The Rise of Decentralized Physical Infrastructure Networks: Exploring the Current Status and Future of DePIN

Introduction

The internet originated during the Cold War, developed by the U.S. military as a distributed network called "ARPANET" to respond to nuclear strikes. However, over the past 55 years, the development of the internet has deviated from its original intention of Decentralization, gradually evolving into a centralized platform system dominated by giants. In recent years, the rise of Web3 aims to reshape the decentralized nature of the internet.

In this context, DePIN( Decentralization Physical Infrastructure Network) provides new ideas for reconstructing internet architecture. DePIN combines the financial attributes and incentive mechanisms of Web3 to build an efficient P2P physical resource network, creating a programmable decentralized physical network infrastructure.

At the same time, the explosion of AI in the Web3 field has witnessed the expansion of blockchain applications from on-chain to the real world. The rise of DePIN is a reflection of the gradually blurred boundaries between the physical world and the blockchain world. Below, we will delve into the current status and future development of DePIN.

DePIN Overview

Definition and Operating Model of DePIN

DePIN( Decentralized Physical Infrastructure Network) combines 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.

A complete DePIN network usually consists of project parties, off-chain physical devices, suppliers, and demanders, with basic operating modes including:

1. Off-chain hardware devices: can be divided into customized dedicated hardware, professional-grade hardware, and smart mobile devices.

2. Proof: Prove the workload of the (PoPW) verification device through physical work.

3. Identity verification: Verify the on-chain address of the device owner.

4. Reward Distribution: Distribute token rewards to the verification address.

5. Demand Matching: Complete resource exchange and matching on the DePIN market platform.

The value of DePIN

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

• Resource Sharing and Digitalization: Transforming idle physical resources into tradable digital assets
• Decentralization governance: Achieving fair incentives based on open protocols and cryptoeconomic models
• On-chain settlement: reducing costs through blockchain
• Innovation: Open systems promote rapid experimentation

Current Status of DePIN Development

The DePIN project has covered multiple fields including storage, computing power, wireless communication, sensors, and energy. Currently, the projects ranked at the top by market capitalization are mainly concentrated in the storage and computing power sectors.

AI is the keyword for DePIN in this cycle, giving rise to a batch of projects focused on providing infrastructure for AI.

According to DePIN Ninja data, the number of launched DePIN projects has reached 1,561, with a total market value of approximately 22 billion USD. Messari predicts that the DePIN market size could surpass 3.5 trillion USD by 2028.

The current DePIN projects are mainly deployed on public chains such as Solana, IoTex, and Peaq, while Polygon and Arbitrum are gradually becoming emerging choices.

DePIN Middleware

The large-scale access of DePIN devices to the blockchain faces technical challenges and liquidity pressures, leading to the emergence of middleware that connects devices and networks, aimed at helping project parties quickly launch DePIN applications. The middleware projects mainly include:

• DePIN infra: such as DePHY, W3bStream, etc., providing development frameworks and tools.
• Liquidity schemes: such as PINGPONG, Parasail, etc., provide liquidity support for DePIN projects.

DePIN application layer

The DePIN application layer covers four major sectors: cloud networks, wireless networks, sensors, and energy.

Cloud Network

• Storage: such as Filecoin, Arweave, etc.
• Hashrate: such as Render Network, io.net, PinGo, etc.

Wireless Network

• 5G: like Pollen Mobile
• WiFi: such as Wicrypt, Roam
• LoRaWAN: like Helium
• Bluetooth

Sensor

• Environment: such as WiHi
• Geography: such as HiveMapper

Energy

• Such as Starpower, Powerpod, Arkreen, etc.

DePIN future trends

1. Deep integration with Web2 application scenarios
2. The hardware threshold is lowered, transitioning to consumer-grade products.
3. Financialization: Staking Liquidity Pools, Asset Securitization, etc.
4. Mutual Development with AI

Challenges Facing DePIN

1. Complexity of technical implementation
2. Market acceptance is uncertain.
3. The sustainability of the profit model remains to be verified.
4. Potential Regulatory Risks

DePIN Project Evaluation Factors

1. Hardware: Homemade vs Third Party, One-time vs Ongoing Costs, High Density vs Low Density, Scarce vs Common
2. Token Economics Design: BME vs SFA, Governance Functions, Staking Mechanisms, etc.

summary

DePIN, as an important component of the Web3 value network, is expected to reshape production relationships and unleash productivity by integrating idle resources globally. Despite facing numerous challenges, DePIN is ready for large-scale applications as blockchain performance improves and token economic models mature. The future development of DePIN requires "accumulating strength for a sudden outbreak," waiting patiently for the right moment.