Decentralization Physical Infrastructure Network ( DePIN ) Status and Future Outlook

Introduction

The Internet, as a symbol of globalization, actually originated during the Cold War. In 1969, the U.S. military developed a decentralized network prototype called "ARPANET" to respond to potential nuclear strikes. This network employed a distributed architecture designed to avoid single points of failure and possess self-recovery capabilities.

However, over the past 55 years, from Web1 to Web2, the development of the internet has instead spawned a centralized platform system. Web2 giants control the discourse and value distribution in the online world. Therefore, in recent years, the wave of Web3 has emerged, advocating for Decentralization and platformization.

In this context, DePIN( decentralized physical infrastructure networks ) provide a new solution: by combining the financial attributes and incentive mechanisms of Web3, an efficient P2P physical resource network is constructed to create a decentralized physical network infrastructure. At the same time, the explosion of AI in the Web3 field has also witnessed the expansion of blockchain applications from on-chain to the real world.

Next, let's take a look at the current status and future development of DePIN.

DePIN Overview

What is DePIN?

DePIN( Decentralization Physical Infrastructure Network) is a model that combines physical infrastructure resources with blockchain technology. It coordinates global resource collaboration through distributed ledgers, token incentives, and smart contracts.

In short, DePIN creates a "resource sharing + economic incentive" bilateral market by linking hardware with blockchain. This community-driven model is more flexible than traditional single-point resource management, offering stronger scalability and robustness.

A complete DePIN network consists of project parties, off-chain physical devices, suppliers, and demanders. The basic operating modes include:

1. Off-chain hardware devices: can be divided into three categories: customized dedicated hardware, professional-grade hardware, and smart mobile devices.

2. Proof: The data generated by physical devices must be uploaded to the blockchain through physical work proof (PoPW).

3. Identity verification: Verify the on-chain account address of the device owner.

4. Reward Distribution: Token rewards are distributed based on contributions, involving the tokenomics design of DePIN.

5. Demand Matching: Complete resource exchange and matching on the DePIN marketplace platform.

Why is DePIN needed?

DePIN can solve the following problems faced by traditional physical infrastructure networks:

• Centralized control: Vulnerable to attacks, low transparency
• High entry barriers: restrict market competition and innovation
• Resource waste: low resource utilization rate
• Insufficient incentive mechanism: low user participation

The core value of DePIN includes:

• Resource Sharing and Digitalization
• Decentralization Governance
• On-chain settlement
• Innovation

Current Status of DePIN Development

DePIN involves fields such as storage, computing power, wireless networks, sensors, and energy. Currently, projects with high market capitalization are mainly concentrated in the storage and computing power sectors.

With the explosion of AI, a batch of AI DePIN projects has also emerged, dedicated to providing underlying infrastructure support for AI models.

From the perspective of market size, there are more than 1,500 DePIN projects that have been launched, with a total market value of approximately $22 billion. It is expected that by 2028, the DePIN market size could exceed $35 trillion.

In terms of public chains, DePIN projects are mainly deployed on public chains such as Solana and IoTex, while Polygon and Arbitrum are gradually becoming rising stars.

The current DePIN projects are mainly divided into two directions: focusing on the middle layer and focusing on demand side expansion.

DePIN Middleware

The DePIN middleware primarily includes middleware that connects devices and the DePIN network, aiming to help project parties quickly launch DePIN applications. It mainly includes:

• DePIN infra: Such as DePHY, W3bStream, etc., provide development frameworks and solutions for DePIN projects.

• Liquidity solutions: such as PINGPONG, Parasail, etc., provide liquidity support for DePIN projects.

DePIN Application Layer

The DePIN application layer is mainly divided into four major sectors:

Cloud Network

Including Decentralization storage and computing.

Representative projects in storage include Filecoin and Arweave.

Representative projects in the field of computing power include Render Network, io.net, and PinGo.

Wireless Network

Including 5G, WiFi, Bluetooth, LoRaWAN, etc.

Representative projects include Helium, Wicrypt, Metablox, etc.

sensor

Mainly used for monitoring and capturing data related to the environment, geography, and health.

Representative projects include WiHi, HiveMapper, and so on.

Energy

Representative projects include Starpower, Powerpod, Arkreen, etc.

The Future Trends of DePIN

1. Integration with Web2 application scenarios: DePIN will play an important role in areas such as the Internet of Things, smart cities, and energy sharing.

2. Lower hardware barriers: Transitioning from professional-grade equipment to consumer-level products is expected to further expand the user base.

3. Financialization: The tokenization of physical hardware has opened up the imaginative space for on-chain finance in DePIN.

4. Mutual Nourishment with AI: DePIN provides computing power, data, and other resources for AI, while AI makes DePIN smarter and more sustainable.

Challenges Facing DePIN

1. The technical implementation is complex, with high requirements for hardware and developers.

2. The market acceptance is still unclear, and the initial costs are high.

3. The profit model has uncertainties.

4. May face legal and policy interventions.

DePIN Project Evaluation Factors

1. Hardware: homemade vs third-party, one-time vs ongoing costs, high density vs low density, scarce vs common.

2. Token Economy Design: BME vs SFA, and Token Empowerment Mechanism.

Summary

DePIN integrates global idle resources through the Web3+ token economy model, aiming to solve the issues of resource monopoly and inefficiency under traditional centralized models. Despite facing numerous challenges, DePIN demonstrates enormous development potential and is expected to achieve large-scale application in the future, driven by improvements in blockchain performance, maturation of token economic models, and a surge in market demand.