Youbi Capital: Why We Invest in Meson Network?

Author: Melrose, Chen Li, Li Gong

Corresponding Author: Bjeast, Enzo, Youbi Investment Research Team

In late January, the leading AI DePIN project Meson announced a strategic round of financing with a valuation of $1 billion, and it will soon be listed for spot trading on OKX on April 29. Youbi Capital is honored to have participated in the seed round investment of Meson early on, alongside other excellent investors such as HashKey Capital, SevenX Ventures, and Mask Network.

What is Meson Network?

A model that grows bandwidth and IP resources in long-tail markets through DePIN, combined with IDC to provide high-quality data collection and distribution services.

Meson Network is a vast decentralized bandwidth trading market that aims to build the infrastructure for a public data distribution network. Suppliers from different regions around the world can offer their idle commercial-grade bandwidth or home bandwidth at relatively low prices to users with data transmission needs. Meson Network primarily adopts the shared economy model of DePIN to cater to the diverse and rich long-tail market, forming a complete business system. In addition, Meson collaborates with IDC service providers to offer higher quality services to enterprise users, meeting comprehensive market demands.

Meson Network consists of three main components:

1) Gateway X primarily targets global enterprise-level bandwidth and IP providers. Large server owners, such as internet data centers or cloud service providers, can choose to offer their idle bandwidth resources on the Gateway X platform to provide stable and reliable storage and data transmission services to enterprise clients. Currently, Meson has partnered with AWS to help participants quickly set up Meson nodes. Meson's support for enterprise-level infrastructure somewhat mitigates potential issues and risks associated with DePIN. Commercial-grade service equipment can provide higher quality infrastructure support for Meson, ensuring operational stability and laying a solid foundation for collaboration with other well-known projects, such as BNB Chain, Arbitrum, and Arweave.

2) GaGaNode, unlike Gateway X, mainly supports individual devices supplying the bandwidth market. Users can use any idle device to provide resources for Meson Network, such as Android phones, TV Boxes, Raspberry Pi, and PlayStation, which can all become nodes in the Meson network. This shows that Meson offers great flexibility in device selection for network contributors, fully aligning with the core concept of DePIN. The diversity of devices and low participation threshold facilitate the large-scale expansion of the network, increasing the number of nodes and supporting more diverse geographical locations, thereby helping Meson provide higher quality IP data transmission services.

3) IPCola is a direct IP service purchasing platform for users, aggregating the bandwidth resources output by nodes from Gateway X and GaGaNode and providing them to users at appropriate prices. The revenue generated will flow to the contributing nodes. IPCola is the most direct business model for Meson to monetize traffic, fully converting the resources provided by nodes into revenue rather than just for data transmission. Additionally, IPCola can offer diverse IP services such as dynamic IPs or static residential IPs, essentially covering all user IP needs.

Meson Network Data Overview

Currently, Meson Network boasts over 210,000 nodes, with nearly 40,000 nodes provided by enterprise-level service providers. The nodes are distributed across various continents, with a significant number deployed in regions like Asia, Europe, and North America, where the Web3 industry is more developed. Furthermore, the number of GaGaNodes has reached nearly 180,000, with a large number of individual participants contributing to Meson's bandwidth resources. From the data perspective, Meson Network's performance is very strong, fully leveraging the advantages of DePIN and attracting enough personal devices to join the network. At the same time, such a large number of nodes and extensive geographical coverage provide strong support for the quality of Meson Network's products.

DePIN + AI: The Public Data Collection Engine

If GPU resources are the new "oil," then undoubtedly, data is the new "gold" for AI, and the public data obtained by Meson is crucial.

Currently, influenced by the AI wave, more and more professionals in the blockchain industry are beginning to explore the combination of blockchain and artificial intelligence. As the products of Crypto + AI become increasingly diverse, the infrastructure support will also be very important. Most DePIN projects currently focus on providing computing power for AI, while Meson is the only product dedicated to collecting public data for AI, providing a more decentralized and diverse data set for AI training, becoming the "gold" in the AI training process.

The first step for Meson Network to become the "gold" for AI is to collect IP in a DePIN manner. GaGa Node, as the physical hardware layer, helps Meson collect idle bandwidth from around the world in a decentralized way through token incentives.

