DePIN: The Key Infrastructure of Web3

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

The Importance of DePIN to Web3

Despite the flourishing application scenarios of DeFi, gaming, NFTs, social networking, and physical assets developed on various layers of blockchain, Web3 still remains relatively fragile. These applications largely depend on traditional internet infrastructure such as centralized cloud services and data centers.

There have been incidents in the industry where data loss for certain Web3 projects was caused by failures of large cloud platforms. There are also cases where centralized service providers have been prohibited from providing services for specific Web3 projects due to regulatory sanctions, and even access to code repositories and official websites may be restricted.

Therefore, DePIN is crucial for achieving a true Web3. Although these DePIN projects may not capture a significant market share and may not necessarily have performance advantages, their existence can ensure the normal operation of Web3 and cryptocurrency projects at critical moments, enhancing the robustness of the entire ecosystem.

Traditionally, the deployment and management of physical infrastructures such as wireless networks, cloud services, mobile networks, and power grids are often dominated by centralized large companies due to high capital requirements and logistical challenges. This not only leads to a poor user experience due to a lack of competition and innovation but also hampers the robustness of Web3.

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

1. Lower participation threshold: The decentralized network reduces management costs by leveraging the collective resources of participants.

2. Network Resilience: Decentralized networks provide a more resilient and secure infrastructure, less susceptible to single point of failure.

3. Open Competition and Innovation: DePIN eliminates the high capital and large-scale entry barriers of traditional infrastructure networks, benefiting the participation of more small-scale new entrants.

Features and Classification of DePIN

The operational logic of DePIN is relatively simple and mainly involves the following key roles:

Device provider: Provides physical device resources ( such as GPU, CPU, memory, storage space, bandwidth, Wi-Fi hotspots, etc. ), to earn token rewards.

DePIN Protocol: Build a distributed network, design token incentives for device providers, and allow network users to pay.

Network users: Access and use DePIN protocol services and pay, which is usually more cost-effective than centralized infrastructure.

To maintain the stable development of this cycle, it is necessary to ensure that the value of the tokens within it remains relatively stable and that there is a comprehensive capture of the value of the DePIN protocol.

DePIN projects can generally be divided into the following categories: decentralized storage, decentralized computing, CDN, VPN, Wi-Fi, 5G networks, etc.

Most DePINs consist of three basic components:

1. Physical infrastructure: Build and maintain in the real world, jointly constructing a decentralized network, where each device is a network node.

2. Off-chain computing infrastructure: relies on middleware to capture and analyze 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 are used to incentivize network contributors, act as a currency for service pricing, and sometimes serve as collateral for service quality.

The innovations provided by these components far exceed centralized infrastructure and may bring new vitality to this field.

DePIN Project Cases

With low startup costs and rapid expansion capabilities, DePIN has gained widespread attention in the industry. Several well-known projects have emerged so far:

decentralized storage network

A certain global largest distributed storage network project has over 3,800 storage providers and a total storage capacity exceeding 17M TB. The project is committed to introducing open and verifiable features into the three core pillars of the data economy: ( storage, computation, and content distribution ).

This year, a virtual machine has also been launched, with over 1,100 smart contracts deployed and more than 80,000 wallet addresses interacting with these dApps. The project has become one of the most important decentralized physical infrastructures in the Web3 industry.

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 rendering jobs, with an average cost of 20 dollars, showing a slight price advantage compared to many centralized platforms.

In terms of the token incentive mechanism, the platform uses a unit standard based on rendering power, dividing the participating GPUs into three tiers and setting different token incentive prices based on the rendering speeds of the GPUs in different tiers.

Decentralized Wireless Network Protocol

An open-source protocol incentivizes global users to collaboratively build a wireless network. Its native cryptocurrency can be burned to generate data credits, which are crucial for transmitting device data and have a stable dollar value. The values of other subnet tokens ( such as IoT and MOBILE) derive from the mainnet token, and they can be exchanged among each other. Using the network requires the destruction of the mainnet token.

Based on this protocol, two demonstration cases have been constructed: one is an IoT network built on this protocol and LoRaWAN technology, and the other is a 5G network designed to expand coverage at a lower cost while continuously rewarding users.

The project has established a vast decentralized wireless network globally in just three years. It is reported that nearly 1 million hotspots have been deployed, covering over 77,000 towns in 192 countries. The 5G network is also growing rapidly, with the community deploying over 8,000 5G radios in less than a year. Approximately 100,000 devices have connected to the network.

Decentralized Live Video Broadcasting Platform

A certain platform provides video infrastructure networks for live and on-demand streaming media. It aims to offer developers innovative freedom and provide creators with platform autonomy, with the core focus on incentivizing nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through cryptocurrency economic protocols.

The coordinator in the network (, that is, node ), runs a node and can mine tokens while transcoding videos using a GPU.

decentralized video streaming network

A decentralized video streaming platform based on blockchain technology incentivizes individual users with tokens to share excess computing power and bandwidth resources, serving as cache or relay nodes for video streams, thereby improving video stream quality and reducing video distribution costs.

The network consists of two complementary subsystems: the blockchain and the edge network. The blockchain provides payment, rewards, and smart contract functions, while the edge network is responsible for the storage and delivery of media assets such as images and videos.

Summary

DePIN is a track that has been gradually developing since the early days of the industry, with significant expansion in the past two years.

According to a research institution, the total potential market size of the DePIN industry is estimated to be around $2.2 trillion, possibly reaching about $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5 billion.