DePIN: The Next Big Crypto Story?

DePIN, i.e. decentralized physical infrastructure networks, are networks that protect and operate real-world infrastructure by taking advantage of the decentralized structure of blockchain technology.
The cryptocurrency industry and blockchains as a whole are still in their infancy and continue to search for true product Sunday harmony. Although we have seen examples of this in the past through innovations such as DeFi, NFT and tokenomics, there are a large number of use cases of blockchain that have not yet been fully explored. One of them is DePIN, or decentralized physical infrastructure networks.

Decentralized physical infrastructure networks are networks that maintain and operate real-world infrastructure by taking advantage of the decentralized structure of blockchain technology. There are various DePIN projects ranging from telecommunications to storage and computing. Unlike centralized networks owned and operated by a single organization, they usually make use of blockchain-based tokens as a mechanism that encourages individuals to contribute to the network.

What makes DEPIN so exciting is its potential to improve the way we think about and interact with physical infrastructure. When a token is used to encourage network participation and interaction, the flywheel effect begins to occur. Just as the higher valuation of Bitcoin encourages more people to start mining, leading to a stronger network and therefore a higher valuation, DePIN strengthens this cycle by linking the token value to the strength and adoption of the network. They offer a more democratic, efficient and scalable approach to the creation and maintenance of physical infrastructure. On a small scale, DePIN may not make much sense, but if it can be adopted en masse, it can see extraordinary growth and become a stable part of our modern infrastructure.

The best example of the DePIN project is the Helium project, a Solana-based mobile network project. Contributors can purchase and operate access points that allow supported devices to receive an internet connection without having to connect to a base station or Wi-Fi network. The use of this network is paid with HNT, which is also distributed to access point operators. Helium's network can be used by a variety of devices, and they recently released an initiative to build a 5G phone network in the United States for an incredibly cheap price of about $ 20 per month.

Another fruitful example is Filecoin, a network built on the InterPlanetary File System standard, which encourages people with extra hard disk storage to archive information in a decentralized way. People who want to store data pay archivists for an FIL, allowing the data to be distributed worldwide, and storage providers receive an FIL in return. The network is able to store billions of gigabytes of data without the risks associated with keeping the data in a centralized entity, such as censorship, hacking, or downtime.

DePIN protocols are usually built on Solana to take advantage of high speeds and low transaction fees. Unlike modular chains such as Ethereum or layer-2, Solana makes use of a single atomic state machine, which makes network and infrastructure management much more streamlined. In addition, due to the amount of data and interactions that take place, even the fastest Layer-2s may not be able to meet the DePIN Oct.

Decentralized Physical Infrastructure Networks are an exciting new way for individuals to collaborate and create something bigger than themselves, using blockchain and network effects to drive long-term growth and adoption. Although a massive DePIN protocol adopted worldwide has not yet been created or proven to be a viable product, there is definitely excitement in this industry from the point of view of both institutions and consumers.