LD Capital: Mobile 7 days 10 times, DePIN track to break the circle on the eve of the old money into the game

Authors: Yilan, Lisa

1. DePin track on the eve of the old money

DePin is the abbreviation of Decentralized Physical Infrastructure Networks, at the end of 21, IOTEX called this track MachineFi, and at the end of 2022, Messari introduced the new concept of DePIN for the first time, and said that it is one of the most critical crypto investment tracks in the next decade. In the next decade, we can expect incremental capital injections from traditional institutions, and the intervention of traditional funds will subvert the previous preference for complete on-chain economic speculation around crypto-native applications, and shift to investment opportunities with more off-chain logic and real-world impact. The importance and investment potential of DePin in the crypto development process is in line with the need to find funding for a new narrative in the crypto world.

At the heart of the DePin concept is the use of tokens to incentivize users to deploy hardware devices to provide real-world goods and services or digital resources. DePIN can be divided into two parts: physical resource networks (PRN), which refers to users providing WiFi, 5G, VPN, geospatial data, information sharing and other services through hardware distributed in various places; DRN) refers to the physical infrastructure network that provides digital resources through hardware facilities, including broadband networks, storage networks, and computing power networks.

To put it simply, DEPIN is to use hardware to provide resources that may involve software, bandwidth, computing power, etc., to provide token incentives for real-world services that originally require centralized management, and to make asset-heavy services lightweight, decentralized and solve the problem of cold start of the project with more flexible and decentralized node deployment. In the early onboarding phase, DePIN uses a spiraling dynamic mechanism that allows users, providers, and platforms to participate with relatively little risk, but hardware involvement means that DePIN projects need sufficient upfront capital support to ensure broad access to hardware to build a strong network coverage. At the same time, off-chain and on-chain marketing strategies need to keep up at the same time, and the full combination of these elements can lay a solid foundation for the success of a DePIN project.

2. DePin on Solana’s strongest ecology and strongest narrative double buff

The DePins on the SOL are HONEY (Hivemapper), IOT (Helium IOT), Helium Mobile (Helium Mobile), HNT (Helium Network) and RNDR (Render Network) in order of market capitalization, which represent the specific software applications (decentralized maps, IOT services, 5G services), IoT infrastructure (decentralized wireless and 5G service platforms), and point-to-point rendering computing power matching AI platforms and other subdivisions. Among storage (also known as Depin)-related projects, Arweave is a project that is deeply tied to the Solana ecosystem, as most of Solana’s NFTs are stored in Arweave. The following focuses on Helium and Mobile in the Honey, DIMO, and Helium ecosystems.

2.1 HONEY(Hivemapper)

On Solana, Honey (Hivemapper) is a DePin track Alpha with a small market capitalization and strong investment background and project endorsement.

Hivemapper is a blockchain-based map network that creates a decentralized global map that rewards contributors. Contributors can collect data by installing Hivemapper’s dashcam and earn Native Token HONEY as a reward. In Hivemapper’s settings, the dashcam is equivalent to a “miner”. Integrate natively with the Hivemapper network through a seamless mobile app and place the mapping on autopilot and upload it automatically. Install the Hivemapper dashcam to mine HONEY token rewards while driving, collect 4K street-level images and map the world.

The behavioral incentive goal designed by the project team is to obtain better map data. The quality, timeliness and city density of the uploaded data become the dimensions of judging the incentive reward. Qualitatively, the Hivemapper project created a reputation score driven by the quality of the uploaded data. When a user mounts a camera outside the vehicle and captures a higher quality image, a higher reputation score can be obtained. At the same time, the rewards received by users are linked to their reputation scores, and their reputation rolling average is higher, and the rewards are higher.

Timeliness is to ensure that street information is up to date. The project team created the so-called freshness score. They essentially created a function that increments over time, assuming that no one collects data for an entire year, and the next person who tries and uploads new data gets a higher multiplier. This facilitates the timely updating of map data.

In terms of data density, the project team hopes to have a higher density of map nodes distributed in certain major cities, so it has a huge bonus reward system in the selected 35 cities, giving these places a higher reward weight.

