DePIN - Dual Curve Construction of Decentralized Value Network

DePIN is achieving large-scale interaction between the physical world and Web3, disrupting traditional infrastructure operation models. An important characteristic of DePIN's business model is its reliance on hardware revenue as the first growth curve, on top of which data service monetization is layered to form a second growth curve. This is one of the key factors that enables DePIN to lead growth in the current cycle, and it also demonstrates how the DePIN project creates significant wealth effects during the construction of a decentralized infrastructure network, ultimately forming a scalable decentralized value network.

1. Build a Decentralized Internet of Everything World

Decentralization physical infrastructure network ( DePIN ) is defined as "deploying real-world physical infrastructure and hardware networks using cryptoeconomic protocols". This concept heralds an application scenario full of imaginative possibilities: common infrastructures around us will no longer be controlled by centralized entities, but will be divided into equally sized units, held in the hands of individuals or miners. Physical infrastructures of the same kind are highly standardized and scaled, 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. From energy production to data processing, various facilities have the potential to transition to a decentralized model. The total market size of the related industries involved in DePIN has now exceeded $5 trillion. Messari predicts that the potential market size in the DePIN field is approximately $2.2 trillion and is 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 perspective of the supply chain, DePIN can be divided into:

• Upstream: Hardware manufacturers and supply-side users acting as "miners".
• Middle layer: A blockchain platform responsible for data verification and token settlement, and an on-chain layer two protocol serving DePIN; as well as modular service components for developing and managing the DePIN network, SDK tools developed for DePIN, API interfaces, etc.
• Downstream: Interface and connect with the demand-side dApp applications.

Except for IoTeX and the former Helium, most DePIN projects rarely manage to cover every aspect of the DePIN business. They usually choose Solana or IoTeX as the settlement layer for their token economics. AI and cloud computing projects in this 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 equipment through middleware, such as smartphones or computers equipped with high-performance consumer-grade GPUs.

1.2 Overview of DePIN Industry Development

According to DePIN Ninja data, the number of DePIN projects that have been launched has reached 1,215, with a total market value of approximately $43 billion. 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.

In October of last year, this number was only 5 billion dollars, 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 launching and application scenarios expanding, the DePIN industry is expected to become an important area for the integration of blockchain technology with real-world applications.

2.Inspirations from DePIN Business Logic

The prototype of DePIN can be traced back to the IoT + Blockchain ( concept from the previous cycle. Projects like Filecoin and Storj have transformed centralized storage into a decentralized operating model through cryptoeconomic models, achieving 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 characteristic of Decentralization ) "De" (, while DePIN emphasizes the construction of physical infrastructure and the large-scale interconnected network. In DePIN, "PI" represents Physical Infrastructure ), and "N" stands for 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. It wasn't until 2018 that Helium confirmed the use of blockchain as an incentive mechanism for decentralized deployment of the Internet of Things. To date, Helium has almost met 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. Additionally, at the end of last year, Helium Mobile launched a $20 communication plan service in collaboration with T-Mobile, targeting traditional users. When users transmit data using the Helium network, they not only receive token rewards but also enjoy reliable communication services. Furthermore, Helium has helped T-Mobile address signal coverage issues in rural areas of the United States, creating a win-win situation for all parties involved. Its terminals catering to a large number of traditional users are likely to promote the breakout momentum of DePIN and accelerate the large-scale adoption of blockchain technology and the Web3 network.

Helium and Filecoin both belong to the DePIN category, but the difference between the two is that Helium emphasizes hardware more, allowing it to support the growth of data services on the second curve through hardware revenue, building an independent ecosystem, while also harvesting Alpha and Beta returns. Despite Helium's involvement in false advertising last year, and facing issues such as the niche programming language leading to development difficulties, a series of actions at the end of the year reopened the growth of Helium's second curve; and as one of the largest DePIN projects to emerge first, it undoubtedly brought us some insights into the DePIN ecosystem.

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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 its traditional growth curve, in order to initiate a new growth curve and avoid stagnation or decline.

From the experience of previously successful DePIN projects, it is already evident that the business logic of DePIN naturally points to selling hardware as the first growth curve of the project, while the monetization of data value networks overlays on the first curve, serving as the guiding philosophy for the development of the second curve.

Product research and development, and operational capabilities are the 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 Decentralization system, and second, the service capability for the demand side.

In the context of the DePIN ecosystem, project parties need to ensure a well-functioning 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 smoothly connect and ultimately provide high-quality, standardized data services. This will achieve a double exponential business growth and create 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 and 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 business, investment is needed to build infrastructure, and after the facilities are improved, services are provided to end users )C-end (. 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 of maintenance personnel at various stages. Referring to BCG's deconstruction of the data value network, its traditional IoT operation model has created the data value chain shown in the left figure, where 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 the 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 methods, including pre-sale "mining machines", purchasing with airdrop rewards, etc.; transferring the huge infrastructure costs to be borne by supply-side users, achieving a low-cost lightweight startup. 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 expectations of future mining profits.

Moreover, unlike traditional centralized device providers, DePIN device updates and maintenance are jointly completed by the project parties and miners, meaning that device providers are only responsible for device update research and sales, while updates and maintenance are carried out by supply-side users. In the process of collaboratively maintaining and building the hardware network, the interaction with project parties 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 the narrative marketing, mining machine sales, and community operations; then, all the elements of the project's own first growth curve will be gathered, ultimately forming the first curve of increasing network coverage scale ------ increasing token incentives ------ attracting more miners to join.

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

Helium

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

• The $20 communication package service launched in collaboration with T-Mobile on January 25 has seen the number of subscribers grow from 0 to 93,000 in just 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 map ecosystem through blockchain technology and cryptocurrency incentive mechanisms. Hivemapper's main business includes HiveMapper Dashcam------a dashcam that allows users to collect geographical 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 generated over $60 million in revenue solely from hardware sales.

• As of now, the map data collection network established by Hivemapper has covered most areas 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 taken a different approach to achieve good growth. For example, Jambo has achieved outstanding sales performance in the African market by focusing on mobile phones. OORT has technical 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, exploring new ways to integrate DePIN across various industries.

Jambo

• Web3 wallet is the entry point for all crypto users, and Jambo intends to implement Web3 in the African market using DePIN+ wallet.