The Road to Digital Transformation of Infrastructure: A Comprehensive Analysis of the DePIN Track
The year 2024 will be a big year for the DePIN track.With the rapid development of technology, blockchain technology has expanded from its initial financial applications to various fields. DePIN, as an emerging track, redefines the construction and operation model of infrastructure by utilizing blockchain technology and token economics principles, achieving optimal resource allocation and significantly improving usage efficiency. Many investment research institutions believe that 2024 will be a big year for the DePIN track, with enormous development potential.
1. Overview of DePIN
Definition of DePIN
DePIN (Decentralized Physical Infrastructure Networks) is a concept first proposed by the analysis agency Messari, aimed at optimizing the deployment and management of physical infrastructure through blockchain technology. According to Messari's classification, DePIN is mainly divided into two categories: Physical Resource Networks (PRN) and Digital Resource Networks (DRN). Physical Resource Networks emphasize the use of geographically relevant hardware to provide real-world goods and services, such as WIFI, VPN, and energy information sharing; whereas Digital Resource Networks focus on using hardware facilities to support the storage and computation of digital resources, such as broadband networks and data centers.
DePIN projects achieve the management and allocation of physical resources such as energy, storage space, and bandwidth through decentralized nodes and decision-making processes. In a DePIN network, each participant is not only a user of resources but may also become a provider of resources, ensuring the transparency and security of resource transactions through smart contracts and cryptographic technologies.
Characteristics of DePIN
Decentralized Management: The most significant feature of DePIN is decentralization, which reduces reliance on centralized management institutions, lowers management costs, and increases the system's resistance to attacks.
Optimized Resource Allocation: By automatically executing smart contracts, DePIN can more efficiently match resource demand and supply, optimizing resource allocation.
High Transparency and Trustworthiness: The application of blockchain technology makes all transaction records public, transparent, and traceable, greatly enhancing the trustworthiness of the network.
Incentive Mechanism: DePIN provides economic incentives for resource providers and consumers through token economics models, encouraging more participants to join and maintain the network.
Enhanced Security: The decentralized nature makes the network less susceptible to single points of failure, enhancing the overall security of the system.
DePIN projects can not only improve the operational efficiency and transparency of traditional infrastructure but also reduce costs and provide space for new business models and innovations.
2. Classification and Principles of DePIN Projects
Projects in the DePIN track can be classified based on the types of physical infrastructure resources they provide, covering various fields such as computing resources, storage resources, bandwidth resources, and Internet of Things (IoT) applications. Each category of projects not only differs in technical principles but also targets specific market demands and application scenarios.
1. Computing Resources
Computing resources typically refer to distributed computing capabilities, including the allocation and utilization of CPU and GPU resources. Blockchain technology enables these resources to be securely shared and traded in a decentralized network. Key technologies include:
Node Distributed Processing: Each node in the network can provide computing resources, automatically matching demand and supply through smart contracts.
Consensus Mechanism: Ensures the correctness and transparency of computing tasks and resource allocation in the network.
Cryptographic Technology: Ensures the security and privacy of data during transmission and processing.
Representative Projects:
io.net: A decentralized computing network that is building the world's largest AI computing cloud, supporting the development, execution, and scaling of ML applications on the Solana blockchain, combining one million GPUs to form the largest GPU cluster in the world. Recently, io.net announced its token IO's economic model, which is expected to launch by the end of April.
Render Network: A provider of decentralized GPU rendering solutions, aiming to connect users who wish to execute rendering jobs with those who have idle GPUs to process the rendering.
Akash Network: A decentralized cloud computing platform that aims to integrate underutilized computing resources globally through a peer-to-peer market, establishing a transparent market.
2. Storage Resources
In DePIN, storage resources refer to space on decentralized storage devices, which can include personal computers, data centers, or even mobile phones. The technical principles mainly include:
File Sharding: Large files are split into multiple smaller segments before storage, distributed across multiple nodes to enhance data tamper resistance and availability.
