and services of decentralized networks to optimize urban management and public services, such as energy management, traffic management, etc.

Modularity/Data Layer/Middle Layer

Modular blockchains optimize the scalability, security, and flexibility of blockchains by dividing core functions such as execution, consensus, data availability, and settlement into different layers. For example, Ethereum improves data availability and processing power by adopting sharding architecture and rollup, while Cosmos achieves cross-chain interoperability and high customization through the IBC protocol and Tendermint consensus mechanism. The advantages of modular blockchains include higher transaction processing capabilities, enhanced security, and greater development flexibility, which will further promote the development of blockchain technology in the future.

DePIN's modular trend significantly enhances its scalability. The modular design enables DePIN to flexibly adapt to different application scenarios and technical requirements, and simplifies the deployment and maintenance of the network through standardized interfaces and interchangeable components. For example, the Render network has achieved expansion from image rendering to AI model training through a modular structure, increasing the network's service scope and market potential. In addition, Filecoin's modular design allows it to expand storage services, add hot storage and data computing functions, further enhancing the practicality and attractiveness of its network. The modular trend not only improves the technical compatibility and upgrade capabilities of the DePIN network, but also enables each independent module to develop and optimize independently, thereby accelerating the innovation and progress of the entire network ecosystem. This flexible and efficient architecture greatly improves the scalability of DePIN, enabling it to respond to market demands and technological changes more quickly, and promote the widespread application and development of decentralized infrastructure.

Representative Projects

DePHY

DePHY is a development framework designed specifically for DePIN. Through key functions such as the message layer, DID (Device ID), open source hardware design, off-chain computing network, and re-mortgage layer, it significantly reduces development costs and time, supports any standard interface hardware, and achieves fast, efficient, and secure deployment of decentralized infrastructure projects.

PINGPONG

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

DePIN track platform and players

Solana

Solana is becoming the new super infrastructure for DePIN. Solana's high performance, low network fees, strong developer and user community, and high purchasing power make it the preferred launch network for many DePIN projects. Some old DePIN star projects such as Render and Helium have achieved better development after migrating to Solana, which shows the vitality that Solana's strong infrastructure and broad community user base bring to the DePIN project. Solana has gradually attracted emerging and cutting-edge DePIN projects in different categories including Grass, Natix, Exabits, and is gradually improving its own DePIN ecosystem.

Representative Projects

Render

Render Network is a decentralized GPU rendering platform that uses blockchain technology to connect artists with GPU providers for scalable, cost-effective rendering solutions.

Hivemapper

Hivemapper is a decentralized mapping network that uses blockchain technology and crowdsourced dashcam data to create detailed real-time maps.

Helium

Helium is a groundbreaking DePIN project that creates a decentralized wireless network that allows IoT devices to connect globally through a distributed network of hotspots.

Natix:

Natix Network is a blockchain-based crowdsourced camera network for creating real-time world maps.

Exabits:

Exabits is a decentralized infrastructure for AI and compute-intensive applications. It allows users to provide distributed GPU services, data storage or expertise to the AI community without the need for a central authority or intermediary.

Grass:

Grass is a DePIN project developed by Wynd Network that allows users to monetize their unused network resources by adding their connected devices to a decentralized network designed to provide data for AI training.

EV3

EV3 is an idea-driven investment firm that supports outstanding entrepreneurs building DePINs. By investing up to $1 million in early-stage projects, EV3 aims to unlock the next $100 trillion of global GDP through next-generation open infrastructure networks such as telecommunications, logistics, energy, cloud computing and artificial intelligence. Founded by institutional-trained investors Mahesh Ramakrishnan and Salvador Gala, EV3 is backed by leading investors with a combination of deep industry expertise and long-term partnerships.

Representative Projects

3DOS

3DOS is the world's largest decentralized on-demand manufacturing network, aiming to revolutionize the manufacturing industry through blockchain technology and 3D printing. The platform allows anyone to upload designs, receive royalties, and manufacture on demand around the world.