Source:Hivemapper

In terms of funding and project background, Hivemapper raised $18 million in Series A funding last year, led by Multicoin Capital, with participation from Craft Ventures, Solana Capital, Shine Capital, Spencer Spencer Rascoffs 75 and Sunny Ventures. Founder Collective and Homebrew investments. Hivemapper raised a total of $23 million. Amir Haleem, CEO and founder of Helium, joins the project’s board of directors.

In terms of token distribution, Honey’s release rules are very similar to Helium’s, and the maximum supply of HONEY tokens is 10 billion, which is a fixed upper limit. The initial allocations are as follows:

The Hivemapper network began minting and distributing 4 billion HONEY tokens as a reward to contributors. The exact number of tokens minted each week is determined by the progress of the global map. At present, the circulating supply has increased by about 1.6mln honey in 1 day.

2.1 DIMO

DIMO and Hivemapper both belong to the Drive to earn track and are one of Hivemapper’s competitors.

Compared with Hivemapper, which is also an application scenario of the Internet of Vehicles, DIMO is designed to meet the needs of users, by incentivizing the decentralized acquisition of driving data ownership, it is convenient for the C-end to collect data and use it (rewarding car owners and meeting the needs of automatic parking/automatic parking space finding, etc., the on-board data collected and shared by car owners can be used in more scenarios), while Hivemapper is biased towards B-end products (providing more detailed maps for car companies/related service providers).

The business logic behind it lies in the fact that the Internet of Vehicles track is backed by a huge market of 450 billion to 700 billion US dollars (until 2023) with the overall profit of global car data monetization, and DIMO links cars and drivers to tokenize car driving data, cutting into the global data production supply chain of 250 million connected cars, so that users can become the obtains of driving data profits.

In terms of usage data, Hivemapper and DIMO are relatively similar in terms of the number of users, but DIMO is smaller in terms of FDV. DIMO is an ERC-20 token on the Polygon and Ethereum blockchains, and the project endorsement is slightly inferior and the ecology is not in the hot spot, so DIMO started to discover value later than Honey.

Source: LD Capital

In terms of token distribution, the total supply of DIMO is 1 billion, with baseline rewards accounting for 38%, and 380 million DIMO will be distributed in 40 years, with 1,105,000 DIMO issued to users every week in the first year, and the mining rewards obtained by each user will be distributed according to the rules in the figure below, and the issuance will decrease by 15% every year; 22% of the Dimo treasury, and teams and individuals who contribute to the network may receive $DIMO in the form of bounties or grants, 22% of the team, and the token distribution will be locked for two years, and then unlocked linearly every month until it is fully unlocked after three years, and 8% for investors, and the token distribution will be locked for two years, and then linearly unlocked every month until it is fully unlocked after three years, and the airdrop will be 7%;

Source:DIMO

There are currently 194mln in circulation (including 70mln of airdrops, 57mln of baseline rewards already distributed, and 67mln distributed to the treasury), and the initial airdrop is actually a large-scale distribution of baseline rewards (understood as mining income) (70mln), leaving 382,491,185 $DIMO. The pool will be distributed over a period of 40 years, with 1,00,1050$DIMO issued to users weekly for the first year, a 15% decrease per year. From the point of view of the chip structure, it is better.

2.1 Helium

Helium is a centralized wireless network project (Distributed Internet of Things). Founded in 2013, it is a pioneer in the DePIN track. As the purest DePin project in the Solana ecosystem, Helium has the most mature ecological network and is stronger than other IOT ecosystems.

HNT is the main economic asset in the Helium ecosystem, and the only way to pay for network data transfer is to burn HNT. Helium’s revenue has increased with the price of HNT, reaching $9k per day, which is still in a state of insufficient demand, which may be one of the reasons why Helium vigorously promotes its sub-DAO. More sub-DAOs are a boost to HNT prices. The second phase of HIP 51 implements the Helium DAO, which oversees and maintains the various sub-DAOs, and as more sub-DAOs emerge (currently only IOT subDAOs and 5G subDAOs), there will be more competition between protocols for a fixed amount of HNT generated per day (HNT currently net release of 1.23 million HNT per month, 40,000 per day).

