LBank Research Institute: DePIN Track Analysis | The Third World of Crypto Spirit and Jevons Paradox
In the comprehensive report of cryptocurrency institutions at the beginning of 2024, DePIN is favored by numerous institutions such as Coinbase, Messari, Spartam, and Pantera, and it is believed that the DePIN track is "a strong competitor to existing Web2 businesses by leveraging cryptoeconomics to reduce structural costs."
Author: Eva, LBank Researcher
The views expressed are those of the author and do not constitute any trading advice.
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|------------------------------------------------| | TLDR: DePIN is a reshuffling challenge to traditional hardware, and will become a typical paradigm for the integration of decentralized hardware and the new economy. |
Narrative is a main thread driving the crypto industry, with investment institutions and the market creating more narratives to guide industry transformation. In a comprehensive report from crypto institutions at the beginning of 2024, DePIN was favored by many institutions such as Coinbase, Messari, Spartam, and Pantera, which believe that the DePIN track is "a strong competitor to existing Web2 businesses by using crypto economics to reduce structural costs."
The concept of DePIN is broad, encompassing storage, AI, cloud services, and more. Currently, the future of DePIN is being integrated with on-chain artificial intelligence, on-chain gaming, computing power, etc., continuously expanding its foundational services and ecosystem. In this article, the LBank Research Institute will provide an understanding of the basic concepts and innovative highlights of DePIN, and explore the currently popular DePIN projects, aiming for a comprehensive analysis of the DePIN ecosystem, exploring its current landscape, potential drivers, and future development expectations.
Overview of DePIN
DePIN stands for Decentralised Physical Infrastructure Networks, which, as the name suggests, refers to "decentralized network hardware infrastructure." In simple terms, it utilizes blockchain token incentives to allow users with "hardware devices" to establish large-scale collaborative relationships, forming an infrastructure network with service capabilities, enabling small and medium enterprises to access and utilize network resources in an economical manner without barriers.
According to data from CoinMarketCap, the DePIN sector includes a total of 135 projects, with a market capitalization of $32.6 billion.
In Messari's 2024 investment forecast, it was pointed out that the officials are more focused on the DePIN track, believing that it has a huge potential market size, is not driven by rampant speculation, and can make more practical changes to the shortcomings of real-world business processes.
Source: Messari
Innovative Highlights of DePIN
The initial definition of DePIN largely leaned towards the "physical" nature of projects, but as market demands and collaboration methods have evolved, the concept of DePIN has transformed into a product that integrates decentralized hardware with the new data economy.
What is exciting is that DePIN represents an emerging use case that extends into the real world. It uses tokens to initiate the deployment of physical infrastructure, then creates network effects, unlocking a novel design space for real-world DApps. This is not merely a concept but an application that can be tangibly experienced.
In the world of DePIN, you are both a participant and a network owner, embodying a dual identity, which is the logic system of the sharing economy. Its core advantages are cost, efficiency, and decentralization. Its main features include reducing startup costs and capital expenditures for startups, allowing network builders to have direct ownership and control, and enjoying token incentives. Finally, network users can receive high-quality, scalable services that embody the spirit of Web3.
Imagine, when you purchase a Saga phone, you can directly receive a Genesis NFT and $BONK airdrops; by connecting to the mobile network built by Helium Mobile, you can earn $MOBILE rewards just by using it daily; after dinner, going for a city walk and exercising on Sweat Economy can directly lead to a healthier lifestyle and earn $SWEAT rewards.
Overview of the DePIN Ecosystem
Broadly speaking, DePIN covers a wide range, with projects ranging from decentralized storage networks like Arweave and Filecoin, to decentralized WiFi connection devices like Helium, and community software applications like Hivemapper, all of which can be categorized under "DePIN."
The LBank Research Institute has compiled a detailed summary of the types and projects of DePIN, as follows:
In this classification, the LBank Research Institute primarily divides them based on their utility value:
Computing: Mainly involves processing and communicating information using computing systems, including Render Network, Bittensor, etc.
Storage: Storage projects ensure data preservation and provide retrieval and usage, including Filecoin and Arweave as file storage solutions.
Network: Obtaining and transmitting real-world data through networks, enabling communication between different nodes and connecting them to users, including Helium, IoTex, etc.
Analysis of Typical DePIN Projects
Given the general characteristics of DePIN, let's explore the currently popular DePIN projects together with the LBank Research Institute and track their project dynamics.
1: io.net: A rising star on Solana, a GPU network powered by AI + DePIN concept
Official website: https://io.net/
Token name: io
Total supply: Initially 500,000,000, increasing to 800,000,000 over 20 years
Distribution: 50% community allocation, 12.5% seed round investors, 10.2% Series A investors, 11.3% core contributors, 16% for R&D and ecosystem
Contract has been announced: Solana chain BZLbGTNCSFfoth2GYDtwr7e4imWzpR5jqcUuGEwr646K
Introduction: IO.NET is a decentralized computing network that has built a bilateral market around chips, where the supply side consists of globally distributed chips (mainly GPUs, but also CPUs and Apple's iGPUs), and the demand side consists of AI engineers looking to complete AI model training or inference tasks.
Latest updates: According to research from the LBank Research Institute, io.net's GPU count has reached 18,427, far exceeding Render Network's 984 and Filecoin's 1,024.