Zonal

Zonal is developing a decentralized network based on a micro-positioning protocol, using wireless communication technologies such as ultra-wideband (UWB) and low-power Bluetooth (BLE) to provide highly reliable global and indoor positioning services to verify real-world interactions. Its goal is to create a unified protocol that provides location verification tools for various services and enterprises.

XNET

XNET is a next-generation mobile operator that uses blockchain technology to build a decentralized network. By using the CBRS spectrum, XNET aims to build a reliable industry-grade neutral host network. The project aims to solve the inefficiency and capital intensity of the telecommunications industry through its distributed radio access network (RAN).

IoTeX

IoTeX is an open platform for modular construction of AI+DePIN infrastructure, aiming to open up the connection channel between smart devices and real-world data and Web3, allowing Web2 to easily and effectively access the blockchain and create a decentralized real-world open ecosystem of multi-dimensional data and scenarios. Through modular construction, developers can connect smart wearables, Internet of Vehicles, green energy, environmental data and other full-scenario innovative applications from smart life to smart industry in Web3.

As of the first quarter of 2024, the IoTeX network has 108 active nodes with a total staking value of US$29 million, a month-on-month increase of 73%. The average staking participation rate reached a record high of 40.6%. In addition, node rewards increased by 71% month-on-month to US$3.3 million.

IoTeX provides a complete "plug-and-play" product and tool that enables blockchain-driven IoT applications to be efficiently built and deployed. The platform is divided into four layers: hardware layer, middleware layer, tool layer and blockchain layer. Since its inception, IoTeX has raised more than US$90 million in funds to support its R&D and market expansion. IoTeX's solutions support various IoT ecosystems, such as the sharing economy, smart home, autonomous driving and supply chain management.

Representative Projects

Network3

The Network3 project is a Layer2 blockchain platform that integrates AIoT technology, aiming to provide AI developers with efficient model training and verification tools, while enabling users to earn cryptocurrency by running nodes.

Inferix

Inferix is a decentralized GPU visual computing platform dedicated to 3D/AR/VR rendering and AI inference.

Wayru

Wayru Network is a decentralized wireless network that enables various intelligent functions through WayruOS and Wayru Connectivity Superapp.

DePIN subdivisions divided by physical hardware devices

source：MT Capital

Track Mapping

Sensor Track

We define "sensors" as outdoor sensors that can help users collect various types of data, such as maps, weather, and vehicle information. After these outdoor sensors collect data, users can contribute their data to create a data value network and receive corresponding token rewards. The DePIN project can aggregate the data shared by these users, provide B-side customers with more diverse data samples, and capture commercial revenue from Web2.

Representative Projects

Map Network

Hivemapper

Hivemapper is a decentralized map network that uses blockchain technology and crowdsourced dashcam data to create detailed real-time maps.

Internet of Vehicles Data Network

DIMO

DIMO is a decentralized IoT vehicle data DePIN network that enables vehicle owners to collect, use and monetize their vehicle's data.

Positioning Network

Geodnet

GEODNET is a blockchain-based global earth observation decentralized network that uses real-time kinematic technology (RTK) to significantly improve GPS accuracy.

Wireless Network Track

Mobile Wireless Network:

· Market Size and Growth: With a market share of over 76% in the telecommunications industry in 2022, this growth is primarily driven by 5G and IoT technologies. A CAGR of 6.2% is expected from 2023 to 2030.

· Role: Provides extensive personal and commercial connectivity through cellular technology. Supports a wide range of devices and applications to enable mobile communications and data services.

· Future Outlook: Due to the increased demand for higher bandwidth, advancements in 5G technology, and the integration of IoT devices, the demand for mobile wireless networks will continue to increase.

Helium

Helium is a pioneering DePIN project that creates a decentralized wireless network that allows IoT devices to connect globally through a distributed network of hotspots.

Fixed Wireless Access (FWA):

· Market size and growth: As an alternative to wired broadband, it is growing rapidly, especially in areas where laying cables is not practical. The market size is expected to grow from 130 million connections at the end of 2023 to 330 million in 2029.

· Function: Use radio waves to provide Internet services between fixed points. Usually deployed in areas where mobile wireless networks are insufficient, it is cheaper and easier to deploy than wireless mobile networks.