By combining web3 technology with IoT networks, Helium solves the problem of high capital barriers in the IoT network market (mobile operators like China Mobile Unicom), and aims to improve the pain points of WI-FI and centralized operators that cannot efficiently cover the signal in the middle ground by expanding 5G services. Through the participation of everyone, the heavy cost of the early construction of the Internet of Things can be allocated to each user, so as to achieve a lightweight start-up. At present, some indoor and outdoor positioning devices, smart farms such as Abeeway, Agulus, etc., have begun to adopt Helium. T-Mobile and Helium Mobile started working together last year.

The Helium network and its associated tokens are based on the Proof of Coverage (PoC) mechanism, which is fundamentally different from Proof-of-Work (PoW), and unlike GPU mining, which consumes a lot of energy, Helium hotspots only require as much energy as a 12-watt LED bulb to operate, and the biggest cost miners bear is a one-time fee for the purchase of hardware.

The specific process of hotspot mining is that miners buy special LoRaWAN routers, such as Bobcat 300, etc., place them on the roof or balcony, and then maintain the network, miners will receive HNT tokens in return, which will automatically appear in the Helium App, which is connected to the miner, and the PoC constantly checks whether the hotspot is actually located in the location it provides and whether it generates a wireless network to cover that location.

Development Status

The two current sub-DAOs represent a narrowband network for IOT devices (Helium IOT) and a 5G hotspot network (Helium Mobile) that is compatible with HNT miners.

Source:Swissborg

In terms of 5G, although Helium’s development is constrained by the dual dilemma of compliance and market ceiling. But the partnership between Helium Mobile and T-mobile is helping Helium Mobile really move towards Mass adoption. The shift to Solana, a high-performance public blockchain, highlights Solana’s role as a fertile ground for the development of DePin projects.

In terms of compliance, the allocation and licensing of frequency bands in the United States is strictly regulated by the Federal Communications Commission (FCC). Licensed T-Mobile deploys 5G in the 600MHz band, and Verizon deploys 5G in the 700MHz band. As a latecomer, to reduce deployment costs and address compliance challenges, Helium opted for the non-licensed CBRS GAA band, which has slightly smaller coverage than the mid-band and does not show a significant advantage over U.S. carriers.

In terms of the ceiling of the market, 5G is an area that is strictly regulated by national policies, and most of the world’s network operators are state-owned enterprises, and only a few are private companies with close relationships with the state. As a result, from an international market perspective, it will be difficult for Helium to replicate the U.S. 5G market experience overseas.

The strategic move to Solana began in March of this year, with Helium migrating from its own Layer 1 blockchain to Solana. One of the main reasons for choosing Solana is that Solana’s latest state compression feature can mint a large number of NFTs at a very low cost, so that Helium’s migration to Solana costs only $113 to mint nearly 1 million NFTs, saving a lot of fees. These NFTs can be used as Helium’s network credentials and validate hotspots, and can also integrate the functions of the entire ecosystem, including token gating and access rights for hotspot owners, which is very efficient and convenient. Second, there is also a lot of room for cooperation with Helium in projects such as the Solana Mobile Stack and the Saga mobile phone that Solana wants to launch, which is a win-win situation for Solana who wants to make mobile phones and Helium that wants to develop into a 5G service provider. The third is that the programming language is unpopular, and the incompatibility with the EVM makes it difficult for developers to enter the market, resulting in Helium being unable to attract high-quality developers, and there are no excellent applications in the ecosystem, so the combination with the solana ecosystem is the way to break the game.

Token Situation

HNT is used as Data Credits, which are used in various sub-networks (revenue side) when users seek hotspots. MOBILE/IOT (SUPPLY SIDE) REWARDS EARNED IN 5G SUBDAO OR IOT SUBDAO FOR DEPLOYING HOTSPOTS OR TRANSMITTING DATA CAN BE BURNED AND EXCHANGED FOR HNT.

