DePIN: Building a Decentralization Value Network with Dual Curves

DePIN is gradually disrupting the operational model of traditional infrastructure by combining the physical world with Web3. The business model of the DePIN project includes an important feature: hardware revenue as the first growth curve, which is then supplemented by the monetization of data services, forming a second growth curve. This is one of the key factors that enables DePIN to lead growth in the current cycle, while also demonstrating how DePIN-like projects can create a significant wealth effect during the process of building decentralized infrastructure networks, ultimately forming a scaled decentralized value network.

1. Build a Decentralized Internet of Everything

Decentralization physical infrastructure network ( DePIN ) utilizes cryptoeconomic protocols to deploy real-world physical infrastructure and hardware networks. This concept heralds an application scenario full of imaginative possibilities: common infrastructure around us, including communication base stations, charging piles, photovoltaic panels, billboards, and the data storage and computing devices that underpin the internet, will no longer be controlled by centralized entities and institutions, but will be divided into equally sized units, held by individuals or large-scale miners. Physical infrastructure of the same type is highly standardized and scalable, forming a blanket coverage.

By means of Decentralization, the layout and utilization of infrastructure can achieve higher efficiency and lower costs, while enhancing the overall system's security and resilience. Moreover, from energy production to data processing, various facilities have the potential to transition to a decentralized model. The total market size of the relevant industries involved in DePIN has already exceeded $5 trillion. Therefore, it is expected that by 2028, the potential market size in the DePIN field will reach $3.5 trillion.

1.1 DePIN Track Division

The DePIN track covers six subfields: computing, AI, wireless communication, sensors, energy, and services. Breaking down DePIN from the perspective of the supply chain, it can be divided into:

• Upstream: hardware manufacturers and supply-side users acting as "miners".

• Midstream: project platform, responsible for data validation and token settlement blockchain, and the on-chain Layer 2 protocol serving DePIN; as well as modular service components ( used for developing and managing the DePIN network, such as platform interfaces, data analysis, and standardized services ), SDK toolkit for DePIN development, API interfaces, etc.

• Downstream: Interface and dApp applications that connect to the demand side.

Apart from IoTeX and the former Helium, most DePIN projects rarely manage to cover every aspect of the DePIN business. They typically choose Solana or IoTeX as the settlement layer for their token economy. AI and cloud computing projects in the subfield tend to focus more on on-chain settlement and the development and management of project platforms, while the underlying hardware devices schedule idle electronic devices, such as smartphones or computers equipped with high-performance consumer-grade GPUs, through middleware.

1.2 Overview of the DePIN Industry Development

The number of DePIN projects that are currently online has reached 1,215, with a total market value of approximately $43 billion. Among them, the total market value of the projects that have issued tokens and are listed in the DePIN sub-section on Coingecko exceeds $25 billion.

In October of last year, this figure was still only 5 billion USD, and in less than a year, it has increased fivefold, demonstrating the rapid growth of the DePIN industry. This indicates that the market's demand for and recognition of decentralized physical infrastructure networks is continuously increasing. With more projects going live and the expansion of application scenarios, the DePIN industry is expected to become an important area for the integration of blockchain technology and real-world applications.

2. Insights from the DePIN Business Logic

The prototype of DePIN can be traced back to the concept of IoT + Blockchain ( from the last cycle. Projects like Filecoin and Storj have transformed centralized storage into a decentralized operating model through crypto-economic models, and have found practical applications in the Web3 ecosystem, such as on-chain NFT storage and front-end and back-end resource storage for DApps.

The Internet of Things + Blockchain only reflects the characteristics of Decentralization ) "De" (, while DePIN emphasizes the construction of physical infrastructure and the scaled interconnection of networks. In DePIN, "PI" represents Physical Infrastructure ), and "N" represents Network (, which is the value network formed after the DePIN hardware reaches a certain coverage scale.

Helium is a typical DePIN project that almost meets all the elements of DePIN: node economy, miner model, value network, crowdsourced incentives, and is a leading project in the DeWi) decentralized wireless communication( field. At the end of last year, Helium Mobile launched a $20 communication package service in cooperation with T-Mobile, targeting traditional users. When users transmit data using the Helium network, they not only earn token rewards but also enjoy reliable communication services. At the same time, Helium has also helped T-Mobile solve the signal coverage problem in remote areas of the United States, creating a win-win situation for all three parties. The large number of traditional users it attracts has a strong momentum to push DePIN beyond its boundaries and is expected to accelerate the large-scale adoption of blockchain technology and Web3 networks.

Helium and Filecoin both belong to the DePIN category, but the difference between the two is that Helium emphasizes hardware more, enabling it to support the growth of data services on the second curve through hardware income, building an independent ecosystem while harvesting Alpha and Beta returns.

3. The explosive growth of DePIN is based on the dual curve theory

The "Second Curve" is a concept in management and innovation theory, originally proposed by management scholar Charles Handy). It refers to the need to introduce new innovations or changes when an organization, product, or business reaches the peak of its traditional growth curve, in order to initiate a new growth curve and avoid stagnation or decline.

From the previous successful experience of DePIN projects, it is already evident that the business logic of DePIN naturally points to hardware sales as the first curve of project development, with the monetization of the data value network overlaying the first curve, serving as the guiding principle of the second curve of development.