· Future prospects: Thanks to the improvement of 5G technology, FWA is expected to become a more common form of Internet access, especially in remote areas and rural areas where infrastructure services are insufficient.

Andrena

Andrena is a high-speed fixed wireless access network service provider that uses cutting-edge radio technology to create high-speed, low-cost wireless networks in cities and areas that are underserved by mobile wireless networks.

Wi-Fi Networks:

Market Size and Growth: The market value is approximately US$14.5 billion in 2023 and is expected to reach US$39.4 billion by 2028, with a compound annual growth rate of 22.2%.

Function: Provides local area network connectivity for devices through radio waves, supporting a wide range of consumer electronics products from smartphones to home appliances, and is used in limited private spaces such as homes, businesses, and public hotspots.

Future Outlook: Market growth will be driven by the increasing demand for reliable Internet connectivity for smart devices and the increasing implementation of the Internet of Things in the public and private sectors.

Roam

Roam is a decentralized global WiFi network that provides enterprise-grade OpenRoaming WiFi roaming services to the public worldwide.

Energy Track

The traditional energy market faces the following problems: mismatch between supply and demand in regional energy networks, lack of transparent and tradable energy markets, large untapped clean energy markets, slow and costly expansion of energy networks... However, DePIN can help shape a new generation of decentralized energy networks.

From a market perspective: The clean energy market is experiencing significant growth, with a market value of approximately $1.4 trillion currently, and a CAGR of 9.1% from 2022 to 2032 is expected. The renewable energy market is expected to grow from a market size of $881.7 billion to approximately $1.9 trillion in 2030, with a CAGR of approximately 8.4%. Energy DePIN projects have a huge market space.

Power Plants:

StarPower

Starpower is a groundbreaking DePIN project that aims to revolutionize energy management and distribution by creating Virtual Power Plants (VPPs) through a decentralized network leveraging blockchain technology.

Energy Trading

Daylight

Daylight is an open source blockchain network focused on creating a decentralized marketplace for renewable energy and carbon credits, designed to facilitate more sustainable energy trading and use around the world.

Energy Storage

PowerPod

Powerpod aims to revolutionize the way electric vehicles (EVs) are charged by creating a shared, blockchain-powered network of community-owned charging stations.

Home Device Track

The home device field focuses on using decentralized technology to enhance and optimize all aspects of daily life. This field addresses key issues such as high costs, privacy issues, and unequal resource distribution, and provides solutions by transforming standard home devices into decentralized network nodes. By using blockchain and other decentralized protocols, these devices provide a low-cost, secure, and efficient alternative to traditional cloud services and computing power. This approach not only reduces dependence on centralized infrastructure, but also gives users greater control over their data and resources. In addition, the integration of these devices not only enhances the smart home ecosystem and gaming experience, but also aims to enhance daily interactions and create a globally connected community.

FX land

FX Land provides a distributed cloud storage solution that solves high storage costs and privacy issues through Crowd Storage nodes and Fula protocol.

Hajime AI

The Hajime AI project aims to create a global edge computing power supply network to provide cost-effective computing services for AI startups, solve the problem of uneven distribution of computing resources through a decentralized platform, and will be seamlessly integrated with smart home and IoT ecosystems in the future.

FrodoBots

The FrodoBots project uses real-world robots in a gamified way to solve the problem of embodied AI.

Wearables

In the field of wearables, the focus is on combining smart wearables with blockchain technology. They use advanced artificial intelligence and data privacy protection technologies to provide personalized health monitoring and data management services. By enabling users to monetize their own data and providing a reward mechanism, these devices incentivize users to actively participate in health management. These devices are usually made of high-quality materials, have long battery life and strong waterproof capabilities to ensure user convenience and safety. In addition, these smart wearable devices are compatible with mainstream mobile devices and cryptocurrency ecosystems, promoting the widespread adoption of decentralized applications and Web3 ecosystems while improving users' health and quality of life.

CUDIS

CUDIS is a fashionable, pioneering AI smart ring that motivates users by rewarding them for their health journey. It has core features such as immutable data collection and control, personalized AI coaching, health motivation tasks, and social activities.