Funding situation: $30 million Series A funding, led by Hack VC, with participation from SevenX Ventures, Multicoin Capital, 6th Man Ventures, M13, Delphi Digital, Solana Labs, Aptos Labs, Foresight Ventures, Longhash, ArkStream Capital, Animoca Brands, Continue Capital, MH Ventures, and OKX, as well as industry leaders including Solana founder Anatoly Yakovenko, Aptos founders Mo Shaikh and Avery Ching, Animoca Brands' Yat Siu, and Perlone Capital's Jin Kang.
Latest updates: According to research from the LBank Research Institute, on May 2, io.net members announced the token airdrop details, with the founder stating that the first season reward final snapshot will be conducted before 8:00 on May 16.
2: Render Network: The underlying engine benefiting from ChatGPT AI big data models
Official website: https://rendernetwork.com/
Token: RNDR
Market capitalization: $4,111M
Project introduction: Render Network is a decentralized rendering platform that connects those who need GPU computing power with providers who have excess computing capacity, primarily for artificial intelligence, virtual reality, and media and content creation.
Funding: A total of $31.16 million raised, with $30 million funding led by Multicoin on December 21, 2021, with other participants including Alameda Research, Solana Foundation, Sfermion, Vinny Lingham, and Bill Lee. $1.16 million was raised through ICO on January 1, 2018.
Latest updates: According to research from the LBank Research Institute, the Render Network community has voted through RNP-014 to integrate Blender Cycles with Render, supporting over 2 million Blender users to access Render Network's high-performance decentralized GPU rendering resources.
3: Arweave: An emerging storage powerhouse
Official website: https://www.arweave.org/
Token: AR
Market capitalization: $2,866M
Project introduction: Arweave is a decentralized data storage protocol that allows data to be permanently stored and accessed on its permaweb. The permaweb is a secondary network that allows data to be accessed in a human-readable way (e.g., through web browsers). Arweave financially incentivizes data storage providers through the AR token, and its mainnet was launched in June 2018.
Funding information: A total of $14.87 million raised.
Latest updates: According to research from the LBank Research Institute, Arweave has launched a parallel computing solution AO and opened a testnet.
4: Helium: The light of DePIN on the Solana ecosystem
Official website: https://www.helium.com/
Token: $HNT
Market capitalization: $790M
Project introduction: Helium is a decentralized wireless hotspot network that provides public, remote wireless coverage for LoRaWAN-supported IoT devices.
Funding news: A total of $362 million raised. On February 19, 2024, completed a $200 million Series D funding round at a valuation of $1.2 billion, with participation from Tiger Global and FTX Ventures. In August 2021, completed $111 million in funding through token sales, led by a16z, with participation from Ribbit Capital, 10T, Alameda Research, and Multicoin Capital. In 2019, raised $15 million in Series C funding with participation from Union Square Ventures and Multicoin Capital.
Latest updates: According to research from the LBank Research Institute, in April 2023, Helium completed the transition from its own L1 blockchain to applications on Solana, hoping to enhance user coverage and liquidity, and leverage Solana's high transaction throughput for expansion.
Helium Mobile is entering the vast U.S. 5G market and has now expanded to Mexico, serving as a pioneer and one of the largest markets in the DePIN field. It is a significant venture in Solana, DePIN, and 5G innovation.
5: IoTex: IoT infrastructure
Official website: https://www.iotex.io/
Token: IOTX
Market capitalization: $482M
Project introduction: IoTex is an open-source blockchain project built specifically for Internet of Things (IoT) applications. The project's goal is to create a network where "people and machines can interact in a privacy-preserving, trustless environment." Additionally, the IoTeX ecosystem includes blockchain technology with secure hardware and computing, allowing "trusted data from trusted devices" to be used for decentralized applications (dApps).
Funding news: So far, IoTeX has completed four rounds of funding, raising a total of $35 million.
Latest updates: According to research from the LBank Research Institute, in the Q1 report of IoTeX released by Messari on May 11, it was noted that the staking value of 108 nodes on the IoTeX network reached $29 million, a 73% increase month-on-month, with an average staking participation rate of 40.6%, reaching an all-time high;
Validator rewards increased by 71% month-on-month, reaching $3.3 million.
IoTeX's verifiable off-chain computing infrastructure W3bstream is expected to launch its mainnet in 2024;
The Marshall DAO proposal was approved, aimed at improving the effectiveness of incentive programs. This proposal covers liquidity support for early DePIN projects, public product grants, and ecosystem donations.
Future Outlook for DePIN
Since the second half of 2023, the concept of DePIN has received enthusiastic market attention, with these DePIN-type projects addressing issues such as data availability, identity management, and verifiability. This is largely because DePIN is more like a consumer-facing application layer, similar to DeFi, GameFi, and SocialFi in the early crypto market, with the potential for mass adoption and will largely drive consumer demand for the underlying fundamentals.
Among them, the Solana chain, with its advantages of fast, low-cost transactions and scalability, has become a fertile ground for many DePIN project enthusiasts. Data shows that Solana DePIN has over $10 billion in FDV and a market capitalization of over $4 billion. It is foreseeable that the current DePIN market is still in a blue ocean stage, and with the later integration of artificial intelligence, ZK, gaming, privacy, and more, data will be used more efficiently, ushering in unprecedented mass adoption.
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