In terms of specific release allocation, 30% of the HNT released each month will be used for network data transmission, which will be rewarded to the hotspots that transmit IoT device data, which will be distributed according to the proportion of data transmission, 35% will be used for Hotspots infrastructure rewards, which will be mainly used for mining rewards for hotspot owners and ensure coverage as the network develops, and 35% of the monthly release will be allocated to teams and investors.

Source: Helium

The actual total number of HNT tokens is about 223 million, with 43 million issued in the first year, with a biennial halving. HNT price fluctuations, representing the project’s income rights and governance rights, while meeting the speculative needs of token holders. 7⃣️ The HNT inflation plan is as follows, currently generating inflation of 41,000 HNT per day:

Source: Helium

HNT can be obtained by becoming a challenger, challenged, witness, joining a consensus group, participating in network transmission, etc. (witnesses and network transmissions get the most HNT rewards). HNT meet the needs of the two main players in the Helium ecosystem:

1. HOTSPOT HOSTS AND CARRIERS (PROVISIONING): HOSTS ARE REWARDED WITH NETWORK TOKENS LIKE IOT OR MOBILE WHEN DEPLOYING AND MAINTAINING NETWORK COVERAGE. These network tokens are redeemable for HNT.

2. Enterprise/Developer/Other Users (Need): Enterprises and developers leverage the Helium network to connect devices and build IoT applications. Data credit is a utility token pegged to the U.S. dollar, which is earned through HNT-burn transactions made on the network to pay for transaction fees for wireless data transmission on the network.

However, at present, the revenue brought by burning HNT to Helium is not enough, but the device provider will get more token rewards, so Helium has been criticized for lack of use (demand side, that is, income is small), lack of standards in the early days of the industry, poor developer and user experience, but the promotion of Mobile’s low-cost eSIM card seems to have opened up the dilemma of a serious lack of demand side.

2.3.1 MOBILE

MOBILE is the protocol token of Helium Mobile Network and the governance token of Helium SubDAO, which realizes governance separation. MOBILE was introduced to Helium Network through community proposal HIP-53.

Helium developer Nova Labs has partnered with T-Mobile to launch a commercial mobile smartphone service, starting with a $5 per month plan in Miami and recently launching a $20 per month wireless phone plan across the U.S., combined with a free SIM trial with Solana Labs’ new phones. Detonating the Mobile market,

MOBILE tokens are mined via 5G-CBRS and WiFi hotspots, including both data transmission and proof of coverage. Token distribution MOBILE follows a similar minting scheme to HNT, but with a maximum supply of 230,000,000,000 (230B). At the time of the launch of the mobile network, 50B MOBILE was pre-minted and allocated to the network operation fund managed by the Helium Foundation. A portion of this allocation is distributed to active Mobile Network hotspots during genesis. The first year of MOBILE began on August 1, 2022, and the first tokens were minted on August 12, 2022.

The issuance plan will be halved every 2 years, in line with the HNT issuance halving.

Source: Helium

The value of the MOBILE token comes from two parts, one is that it can be redeemed through the programmatic treasury HNT- the Subdao token MOBILE can be exchanged for HNT. To achieve this, each subnet in the Helium Network is assigned a certain number of HNT pools based on the network utility score. The exchange ratio is set by the contract based on this network utility score algorithm, and the second is the governance utility in the subDAO. In the future, there may be more utility, such as using staking to improve hotspot proofs of covered participation.

The redemption price calculation for MOBILE is carried out through the following rules. The HNT rewards earned by all 5G hotspots within the allotted time are allocated to a pool, and MOBILE holders can burn their MOBILE to earn a pro-rata HNT in the pool. FOR EXAMPLE, IF ALL 5G HOTSPOTS GET A TOTAL OF 100 HNT AND THERE ARE 10,000 MOBILES UNUSED, THAT MEANS YOU CAN BURN 100 MOBILES TO GET 1 HNT. This architecture provides MOBILE with a value floor that MOBILE can trade on top of its floor price based on its utility.

Helium Mobile currently has a payback period of 209 days

Source:Depinscan

2.3.2 IOT

Helium IOT Subdao incentivizes IoT devices connected via the LoRaWAN network and balances the relationship between users and device providers. It can be understood as inheriting the use cases of the original Helium IoT part.