Redundant Storage: Data is stored in multiple copies to ensure that it can still be recovered and accessed if some nodes fail.
Cryptographic Technology: Data is encrypted before storage to ensure its security and privacy.
Representative Projects:
Filecoin: A decentralized storage network that allows anyone to store and retrieve data on the internet through a P2P network, with a built-in economic incentive mechanism to ensure reliable and continuous storage and retrieval of files within the specified time.
Arweave: A decentralized data storage protocol that allows data to be permanently stored and accessed on its permaweb, a secondary network that enables data access through web browsers and other means.
3. Bandwidth Resources
In the DePIN track, bandwidth resources refer to the sharing of data transmission capabilities. Projects in this category typically use the following technical principles:
Traffic Encryption: Ensures the security of data during transmission.
Dynamic Routing Algorithms: Automatically select the optimal path to ensure efficient and low-cost data transmission.
Bandwidth Tokens: Digital tokens issued through blockchain to control the usage and allocation of bandwidth.
Representative Projects:
Helium: Provides decentralized wireless network services, allowing users to contribute bandwidth resources and earn tokens by deploying Hotspots.
World Mobile: A mobile network that uses hybrid spectrum, renewable energy, and blockchain technology, utilizing unlicensed spectrum such as free-space optical communication and other radio transmitters to convert into cheaper internet access.
4. IoT Applications
The application of IoT in DePIN involves managing and operating a large number of IoT devices and the data generated through blockchain technology. Key technical principles include:
Device Authentication: Each device has a unique identity through blockchain technology.
Data On-Chain: Data generated by devices can be encrypted and stored on the blockchain, ensuring data immutability and traceability.
Smart Contracts: Automatically execute specific tasks or transactions based on data, such as automatic payments and data sharing authorizations.
Representative Projects:
IoTeX: Provides secure IoT device connection services using blockchain technology, focusing on privacy protection and data security in smart devices, creating a trusted IoT platform to provide better value for end users.
IOTA: Provides efficient microtransaction and data transmission solutions for IoT environments through its non-blockchain Tangle technology.
3. Current Development Status of the DePIN Track
As technology matures and application cases increase, DePIN projects have moved from the initial proof-of-concept stage to actual application and commercialization. By providing more economical and efficient infrastructure services, they have gradually gained market recognition and user trust. According to DePINscan, as of April 25, there are over 232 DePIN projects operating or in development worldwide, with 31 AI concept projects included. The number of active DePIN devices has reached 841,861, covering more than 175 countries and regions, with a total market value exceeding 11.8 billion USD.
DePIN projects have attracted significant attention from venture capital and investors. According to RootData, from 2022 to the end of 2023, DePIN-related projects received over 3 billion USD in investments. As of April 25, the financing amount announced for the DePIN track in 2024 has reached 97.7 million USD, with funds primarily used for technology development, market promotion, and ecosystem construction. According to CoinGecko data, as of April 25, the market capitalization of DePIN-related tokens has exceeded 26 billion USD, demonstrating its rapid growth potential.
During the Hong Kong Web3 Carnival in April, UWEB, in collaboration with JDI Global, released the "2024 DePIN Development Report," predicting that by 2028, the market size will reach 3.5 trillion USD and will play an increasingly important role in the development of global infrastructure networks.
4. Investment Opportunities and Risks in the DePIN Track
The DePIN track is gradually becoming a hotspot for investors, offering not only innovative technological solutions but also unique business opportunities. However, the DePIN track also presents both opportunities and risks.
Investment Opportunities
Technological Innovation and Application Expansion: The technological innovations involved in DePIN projects, particularly in areas such as IoT, 5G communication, cloud computing, and AI computing power, optimize the allocation of data storage, computing capabilities, and bandwidth resources, improving the efficiency and security of these resources, creating disruptive changes in traditional industries, and generating new market demands.