WatchX

The WatchX project aims to integrate millions of smartwatch users into the Web3 ecosystem and provide a wide range of opportunities for partners within the ecological space.

Dogewalk

A DePIN platform that integrates innovative software and hardware through GameFi and SocialFi elements to enhance the interaction between pet owners and Web3 users.

Portable Device Track

Portables share common characteristics, such as providing convenient mobile devices and applications to enhance the Web3 experience. They focus on simplifying user interactions, improving security, and implementing data ownership and reward mechanisms. These projects integrate hardware and software solutions to promote the development and use of decentralized applications, especially in mobile environments. The goal of this section is to promote the adoption and application of Web3 technologies by lowering entry barriers, optimizing user experience, and providing practical application cases.

Solana Mobile Saga

The Solana Mobile Saga project aims to lead the Web3 mobile revolution by providing top-tier hardware and powerful developer resources, providing a secure and user-friendly decentralized application experience.

Universal Phone Oyster Labs

The Universal Phone project was launched by Oyster Labs, targeting 800 million Telegram users, focusing on emerging markets such as India, Indonesia, and Nigeria.

Puffpaw

Puffpaw is a "quit smoking and earn" project incubated by Arweave and OrangeDAO. Through electronic cigarette devices and blockchain technology, it helps users quit smoking and get financial rewards.

Token economy of the DePIN project: fixed incentive model evolves into dynamic incentive

Internal logic analysis: Taking Helium as an example

Early incentive mechanism and its impact

In the early days of the Helium project, early participants were able to obtain very high token rewards by purchasing and deploying mining machines. This high yield attracted a large number of early users and quickly promoted the expansion of the network. However, this incentive mechanism also brought some problems:

The profit share of early participants is too high: Early users quickly realized high returns due to the large number of tokens they obtained. Although this phenomenon promoted the rapid growth of the network in the early stage, it also led to a rapid increase in the supply of tokens in the market.

Token economic fluctuation adjustment: Due to the large number of tokens in the hands of early participants, they began to sell tokens on the market, causing token prices to fluctuate and fall. When new users entered the market, they found that the yield was much lower than that of early users, resulting in a slowdown in the growth of new users.

Stagnation of network growth: As the early high returns gradually disappear, the willingness of new users to enter decreases, the expansion of the network slows down, and the growth of the project slows down.

Introduction of dynamic incentive mechanism

In order to deal with the above problems, the Helium project introduced a dynamic incentive mechanism to ensure the continued growth and healthy development of the network.

Adjustment of incentives for new and old devices: Helium adjusts the incentive mechanism for new and old devices so that users of new devices can also obtain attractive rewards. For example, increase the initial reward for new devices, and while maintaining the robustness of the network, gradually reduce the reward ratio for outdated devices to encourage users to purchase and deploy new devices.

Regional incentive policies: In order to promote the balanced development of the network worldwide, Helium has formulated differentiated incentive policies based on the equipment deployment in different regions. In areas with fewer devices, higher token rewards are provided to attract users to deploy devices in these areas.

Time period incentive adjustment: Helium balances network load and improves equipment utilization by providing different rewards in different time periods. For example, users who run devices during off-peak hours can receive additional rewards to ensure the stable operation of the network around the clock.

Device density incentives: In areas with low device density, Helium provides additional incentives to promote stable operation of devices and efficient transmission of data. This not only increases user benefits, but also improves the overall performance of the network.

Specific implementation of dynamic incentives

The Helium project implements a dynamic incentive mechanism through smart contracts and algorithms to ensure real-time adjustment and fair distribution of incentives. These measures not only increase the participation enthusiasm of new users, but also stabilize market expectations and prevent market fluctuations caused by high returns in the early stage.

Smart contract adjustment incentives: Through smart contracts, the rewards of different devices are dynamically adjusted according to the usage of the device and market demand. This mechanism ensures the flexibility and real-time nature of the incentives.

Real-time data feedback: By collecting and analyzing the operating data of the device, the Helium project can timely adjust the incentives in different regions and time periods to ensure the optimal configuration and utilization of network resources.

