DePIN: An Indispensable Infrastructure for Web3

Decentralized Physical Infrastructure Networks (DePIN) are revolutionizing the way physical infrastructure is deployed and maintained. This innovative model allows individuals and businesses worldwide to build infrastructure in a distributed manner, rewarding contributors through economic compensation and token incentives. DePIN leverages cryptography, the internet, the Internet of Things, and blockchain to achieve a more efficient, decentralized, and equitable infrastructure deployment model.

The Importance of DePIN to Web3

Despite the rich application scenarios that Web3 has developed on Layer 1 and Layer 2, such as DeFi, gaming, NFTs, social, and RWA, these applications still rely on traditional internet infrastructure like centralized cloud services and data centers. This dependence has led to some issues, such as data loss due to cloud platform outages or the inability to access certain services due to regulatory restrictions. Therefore, DePIN has become the key infrastructure for achieving a true Web3.

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

1. Low participation cost: By utilizing the collective resources of network participants, management costs and expenses are reduced.
2. Enhance Network Robustness: Decentralized networks provide a more resilient and secure infrastructure, reducing the risk of single points of failure.
3. Promote 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 operational model of DePIN includes three key roles:

• Device Provider: Provides physical device resources and earns token rewards.
• DePIN Protocol: Build a distributed network and design a token incentive mechanism.
• Network user: Access protocol, use services and pay fees.

DePIN projects are mainly divided into the following categories: decentralized storage, decentralized computing, CDN, VPN, WiFi, and 5G networks.

Most DePIN projects have three basic components:

1. Physical Infrastructure: Build and maintain a distributed physical infrastructure network in the real world.
2. Off-chain computing infrastructure: used to capture and analyze real-world data, calculate user contributions.
3. Blockchain and tokens: serving as a tamper-proof ledger, device registry, and task scheduling platform, while also providing incentive mechanisms.

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's vision is to introduce open and verifiable characteristics into the three core pillars of the data economy: storage, computing, and content distribution.

Decentralized GPU Rendering Platform

A decentralized GPU rendering platform that matches users needing rendering 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 completed over 4.6 million frames of rendering jobs at an average cost of $20, which has a certain price advantage compared to centralized platforms.

Decentralized Wireless Network Protocol

An open-source protocol incentivizes global users to collaboratively build a wireless network. The native cryptocurrency of this protocol can be burned to generate data credits for transmitting device data. Based on this protocol, applications such as LongFi (an IoT network based on LoRaWAN technology) and 5G networks have been built. Reports indicate that the network has deployed nearly 1 million hotspots in three years, covering more than 77,000 towns in 192 countries.

decentralized live video broadcasting platform

A video infrastructure network for live and on-demand streaming media that incentivizes nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through an encrypted economic protocol.

decentralized video streaming network

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

Summary

DePIN, as a key infrastructure for Web3, is rapidly developing. According to research institutions, the total potential market size of the DePIN industry could reach $3.5T. Currently, the FDV of all decentralized physical infrastructure projects is only $5B, indicating huge growth potential.