For IP resources, the breadth of geographical coverage is the most important. Under this premise, the integration method of DePIN is more efficient compared to centralized models. Meson does not need to set up branches around the world or negotiate with local agents to obtain network access from different regions, allowing idle IP resources to flow to Meson instead of the other way around. Moreover, the low participation threshold and minimal technical requirements for Meson bandwidth nodes can better unleash the potential of the DePIN model.

Once GaGa Node aggregates all bandwidth devices, IPCola processes these resources to form a data collection layer and provides it to users in the form of APIs. Users can use the API to collect public data that is restricted by IP addresses, as some websites will limit network requests from your IP address after a certain number of visits, such as CoinMarketCap. After querying token information 45 times, CoinMarketCap will block your IP address and no longer provide more information. By utilizing different IP addresses in IPCola, users can collect this public data that should be unrestricted to a greater extent, ultimately forming a dataset for AI training. This creates a convenient C-end service, and different IPs can help retrieve more diverse data content from different countries and regions, making such rich data invaluable for AI models.

The entire business process of Meson Network has far exceeded the limitations of DePIN and has become a database infrastructure for AI, similar to the business scope of Google Cloud and Google Crawlers in the IoT industry. In terms of valuation, both have market values exceeding $17 trillion. Although Meson, as a Web3 project, may not expand as rapidly, this reference leaves ample room for imagination regarding Meson's business potential. Currently, IPCola has already generated millions of dollars in real revenue, truly reflecting the genuine demand-driven revenue.

Overall, the large-scale aggregation of public data by IPCola plays a crucial role in AI training and Crypto + AI-type projects. Meson's products perfectly align with the demands of artificial intelligence, making it highly likely that Meson will follow the narrative cycle of AI to achieve value discovery and explosive growth.

Guardians of Blockchain Infrastructure

Youbi Capital chose to invest in Meson because of the importance of Meson as a data transmission infrastructure for the entire blockchain industry.

In addition to its significant support for AI, Meson is also crucial for infrastructure. Currently, with the emergence of numerous Layer 1 and Rollups in the blockchain industry, the increasing infrastructure poses significant challenges for the operation of blockchain networks. For Layer 1, the emergence of more public chains means that nodes with broader geographical coverage will join the network's operation, and long-distance network communication delays have become a challenge for synchronization between nodes and the rapid operation of blockchain. Meson Network's data transmission acceleration provides an efficient solution, allowing Meson's nodes to serve as relay points for blockchain ledger data transmission, distributing information to nearby public chain nodes to achieve rapid blockchain network synchronization. Similarly, for Layer 2, Meson can help second-layer networks cache the increasing transaction data to support nodes in validating transactions. The emergence of Meson ensures the performance of Layer 2 networks in handling massive transactions. Currently, Meson has partnered with several well-known blockchain projects, such as:

1) BNB Chain successfully reduced the data snapshot time between BSC nodes from 20 hours to 1 hour by utilizing the data distribution acceleration provided by Meson Network's numerous global nodes, greatly improving BSC's network efficiency.

2) Arbitrum has also partnered with Meson Network to launch a decentralized RPC service, significantly optimizing request distribution between nodes and enhancing network stability and performance.

3) OKX Chain has integrated Meson Network to ensure the security of its network operations, preventing single points of failure that may arise from centralized data distribution services, while also accelerating network communication between its nodes.

Like Layer 1 and Layer 2, decentralized storage has the same demand for efficient data transmission and synchronization. In the direction of decentralized storage, the extensive node coverage provided by Meson can accelerate user access and retrieval of stored data. The alleviation of network pressure and the reduction of communication distances can significantly shorten the latency when users access data. Therefore, with its excellent infrastructure services, Meson has become the largest decentralized gateway behind IPFS and Arweave, and Arweave's co-founder Sam Williams has also invested in Meson.

Overall, the services provided by Meson align perfectly with the hard demands from blockchain infrastructure and decentralized storage, supporting the secure and rapid operation of the blockchain industry infrastructure, making it a guardian of blockchain networks.

Recognition from Top Research Institutions

Meson Network has a significant possibility of breaking into the top 10 of DePIN.

At the end of last year, the top investment research institution Messari released the "State of DePIN 2023" report, summarizing and evaluating the overall performance of the DePIN sector over the past year. From the report, it is evident that Messari has high expectations for the future development of DePIN. Messari also specifically predicts that by around 2024 to 2025, several Asian DePIN projects will enter the top 10 in market capitalization, with Meson Network prominently listed among them. This indicates Messari's recognition of the value of Meson Network, and we are very optimistic about Meson Network's future development performance.