DePIN: The Key Infrastructure of Web3

Decentralized Physical Infrastructure Network (DePIN) is an innovative model for the deployment and maintenance of infrastructure. It is built in a decentralized manner by individuals and businesses from around the world, open for use by everyone. In return, contributors to these infrastructure nodes can receive economic compensation and token incentives. DePIN achieves a more efficient, decentralized, and fair method of infrastructure deployment by combining cryptographic technology, the internet, the Internet of Things, and blockchain.

The Importance of DePIN for Web3

Although Web3 has developed application scenarios such as DeFi, gaming, NFT, social, and physical assets on top of Layer 1 and Layer 2, these applications still rely on centralized cloud services and data centers as internet infrastructure. There have been incidents in the industry where the downtime of large cloud platforms led to data loss for Web3 projects, as well as situations where centralized service providers were unable to provide services for certain Web3 projects due to regulatory sanctions.

Therefore, DePIN has become an indispensable infrastructure for achieving a true Web3. Although DePIN projects may not dominate the market share and may not have advantages in performance, their existence ensures the normal operation of Web3 and cryptocurrency projects, enhancing their robustness.

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

1. Low participation costs: By leveraging the collective resources of network participants, management fees 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 conducive to the emergence of small-scale new participants.

Characteristics and Classification of DePIN

The industrial logic of DePIN includes the following key roles:

• Device provider: Provides physical device resources (such as GPU, CPU, memory, storage space, bandwidth, WiFi hotspots, etc.) to earn token rewards.
• DePIN Protocol: Build a distributed network, design token incentives for device providers, and charge network users.
• Network users: Access the DePIN protocol, use services and pay fees, enjoying more favorable prices compared to centralized infrastructure.

To maintain the stable development of this cycle, it is necessary to ensure that the token value is relatively stable and that there is a well-established capture of the value of the DePIN protocol.

DePIN projects can be roughly divided into the following categories: decentralized storage, decentralized computing, CDN, VPN, WiFi, 5G networks, etc.

Most DePIN projects have three basic components:

1. Physical infrastructure: Build and maintain in the real world, collaboratively constructing a decentralized network.
2. Off-chain computing infrastructure: Allows for the capture and analysis of real-world data for calculating user contributions.
3. Blockchain and Tokens: Blockchain serves as a tamper-proof ledger, device registry, task statistics, and scheduling platform; tokens act as incentives, currency for service pricing, and collateral assets.

DePIN Project Case

decentralized storage network

A certain global distributed storage network has over 3,800 storage providers, contributing more than 17M TB of storage capacity. The project is dedicated to introducing open and publicly verifiable features into the three core pillars of the data economy (storage, computing, content distribution).

Decentralized GPU Rendering Platform

A decentralized GPU rendering platform that matches users executing rendering jobs with users who have idle GPUs, used for distributed GPU computing in the 3D rendering and AI industries. In the first half of 2023, the platform facilitated over 4.6 million frames of rendering jobs at an average cost of 20 dollars, offering a price advantage compared to many centralized platforms.

decentralized wireless network protocol

An open-source protocol incentivizes global users to collaboratively build wireless networks. The native cryptocurrency of this protocol can be burned to generate data credits for transmitting device data. Demonstration cases built on this protocol include an IoT network and a 5G network. It has been reported that 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

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 crypto-economic protocol.

decentralized video streaming network

A decentralized video streaming platform based on blockchain technology, which incentivizes individual users to share excess computing power and bandwidth resources through tokens, serving as cache or relay nodes for video streams, improving video stream quality and reducing distribution costs. The platform consists of two complementary subsystems: blockchain and edge network.

Summary

DePIN is a track that has been developing since the early days of the industry, and has seen significant expansion in recent years. According to a certain research institution's prediction, the total potential market size of the DePIN industry is approximately $2.2T, and it may reach around $3.5T by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5B, indicating enormous growth potential.