DePIN: Building a Decentralized Value Network with Double Curve Superposition

DePIN is gradually realizing large-scale interactions between the physical world and Web3, gradually disrupting the operational model of traditional infrastructure. By combining sensors, wireless networks, computing resources, and AI with blockchain technology, it promotes crowdsourced development through cryptoeconomic incentives. Analyzing most DePIN projects reveals that DePIN's business model has an important characteristic: hardware revenue serves as the primary growth curve, with monetization of data services layered on top, forming a secondary growth curve. This is one of the key factors that allows DePIN to lead growth in the current cycle, while also demonstrating how DePIN-type projects can create significant wealth effects during the process of building decentralized infrastructure networks, ultimately forming a scalable decentralized value network.

1. Build a Decentralized Internet of Everything

Decentralization physical infrastructure network ( DePIN ) is defined in the 2023 Messari report as "deploying physical infrastructure and hardware networks in the real world using cryptoeconomic protocols." This concept heralds an imaginative application scenario: common infrastructures around us, including communication base stations, electric vehicle charging piles, photovoltaic panels, billboards, and the data storage and computing devices behind the operation of 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. Furthermore, physical infrastructures of the same kind are highly standardized and scalable, forming a carpet-like coverage.

Through Decentralization, the layout and utilization of infrastructure can achieve higher efficiency and lower costs, while enhancing the overall system 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 now exceeded $5 trillion. Therefore, Messari predicts that the potential market size in the DePIN sector is estimated to be around $2.2 trillion, expected to reach $3.5 trillion by 2028.

1.1 DePIN Track Division

The DePIN track covers six subfields: Computing, AI, Wireless Communication, Sensors, Energy, and Services. From the supply chain perspective, DePIN can be divided into:

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

• Midstream: The project platform, a blockchain responsible for data validation and token settlement, and an on-chain layer two 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 ), DePIN development SDK toolkit, API interfaces, etc.

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

Apart from IoTeX and the now migrated Helium( mainnet to Solana), most DePIN projects rarely cover every aspect of the DePIN business. They usually 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 underlying hardware devices schedule idle electronic devices through middleware, such as mobile phones or computers equipped with high-performance consumer GPUs.

1.2 Overview of DePIN Industry Development

According to DePIN Ninja data, the number of DePIN projects that are currently online has reached 1215, with a total market value of about 43 billion USD. Among them, the total market value of projects that have issued tokens and are listed in the DePIN sub-section on Coingecko exceeds 25 billion USD.

In October of last year, this number was 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 where blockchain technology and real-world applications converge.

2. Insights from DePIN Business Logic

The prototype of DePIN can be traced back to the IoT + Blockchain ( concept from the last cycle. Projects like Filecoin and Storj transform centralized storage into a decentralized operating model through cryptoeconomic mechanisms, and find 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 scalable interconnected networks. In DePIN, "PI" represents Physical Infrastructure ), and "N" represents Network (, which refers to the value network formed after the hardware in DePIN reaches a certain coverage scale.

The most typical example is Helium, which was established in 2013 but only confirmed the use of blockchain as an incentive for decentralized deployment of the Internet of Things in 2018. To date, Helium has almost met all the elements of DePIN: node economy, mining model, value network, crowdsourced incentives, making it a leading project in the field of DeWi) decentralized wireless communication(; in addition, at the end of last year, Helium Mobile launched a $20 communication package service in collaboration with T-Mobile, aimed at traditional users. When users transmit data using the Helium network, they can not only earn token rewards but also enjoy reliable communication services. At the same time, Helium also helps T-Mobile address signal coverage issues in remote areas of the United States, creating a win-win situation for all three parties. Its terminals, catering to a large number of traditional users, are likely to drive DePIN's breakout momentum and 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 places more emphasis on hardware, enabling it to support the growth of data services on the second curve through hardware revenue, building an independent ecosystem, while also reaping Alpha and Beta returns. Although Helium was involved in false advertising last year and faced issues such as the rarity of programming languages leading to development difficulties, a series of actions at the end of the year has once again opened the growth of Helium's second curve; and as the largest-scale DePIN project that has come out first, it undoubtedly brings us inspiration for the DePIN ecosystem.