Environmental Sustainability: With the increasing global emphasis on environmental protection and sustainable development, DePIN projects show great potential in improving energy efficiency and reducing carbon footprints. These projects reduce energy waste through optimized resource allocation, aligning with future development trends.
Ecosystem Building and Network Effects: From IoT to cloud computing, from content distribution to smart city construction, the application prospects of DePIN technology are broad. Investing in DePIN projects is not just an investment in a single technology or service, but an investment in a rapidly developing ecosystem. As network effects strengthen and the ecosystem matures, early investors may achieve significant returns.
Global Development Characteristics: DePIN projects inherently possess the characteristics of global development, with services and products that are not limited by geography and can quickly expand to global markets. With the popularization of technologies such as 5G and AI, the practical application and market penetration of DePIN projects will further accelerate.
Regulatory Progress and Market Acceptance: Many countries and regions are gradually introducing policies to support blockchain technology and decentralized networks, which may provide broader development space and higher market acceptance for DePIN projects.
Investment Risks
Technical Complexity and Implementation Difficulty: DePIN projects often involve complex technical challenges, including data security, network stability, and cross-platform compatibility. Projects may face technical obstacles during execution and operation, such as security vulnerabilities and performance issues, which could affect the long-term stable operation of the project.
Uncertainty of Token Economic Models: Many DePIN projects rely on specific token economic models to incentivize participants and maintain network operations. The sustainability and effectiveness of these models are uncertain, which may impact the long-term stability and investment returns of the project.
Market Competition and Technological Iteration: The DePIN track faces fierce market competition. Additionally, rapid technological iteration may render some projects obsolete quickly. Investors need to pay attention to the competitiveness and continuous innovation capabilities of the projects they invest in.
Market Acceptance and User Growth: The success of DePIN projects largely depends on market acceptance and user base growth. If a project cannot effectively attract users and partners, it may lead to difficulties in sustaining its business model.
Regulatory Risks and Policy Changes: As an emerging technology field, DePIN projects may be affected by uncertain regulatory risks and policy changes. Uncertainty in government policies may lead to sudden changes in the investment environment, impacting investment decisions and project operations.
5. Outlook for the DePIN Track
Continuous Technological Innovation: Technology is the core driving force behind the development of the DePIN track. As blockchain technology continues to mature and optimize, future DePIN projects will become more efficient and secure, better serving complex infrastructure needs.
Stronger Cross-Chain Capabilities: To achieve broader interoperability and resource sharing, DePIN projects need to develop stronger cross-chain technologies, enabling seamless connections and data and resource sharing between different blockchain networks.
Expanding Market Application Scope: The market applications of DePIN projects will expand from existing fields to a broader range of industries and scenarios, from energy management to smart city construction, from IoT to supply chain management, with DePIN technology being applied in more industries to improve the operational efficiency and cost-effectiveness of infrastructure.
Increased Consumer-Level Applications: Future DePIN projects will place greater emphasis on consumer experience, developing more applications aimed at ordinary consumers, such as home automation solutions provided through decentralized networks.
Continuous Optimization of Token Economic Models: By optimizing token distribution and incentive mechanisms, ensuring that participants—whether resource providers or service consumers—receive fair returns, and exploring more ways to give tokens practical application value, such as using tokens to pay for specific physical infrastructure usage fees.
Promoting Industry Digital Transformation: DePIN technology will assist traditional industries in achieving digital transformation, improving the transparency and efficiency of industry operations. By optimizing resource allocation and utilization, DePIN projects will help achieve more sustainable development goals globally, such as improving energy utilization efficiency and reducing environmental pollution.
As an innovative track that combines blockchain technology and physical infrastructure, DePIN holds enormous potential and possibilities for continuous development in the future. With ongoing technological advancements and gradual market application expansion, DePIN is expected to become an important force driving the modernization and digital transformation of global infrastructure.
