More and more Dutch people know and can offset solar panels. But due to the convergence of technologies such as AI, crypto, Internet of Things and blockchain, you as a consumer can suddenly make money with the ‘dormant’ maintenance of countless other infrastructure networks. Decentralized Physical Infrastructure Networks (DePIN) are springing up like mushrooms. In this article I share everything about this new tech trend.
Help to find aliens. That seemed cool to me when I was a kid, when I donated a piece of my computer memory to the SETI@Home project. This was started in 1999 by scientists at the University of Berkeley. Anyone who had spare computer power could donate it to the project.
With this you could help find extraterrestrial life. Unfortunately without success and the project has now been discontinued. There are other so-called ‘Boinc projects’ from the university around biology, mathematics and astronomy.
Thanks to all the crazy new technologies, it is now also possible to earn money passively with these types of projects. Not by setting up drop shipping or selling expensive ‘financial freedom courses’, but by helping to keep energy networks, cloud storage and WiFi networks running and to provide AI computing power.
PIN so you can use your PIN again
Decentralized Physical Infrastructure Networks (DePIN) is the name for blockchain networks that use digital tokens to encourage communities (not companies) to run physical infrastructure networks (think mobility, electric vehicle charging and telecommunications). From making and maintaining to operating it. The term first appeared in November 2022. Blockchain knowledge platform Messari started using the name DePIN for its content, after a Twitter vote on the matter.
Build together, maintain together
Setting up and maintaining infrastructures such as power grids and transport systems costs a lot of money. Usually it is the big companies that do this because it is so expensive and complicated. As a result, there is little competition. This means that these large companies can determine almost everything about prices and services. But thanks to new technologies like blockchain and the fact that almost everyone has the internet these days, we can now build these systems in an open and distributed way.
That is why there is now a DePIN for more and more infrastructures. These networks are open to anyone to participate in, meaning both regular consumers and businesses can help make them better. As a thank you for their help, you receive a reward, such as crypto, a piece of the network and sometimes even products or services that the network offers.
Initially there were four sectors of DePINs (servers, wireless, sensors and energy networks), but due to rapid development, this has now been divided into two main sectors (physical and digital), containing all kinds of subsectors. This current map of Messari provides a beautiful overview
Here you see the rapidly growing ecosystem of DePIN solutions; physical infrastructure networks (vehicles for mobility networks, solar panels for energy networks, hotspots for wireless networks and servers for cloud networks).
From dashboard cams to data, from WiFi to Uber
How does that work in practice? 8 nice examples under the microscope.
- Hivemapper
Hivemapper uses the ‘drive-to-earn concept’. It allows users to participate in road image collection and create a decentralized version of Google Maps through car dashboard cameras. Users earn HONEY tokens for every piece of data they provide.
- Sorj
Storj is a great competitor for cloud storage services such as Dropbox, Amazon and Google. It allows data to be stored in a decentralized manner using blockchain technology. With encryption techniques, Storj ensures that you can store and share data securely and efficiently, without having to rely on traditional cloud storage methods. Anyone who offers space to store data will receive the STORJ token in return.
- React Network
The React Network is an energy network that rewards users for their contributions to building a decentralized and environmentally friendly electricity grid system. It aims to create stable energy by encouraging users to plug in their batteries and share excess energy.
- Helium
Helium is a DePIN project that builds a decentralized wireless network that allows users to earn tokens (HNT) in exchange for providing a wireless connection. Users can deploy Helium hotspots to provide wireless connectivity in an area in exchange for HNT tokens. It is also expanding its network with Helium Mobile. The Helium Mobile service combines the Helium network with the 5G mobile network. Users in the US can now enjoy cheaper mobile subscriptions for $20 per month.
- NATIX Network
NATIX Network builds a DePIN from smartphones that work as AI-powered cameras and collect important mobility data. Consider the amount of traffic and road conditions in certain areas. It built a dashcam app that people can download for free and leave on while driving. This app processes the feed from the phone’s camera and converts it into anonymized insights, rewarding the user with tokens for sharing these insights. The phones form the physical infrastructure network and the mechanism that powers this network and distributes the rewards runs on-chain.
- Render Network
Render Network is the first platform to decentralize the power of GPU rendering. This allows people who do creative work, such as designers and animators, to easily expand their GPU rendering projects using powerful computers around the world. The Render Network is designed to support a variety of compute-intensive tasks. All this happens quickly and efficiently via a blockchain network that connects people directly, without errors or delays. Furthermore, this system ensures that rights at work remain secure.