Transparent incentive mechanism: The transparency and openness of the dynamic incentive mechanism enhance user trust and encourage more users to participate in network construction.

Changes in incentives for new and old devices

Incentives for new devices: In order to lower the user entry threshold, new devices usually have higher initial incentives to attract early adopters. Project parties may incentivize users to purchase and deploy new devices through high token rewards and low initial costs, making it easier for new users to participate.

Incentives for old equipment maintenance: To prevent users from abandoning old equipment, the project party will provide continuous incentives, but these incentives may gradually decrease over time. Through equipment upgrade rewards and maintenance fee subsidies, the project party is able to adjust the operating costs of old equipment to ensure its continued effective operation.

Physical market changes

Equipment price adjustment: Based on market demand and the service life of the equipment, the project party will adjust the prices of different types of equipment. Due to production capacity, supply and orders, the cost of new equipment is usually higher, but its incentives are also higher. The price of old equipment is lower, but it can still obtain stable returns, thereby attracting users at different levels.

Secondary market transactions: Equipment can be traded on the secondary market, and the project party can charge transaction fees and use part of the proceeds to repurchase and destroy tokens to support the token price. This approach not only increases the liquidity of the equipment, but also stabilizes the value of the token.

Different regional markets

Regional incentive policies: In order to promote the balanced deployment of equipment around the world, the project party will formulate differentiated incentive policies based on the market demand and development of different regions. For example, in areas with low equipment density, higher rewards may be provided to attract more equipment deployment, thereby achieving global coverage of the network.

Localized support: The project party will provide localized technical support and training in different regions to help users better install and maintain equipment, improve the operating efficiency of equipment and the enthusiasm of users to participate. This localized support can effectively promote the promotion and development of the project in various regions.

Device density

Density rewards: In areas with low device density, the project party may provide additional rewards to enable growth in areas with lower density to promote stable operation of devices and efficient transmission of data. These rewards can include higher token incentives and device upgrade subsidies to encourage users to keep their devices in good working condition.

Dynamic adjustment: The project party can dynamically adjust the device density in different areas based on real-time data to ensure balanced development of the network and optimal allocation of resources. Through such dynamic adjustments, the project party can flexibly respond to market changes and optimize network performance.

Device operation time period

Time period rewards: In order to balance the network load and improve device utilization, the project party can set different rewards in different time periods. For example, devices running during off-peak hours can receive additional incentives to ensure stable operation of the network around the clock.

Load balancing mechanism: The project party can dynamically adjust the incentives in different time periods through smart contracts and algorithms to achieve balanced distribution of network load and optimal utilization of resources. Through this mechanism, the project party can effectively manage network resources and improve overall operational efficiency.

Summary and Outlook

We believe that in the DePIN track, both the classic DePIN and the new generation DePIN have sufficient categories and a broad market, and have the potential to give birth to great projects with large-scale user adoption. In the future, it is very likely that a Web3 project that enters the Top 20 will be born in this field.

The core logic of DePIN lies in the cost reduction and efficiency increase of WEB3 for existing world businesses. By bringing real-world users into Web3, DePIN not only achieves low cost and socialization, but also greatly increases the number and accuracy of data sources. In the three generations of DePIN devices, from fixed devices to flexible and portable devices, the market prospects are constantly expanding, covering all kinds of needs in high technology and daily life.

In recent years, the types and number of investments in the DePIN market have increased significantly, and the number of institutions and projects has also continued to grow. From the demand side, DePIN shows great potential in multiple markets (such as weather, air quality, health, AI, etc.) and device types (such as wearable devices, mobile phones, etc.). The upstream and downstream industrial chains are also gradually improving, including on-chain interactive data, device middle layer, data and hardware.

It is particularly worth noting that the life cycle of DePIN is theoretically longer than that of non-DePIN projects due to the combination of physical devices and token design. This makes the DePIN track have great potential and deserves investors' high attention and investment.

Looking to the future, with the development of the DePIN project and the advancement of technology, we have reason to believe that this track will give birth to more innovative and influential projects, injecting new vitality and possibilities into the Web3 ecosystem.