At present, the circulation of IOT is 24 billion (inflation is based on the table below), which is in the early stage of chip allocation. MC 68mln, FDV566mln, Compared to Mobile’s strong expansion, IOT use cases have not yet been fully explored.

Source: Helium

The Subdao derived from the Helium ecosystem is actually a continuation of the situation that the HNT has gradually approached in the later stage of distribution, and it is conducive to the continued development of the entire Helium ecosystem, after all, the main value capture is still in the HNT, and at the same time the expansion of two sub-DAO tokens with significant development is used as a narrative, which is a win-win situation for HNT, Mobile and IOT.

Helium is the IOT+5G network with the most financing, the most complete products and economic models, coupled with the strategic layout of migrating solana, the current MC/price is relatively high, and as a large-capitalization leading project, it will still enjoy the beta of the track.

3. What other DePin projects are worth paying attention to in the secondary market?**

In addition to DePin in the Solana ecosystem, there are also projects with more mature ecosystems and projects in other ecosystems, including Dimo, IOTX (IOTEX), Streamr (DATA), WIFI Map (WIFI), etc., which are compared with Honey (Hivemapper) above. As can be seen from the hotspot distribution map provided by Depinscan, the hotspots in the Helium ecosystem (IOT, 5G) are the most widely distributed, with 363k devices deployed in Helium IOT, 38k in Helium 5, and 83k deployed in Streamr.

Source: DePinscan

Compared with the Helium ecosystem, the applications in the IOTEX ecosystem are not very dynamic, but they have been working on the extension of various depin applications, while Helium’s sub-DAO is more endogenous and perfect ecological construction. And with the migration of Helium to Solana, IOTEX, as an L1 with a unique layered architecture, is considered to be a more pure DePin infrastructure, and its token also has more scenarios and use cases. The current IOTX MC 520mln and FDV 523mln have an advantage over Helium’s market capitalization. However IOTX is an ancient project that has been fully distributed, and its incentives and ecological vitality cannot be compared to the Helium ecosystem.

In September of this year, Drop Wireless (formerly known as Nesten) transitioned to IoTeX’s DePIN infrastructure. Drop Wireless operates a global LoRaWAN network with 1,000 nodes in 17 countries. The company’s focus extends as far as telehealth services provided in India and plans to continue to expand into Africa to meet significant healthcare needs. IoTeX supports Drop Wireless’ native token, launched as XRC20 on the IoTeX chain, and facilitates decentralized data storage and transmission through W3bstream. This shift highlights IoTeX’s role as a DePIN hub.

IV. Summary

In the medium term, the leader of this track will have to reach at least 3 billion market value to enter the top 30, and at present, in terms of market capitalization RNDR 1.6 billion 48th, Helium 1.3 billion, Theta 1.1 billion, IOTA 860 million, and Mobile 550 million. There is a valuation discount across the track.

HNT as the Depin leader on Solana, the ecosystem is strong, although the chip structure is not as good as Mobile, but it captures more value, and will also benefit from the prosperity of the sub-DAO;IOTX as the DePin infrastructure target of Ethereum Compatible, although it has not touched the market hotspot (Solana), it has an advantage in the ETH replenishment market after the subsequent BTC spot ETF is passed. And the current price is relatively cheap (MC 500mln); There is still room for growth in DIMO MC, and the Internet of Vehicles track also has a grand narrative space; Mobile’s partnership with T-Mobile is likely to bring in real externality revenue, which is expected to lead the way.

As a Mass Option channel, the Depin track is also linked to the AI sector, which is a lap-breaking track that can have a grand narrative and can be selected by capital. In the next decade, we can expect incremental capital injections from traditional institutions, and the intervention of traditional funds will subvert the previous preference for complete on-chain economic speculation around crypto-native applications, and shift to investment opportunities with more off-chain logic and real-world impact. The importance and investment potential of DePin in the crypto development process is in line with the need to find funding for a new narrative in the crypto world.

Source: LD Capital