- Bit tensor
Bittensor is also called the baby of AI and crypto. Bitcoin has given us a decentralized currency. It took power away from banks and governments and put it back in our hands. Bittensor does the same, but for artificial intelligence (AI). So not run by the well-known names such as OpenAI, Google or Amazon, but a DePIN Network, where everything needed to run an AI comes together. The TAO token rewards people for their efforts and is worth more than 620 euros at the time of withdrawal.
- Teleport
Teleport is an open source and decentralized version of Uber. They are building a network of drivers and passengers worldwide. Instead of Uber algorithms, they set prices themselves and maximize the value they can get out of it. With this new protocol, it wants to ensure that more money goes to drivers, that passengers pay less per trip and that more money stays in the local economies.
The benefits of DePINs
I am very enthusiastic about these new technological possibilities compared to traditional physical infrastructure:
It’s decentralized One of the key benefits of DePIN is the shift from a centralized to a decentralized model. DePIN removes the dependency on a single entity or large corporation to set up and maintain the physical infrastructure.
Scaling at lightning speed By crowdsourcing physical infrastructure, DePINs can scale faster than traditional projects at a fraction of the cost by being distributed to network participants and offset by future growth and revenue. NATIX now has thousands of users and maps the world faster than Google.
Community instead of enterprise Rather than relying on a centralized enterprise, communities can own the hardware that makes up the network that delivers the goods and services they need and use. This aligns stakeholder interests to promote adoption and growth. For example, ELOOP ensures that anyone can make money when someone takes a ride in a Tesla, even the person using the vehicle.
‘Sharing Economy’ model DePIN applies the principle of the sharing economy. The costs and responsibilities of establishing and maintaining infrastructure are distributed among supply-side participants (service providers), creating a more cost-effective and equitable model.
Cheaper Startup By crowdsourcing the hardware and its maintenance, DePINs operate at a fraction of the capital and operating costs of traditional companies. While telecom companies must invest billions in the infrastructure and real estate to host it and maintain armies of employees to support it, DePIN’s incentivize network members to take care of this while everyone benefits.
Still a lot of work to be done!
In the first wave of DePIN projects, numerous models were experimented with, many mistakes were made, and a lot was learned. However, I still see a number of challenges for this cool new tech trend:
If the price of tokens fluctuates a lot, some people may be reluctant to participate in DePIN projects. People who help with the offering will be paid with the project’s tokens. But if the price keeps changing, they’re not sure if they’ll make a profit. There are ways to reduce this risk, but they are not always easy for everyone. In addition, if tokens suddenly become much more expensive, people who want to pay for services may be deterred. A good plan for how the tokens are used and priced is therefore important to keep prices stable.
People mainly participate in DePIN projects to earn money. If the price of the tokens rises, new users will be added more easily. But if the price drops, people may quit. Especially for projects with a small market value and little trade. It is difficult to solve this problem, but projects that provide really useful services will attract more people. Not just those who want to make a quick buck.
It’s really still in its infancy. Many people outside the crypto world are not yet aware of these types of projects. Let alone these kinds of ways of maintaining infrastructures. This is because many people are not yet familiar with how blockchain works and find cryptos complicated. That is why few people now see the benefits of these new, decentralized services. So there is still a long way to go in the field of awareness, adoption and education.
The future of DePIN
It is of course unlikely that DePIN will replace old infrastructures in the short term, but it can help, by using unused resources and providing services where this would be too expensive for traditional companies. In this way, DePIN networks can coexist alongside the old systems and help where they fall short. Especially in places that are difficult to reach. This also makes it easier for smaller groups or people to help build infrastructure.
When I see the first projects, what is required technically and what steps you have to go through to actually get started with it yourself, then that is still a bridge too far for most consumers. Too complicated, too cumbersome. So I also see DePIN projects collaborating with well-known Web2 companies such as Google and Amazon to make it easier for everyone. This means that users can work via a regular Web2 interface, without knowing that DePIN and blockchain technology is being used in the background. This makes using DePIN just as easy as existing web services, but with additional benefits such as lower costs and more openness.
We are on the cusp of a revolution in how we think about building and maintaining our physical and digital world. I think DePIN can play a great role in this. Hopefully this blog has inspired you to experiment with it yourself!