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 for an organization, product, or business to introduce new innovations or changes when it reaches the peak of the traditional growth curve in order to initiate a new growth curve, thereby avoiding stagnation or decline.

From the previous successful DePIN project experience, it is already clear that the business logic of DePIN naturally points to hardware sales as the first development curve of the project, while the monetization of the data value network is layered on top of the first curve, serving as the guiding ideology for the development of the second curve.

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

In the context of the DePIN ecosystem, it is necessary for the project party to first ensure the smooth operation of the data value network, under the premise of having the hardware network capability to organize and undertake large-scale data transmission. Only then can the demand side be successfully connected, ultimately providing high-quality, standardized data services. This will ultimately complete the dual curve business double growth, forming a positive cycle within the project ecosystem.

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

In the first growth curve, the business will experience rapid initial growth, then gradually reach a peak. The growth momentum of the first curve of the DePIN project comes from the revenue and profits generated by hardware sales.

Traditional infrastructure, especially in areas such as data storage and communication services, has a linear business logic for centralized service providers or entities: in the early stages of the business, investment is needed to build infrastructure, and services are provided to end users ) C-end ( only after the facilities are in place. 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 the hiring of maintenance personnel at all stages. Quoting BCG's deconstruction of the data value network, its traditional IoT operating model has created the data value chain shown in the left diagram, in which data is transmitted as a production factor in an independent and linear manner, and each ecosystem is completely independent.

The DePIN project decentralizes the 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 strive to promote itself, spread its own narrative, and attract supply-side users to participate through a series of operational means, including pre-selling "mining machines" and offering airdrops for purchases; transferring the significant infrastructure costs to be borne by supply-side users, achieving a low-cost and lightweight launch. Supply-side users also become "shareholders" of the project party in the form of holding hardware, while helping the project party deploy the hardware network with the expectation of earning 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 the device provider is only responsible for the development and sale of device updates, while the updates and maintenance are completed by the supply-side users. In the process of collaboratively maintaining and constructing the hardware network, the interaction with the project party and middleware has strengthened the community identity of miners ) and supply-side users ###, as well as their recognition of the DePIN project.

If a DePIN project can smoothly run through narrative marketing, mining machine sales, and community operations; then the essential elements of the project's own first growth curve will have been gathered, ultimately forming the first curve of increasing network coverage scale ------ increasing token incentives ------ attracting more miners to join.

The following is the current data on the number of active nodes. Hivemapper, Helium, and Natix rank in the top three, each having deployed over 100,000 nodes worldwide.

Among them, the node deployments of Hivemapper, Helium, Natix, and Nodle have all exceeded 100,000, with Helium and Hivemapper showing outstanding business performance:

Helium

• Helium is a Decentralization wireless network, mainly including 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 partnership with T-Mobile on January 25 increased from 0 to 93,000 subscribers worldwide 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 enhancing Helium's revenue sources and market influence.

Hivemapper

• Hivemapper is a decentralized mapping platform designed to create a global, real-time updated map ecosystem through blockchain technology and cryptocurrency incentives. Hivemapper's main business includes HiveMapper Dashcam------a driving recorder that allows users to collect geographic data while driving by installing the 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 regions of Europe and America. Hivemapper's data service revenue has also seen significant growth.

• In terms of hardware revenue, there are also other projects that have achieved notable 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 innovative models. Ordz Game, as a GameFi project, cleverly integrates DePIN elements to attract a wave of popularity. These projects have successfully achieved breakthroughs in hardware revenue through their respective innovative models and technological advantages, and are exploring new ways to integrate DePIN across various industries.

**Jam