Product research and development, as well as operational capabilities, are key to ensuring the growth of the first curve; to initiate the growth of the second curve, two capabilities are required: first, the organizational capability of a decentralized system, and second, the service capability on the demand side.

Corresponding to the DePIN ecosystem, it is necessary for the project party to first ensure the good operation of the data value network under the premise of having the ability to organize and undertake large-scale data transmission hardware networks, so that the demand side can smoothly connect, ultimately providing high-quality, standardized data services. This will ultimately complete the business dual exponential growth and form a positive cycle within the project ecosystem.

( 3.1 The value of hardware is the first curve of value creation.

In the first growth curve, the business will experience rapid growth in the early stages, then gradually reach its peak. The growth momentum of the first curve of the DePIN project comes from the revenue and profit generated by hardware sales.

Traditional infrastructure, especially in areas such as data storage and communication services, has a centralized service provider or entity whose business logic is linear: in the early stages of business, investment is needed to build infrastructure, and services are provided to end users )C-end ( only after the facilities are complete. Therefore, developing such businesses often requires the participation of giant enterprises to bear the high costs in the early stages of operation, including hardware purchases, land leasing, deployment, and hiring maintenance personnel, among other aspects.

The DePIN project splits the centralized supply side and turns it into a crowdsourcing model to establish a hardware network.

Therefore, the first step in dismantling centralized infrastructure is key to achieving the first curve of growth for the DePIN project.

The DePIN project party must first work hard to promote itself, spread its narrative, and attract participation from supply-side users through a series of operational means, including preselling "mining machines", purchasing incentives for airdrops, etc.; transferring the massive infrastructure investment costs to supply-side users to achieve a low-cost lightweight startup. Supply-side users also become "shareholders" of the project party by holding hardware while helping the project party deploy the hardware network with the expectation of making money from mining in the future.

Moreover, unlike traditional centralized device providers, the updates and maintenance of DePIN devices are carried out jointly by the project party and miners, meaning that device providers are only responsible for the research, development, and sales of the devices, while the updates and maintenance are completed by the supply-side users. In the process of collaboratively maintaining and building the hardware network, the interaction with the project party and middleware has strengthened the sense of community identity among miners ) and supply-side users ###, as well as their recognition of the DePIN project.

If a DePIN project can smoothly execute narrative marketing, mining machine sales, and community operations, then the essential elements of its own first growth curve will be complete, ultimately forming the first curve of increased network coverage scale -- increased token incentives -- attracting more miners to join.

Currently, Hivemapper, Helium, and Natix rank as the top three in terms of active node count, having deployed over 100,000 nodes worldwide.

Among them, Helium and Hivemapper have performed exceptionally well in their business.

Helium

• Helium is a decentralized wireless network, its main services include Helium Hotspot, providing low-power wide-area network ( LoRaWAN ) coverage; Helium Mobile, a mobile communication service launched in collaboration with T-Mobile and TEF.

• The $20 communication plan service launched in cooperation with T-Mobile on January 25 increased from 0 to 93,000 subscribers in 5 months.

• Collaborating with one of Mexico's telecom giants, Telefónica (TEF), to enter the Mexican market with a population of 126.7 million further enhances Helium's revenue sources and market influence.

Hivemapper

• Hivemapper is a decentralized mapping platform aimed at creating a global, real-time updated mapping ecosystem through blockchain technology and economic incentives. Hivemapper's main business includes HiveMapper Dashcam--a dashcam that allows users to collect geographic data while driving by installing this device.

• This device is priced at $549. Based on the current number of node deployments, it can be roughly estimated that Hivemapper has already achieved over $60 million in revenue solely from hardware sales.

• As of now, the map data collection network established by Hivemapper has covered most of Europe and the United States. Hivemapper's data service revenue has also seen significant growth.

• In terms of hardware revenue, other projects have also found good growth through different approaches. For example, Jambo has achieved outstanding sales performance in the African market by focusing on mobile phones. OORT has technological barriers in cloud computing and edge computing, realizing significant hardware sales revenue through its innovative model. Ordz Game, as a project in the GameFi sector, cleverly integrates DePIN elements to generate a wave of popularity. These projects have successfully achieved breakthroughs in hardware revenue through their respective innovative models and technological advantages, exploring new ways to integrate DePIN across various industries.

Jambo

• Web3 wallets are the entry point for all crypto users, and Jambo plans to adopt DePIN+ wallets to achieve large-scale adoption of Web3 in the African market. By selling cost-effective Jambo phones, marketed as Web3 phones, they aim to attract a large number of traditional Web2 users. With the pre-installed Web3 wallet application, users can use a one-stop wallet app to play games or watch ads, earning JAMBO native token rewards. The Jambo project collaborates with several major data service providers in Africa to achieve a business closed-loop by selling the generated data to service providers.

• In the future, the Jambo phone will also launch several incentive activities such as on-chain data mining. In addition, by pre-installing dApps, users can manage DePIN phones using the Jambo phone. Currently, the Jambo phone has been launched in over 120 countries and regions, with the main market concentrated in Africa. Priced at $99, the Jambo phone is very affordable and has sold over 400,000 units, activating 1.23 million non-custodial wallet addresses.

OORT