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DePIN Dual Growth Curve: Building a Decentralized Value Network from Hardware to Data Services
DePIN: Dual Rise Curve Constructing Decentralized Value Network
The decentralized physical infrastructure network ( DePIN ) is realizing large-scale interaction between the physical world and Web3, gradually disrupting traditional infrastructure operation models. DePIN combines sensors, wireless networks, computing resources, and AI with blockchain technology, leveraging crypto-economic incentives to promote crowdsourced development. Analysis of most DePIN projects reveals a significant characteristic in their business models: hardware revenue serves as the first rise curve, on which data service monetization is layered, forming a second rise curve. This is one of the key factors that enables DePIN to lead the current cycle of growth, while also demonstrating how DePIN-type projects can create significant wealth effects during the construction of decentralized infrastructure networks, ultimately forming a scalable decentralized value network.
1. Build a Decentralized Internet of Everything
The decentralized 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 infrastructure around us, including communication base stations, 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 but will be divided into equally sized units, held in the hands of individuals or miners. Similar physical infrastructures 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 system security and resilience. From energy production to data processing, various facilities have the potential to transition to a decentralized model. The existing total market size of industries related to DePIN has exceeded $5 trillion. It is expected that by 2028, the potential market size in the DePIN field will reach $3.5 trillion.
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: Project platform, a blockchain responsible for data verification and token settlement, and the on-chain layer two protocol that serves DePIN; as well as modular service components, SDK toolkits, API interfaces, etc., for developing and managing the DePIN network.
Downstream: Interface and dApp applications that connect to the demand side.
Except for IoTeX and the former Helium, most DePIN projects rarely cover all business segments. They usually choose Solana or IoTeX as the settlement layer for the token economy. AI and cloud computing projects focus more on on-chain settlement and project platform development management, with underlying hardware devices scheduling 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 the data, the number of DePIN projects that have been launched currently stands at 1215, with a total market value of approximately 43 billion USD. Among them, the total market value of projects that have issued tokens and launched in the Coingecko DePIN sub-section exceeds 25 billion USD.
Last October, this figure was only 5 billion dollars, and it has increased fivefold in less than a year, indicating the rapid rise of the DePIN industry. This shows that the market's demand and recognition for decentralized physical infrastructure networks are continuously increasing. With more projects going live and application scenarios expanding, the DePIN industry is expected to become an important area for the integration of blockchain technology and real-world applications.
2. Insights from the DePIN Business Logic
The prototype of DePIN can be traced back to the concept of IoT + Blockchain ( in the last cycle. Projects like Filecoin and Storj have transformed centralized storage into a decentralized operating model through encryption economic models, and have found 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 the large-scale interconnected network. In DePIN, "PI" stands for Physical Infrastructure ), and "N" stands for Network (, which refers to the value network formed after the DePIN hardware reaches a certain coverage scale.
A typical example is Helium, established in 2013, which only confirmed the use of blockchain as an incentive for decentralized deployment of the Internet of Things in 2018. Helium almost meets all the elements of DePIN: node economy, miner model, value network, and crowdsourced incentives. It is a leading project in the DeWi) decentralized wireless communication ( field. At the end of last year, Helium Mobile collaborated with T-Mobile to launch a $20 communication package service aimed at traditional users. When users transmit data using the Helium network, they not only receive token rewards but also enjoy reliable communication services. At the same time, Helium also helps T-Mobile solve signal coverage issues in remote areas of the United States, creating a win-win situation for all three parties. The large number of traditional users it attracts is driving the DePIN to break out of its niche and is expected to accelerate the widespread adoption of blockchain technology and Web3 networks.
Helium and Filecoin both belong to the DePIN category, but Helium places more emphasis on hardware, using hardware revenue to support the rise of data services on the second curve, building an independent ecosystem while reaping Alpha and Beta returns. Although Helium was involved in false advertising last year and faced issues such as a lack of popular programming languages leading to development difficulties, a series of actions at the end of the year have once again opened up Helium's second curve growth. As the largest DePIN project to emerge first, it undoubtedly brings some insights to the DePIN ecosystem.
3. The explosive rise of DePIN is based on the dual curve theory
The concept of "Second Curve" is found 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 to initiate a new growth curve when it reaches the peak of the traditional growth curve, in order to avoid stagnation or decline.
From the successful experiences of DePIN projects, it is clear that the business logic of DePIN inherently points to hardware sales as the first curve of project development, with the monetization of data value networks building on the first curve, serving as the guiding principle for the second curve of development.
Product research and development, as well as operational capabilities, are the keys to ensuring the rise of the first curve; to initiate the rise of the second curve, two capabilities are required: first, the organizational capability of a decentralized system, and second, the service capability on the demand side.
In the context of the DePIN ecosystem, project parties must first ensure the smooth operation of the data value network, based on the capability of organizing and undertaking large-scale data transmission hardware networks. Only then can the demand side be successfully integrated, ultimately providing high-quality, standardized data services. This will complete the hyperbolic dual rise of the business and form a positive cycle within the project ecosystem.
( 3.1 Hardware value is the first curve in creating value.
In the first rise curve, the business will experience rapid growth in the early stages, then gradually reach a peak. The growth momentum of the DePIN project's first curve comes from the revenue and profits generated by hardware sales.
Traditional infrastructure, especially in areas such as data storage and communication services, has a centralized service provider or entity whose business logic is linear: 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 large enterprises to bear high costs during the initial operation of the business, including hardware purchases, land leasing, deployment, and hiring maintenance personnel at all stages. The traditional IoT operation model has created a data value chain where data is transmitted as a production factor in an independent and linear manner, and each ecosystem has a completely independent data value chain.
The DePIN project splits the centralized supply side and adopts a crowdsourcing model to establish a hardware network.
Therefore, the first step in dismantling centralized infrastructure is key to achieving the first curve rise of 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 preselling "mining machines", purchasing with airdrop gifts, etc.; transferring the enormous infrastructure costs to the supply-side users to achieve a low-cost lightweight launch. Supply-side users also become "shareholders" of the project party in the form of holding hardware, helping the project party deploy the hardware network with the expectation of earning money from future mining.
Unlike traditional centralized device providers, the updates and maintenance of DePIN devices are jointly carried out by project parties and miners, meaning that device providers are only responsible for the research, development, and sale of devices, while updates and maintenance are completed by supply-side users. In the process of collaboratively maintaining and building the hardware network, the interaction with project parties and middleware strengthens the community identity of miners ) and supply-side users ###, as well as their recognition of the DePIN project.
If a DePIN project can smoothly execute narrative marketing, mining machine sales, and community operations; then, the essential elements of the project's first growth curve will be fully assembled, ultimately forming the first curve of increasing network coverage scale - increasing token incentives - attracting more miners to join.
As of now, the data on active nodes shows that Hivemapper, Helium, and Natix are 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's business performance being particularly outstanding:
Helium:
Hivemapper:
In terms of hardware revenue, there are also other projects that have taken alternative paths to achieve good rise. For example, Jambo has excelled in sales in the African market by focusing on mobile phones. OORT has technological barriers in cloud computing and edge computing, achieving 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 have explored new ways of integrating DePIN across various industries.
Jambo: