MT Capital Research Report: DePIN Reshaping the Decentralized Future of Physical Infrastructure
The core definition of DePIN lies in bringing real-world users into Web3, achieving cost-effectiveness and socialization through decentralized networks.Author: Ian, Xinwei, Severin, MT Capital
TL;DR
DePIN Overview: Decentralized Physical Infrastructure Networks (DePIN) combine the physical world with Web3, reducing costs and improving efficiency through decentralized technology. They are widely applied in computing, storage, wireless networks, and more, ranging from traditional fixed devices to the new generation of portable and wearable devices, with vast market potential.
Investment Trends and Projects: DePIN projects have shown significant growth during both bull and bear market cycles, covering various types including wireless networks, mapping, connected vehicles, agriculture, drones, weather, and energy. Investment institutions have expanded from Europe and the U.S. to Asia, with a continuous increase in participating institutions and investment amounts, indicating strong interest in the DePIN field.
Market Demand and Potential: The emerging DePIN market includes a variety of sectors such as health data, weather, energy, bandwidth, AI, and mobile phones, with substantial market space and high growth rates. The energy and mobile phone markets, in particular, show great potential, while the year-on-year growth rates for health data and AI markets are also impressive.
Project Ecosystem and Blockchain Choices: Ethereum and Solana have emerged as the primary choice chains for existing and emerging DePIN projects, respectively. Solana attracts numerous new projects due to its high performance, low costs, and strong community support, gradually becoming the preferred platform for DePIN projects. Representative projects like Render, Helium, and Hivemapper showcase the diverse applications of DePIN. Core players like Solana and IoTeX provide robust technical support and ecosystem environments for DePIN projects, driving rapid development.
Modular Blockchain Trends: Modular design significantly enhances the scalability and adaptability of DePIN. By standardizing interfaces and interchangeable components, DePIN can flexibly adapt to different application scenarios and technical requirements, facilitating rapid deployment and maintenance of networks.
Evolution of Token Economics: From early fixed incentive models to current dynamic incentive mechanisms, DePIN projects like Helium ensure sustained growth and healthy development of the network through measures such as adjusting incentives for new and old devices, regional incentive policies, and time-based incentive adjustments.
Definition of DePIN
DePIN, short for Decentralized Physical Infrastructure Network, literally means "decentralized physical infrastructure network." Here, "De" stands for decentralized, "P" represents physical, "I" refers to infrastructure, and "N" denotes network.
The core definition of DePIN lies in bringing real-world users into Web3, achieving cost reduction and socialization through decentralized networks. In today's world, especially in the realm of physical businesses, DePIN aims to lower costs and increase efficiency through decentralized technology.
Previous studies and reports have often focused more on the infrastructure aspect of DePIN, while this report (for the full PDF version, please download from the official website) emphasizes the decentralized part, striving to showcase the diverse DePIN markets and investment opportunities in the future.
Types of DePIN Projects
Classic DePIN Devices:
Characteristics: These devices are typically immobile and fixed in a certain location.
Main Business: Includes computing, bandwidth, and storage.
Market Characteristics: The market for classic DePIN projects leans towards technology, especially in areas like AI computing power, attracting significant funding and traffic. This market is large but highly competitive, representing a red ocean.
Representative Projects: Filecoin, RNDR, etc.
New Generation DePIN Devices:
Characteristics: These devices are compact and flexible, portable, and even wearable.
Main Business: Services related to daily life, such as health monitoring, weather forecasting, and mobile phone functions.
Market Characteristics: The market for new generation DePIN projects is more oriented towards daily life and is low-cost, suitable for everyday applications. This market is diverse, has a wide range of applications, and is yet to be deeply explored, representing a blue ocean with enormous potential.
By comparing these two generations of DePIN projects, it is evident that DePIN technology is continuously evolving, and application scenarios are expanding. From traditional fixed devices to today's more flexible and portable devices, the market prospects for DePIN are increasingly broad, covering various needs from high-tech fields to daily life. The traditional DePIN market is large and highly competitive, while the innovative DePIN market is diverse, with a wide range of applications yet to be explored, representing a blue ocean with significant potential.
New Ecological Landscape of DePIN Investment
In this bull market cycle, the number and variety of DePIN projects have significantly increased, with new lightweight DePIN projects emerging, including AI, wristbands, watches, and other wearable devices that collect health data, as well as numerous portable lightweight physical devices for DePIN.
2022.1.1 - 2023.1.1
A total of 19 DePIN projects received financing, with an average disclosed financing amount of 18M. Excluding Helium's large financing of 200M in round D, the average financing amount is 5.9M.
Project types include wireless networks, mapping, connected vehicle data, agriculture, drone imagery, weather, electricity markets, and DePIN infrastructure, with the highest number of projects in the wireless network category, reaching 7.
2023.1.1 - 2024.1.1
A total of 9 DePIN projects received financing, with an average disclosed financing amount of 7.2M, significantly lower in quantity than in 2022 (bear market), but up 22% in amount compared to 2022.
Project types include wireless networks, decentralized computing, mapping/geospatial data, weather, and DePIN infrastructure, with a significant decrease in the number and categories of financing. (The bear market requires more reasonable business scenarios and models.)
2024.1.1 - 2024.5.20
A total of 26 DePIN projects received financing, with an average disclosed financing amount of 6.5M. The number of financing has significantly increased, while the financing amount has decreased.
Project types include decentralized computing, connected vehicles, IoT, wireless networks, FHE, mapping, meteorology & environment, bandwidth, DePIN infrastructure, mobile phones, energy, storage, and mixed reality.
Newly added undisclosed financing types include AI, VPN, wristbands/watches, and other wearable and portable device projects (health data).
source: MT Capital
Number of DePIN Projects and Institutions
In the previous cycle, DePIN participating institutions were predominantly from Europe and the U.S., while this cycle has gradually seen more Asian institutions emerging, demonstrating strong interest from Asian institutions in DePIN. The number of DePIN projects has also significantly increased, with over 135 secondary DePIN projects and over 130 primary DePIN projects cumulatively.
Projects:
• Secondary market projects: 137
• >$1B FDV: 20
• $500M - $1B: 19
• $100M - $500M: 48
• $50M - $100M: 16
• $30M - $50M: 14
• $10M - $30M: 12
• <$10M: 6
• Primary market projects: 133
• Since the start of the current bull market cycle (from October 2023 to present), a total of 8 projects have raised over $2 million, and 6 projects have raised over $10 million.
source: MT Capital
Institutions:
Previous cycle:
• Andreessen Horowitz (A16z)
• Multicoin Capital
• HashKey Capital
• IOSG Ventures
• Spartan Group
• Borderless Capital
• Lattice Ventures
• Variant Fund
• Delphi Digital
• Big Brain Holdings
• Cogitent Ventures
Current cycle:
• OKX
• Animoca Brands
• JDI
• IoTeX
• FMG
• Waterdrip Capital
• MH
Market Demand for DePIN
In the previous cycle, DePIN sub-tracks represented by computing power, storage, wireless networks, and mapping continued to see new emerging projects. This cycle has added new sub-track categories focused on health data, wearable devices, weather, energy, bandwidth, AI, and mobile phones.
From the demand side, the energy market and mobile phone market have enormous market space, while the health data market and AI market not only have large market space but also very high year-on-year growth rates, with a very objective market scale.
Market: (Number of primary market projects + Number of secondary market projects)
Health (5+/), Weather (9+1), Energy (15+10), Computing Power (17+29), Storage (7+19), Wireless Networks (9+11), Bandwidth (6+4), Mapping (3+2), AI (8+13), Mobile Phones (5+)
Previous cycle market project numbers
• Computing Power: 17+29
• Storage: 7+19
• Wireless Networks: 9+11
• Mapping: 3+2
Emerging market project numbers
• Health Data (Wearable Devices): 5+ /
• Weather: 9+1
• Energy: 15+10
• Bandwidth: 6+4
• Mobile Phones: 5+
• AI: 8+13
source: MT Capital
Market Size and Growth Rate
• Health Market: $243B, CAGR 17%
• Weather Market: $7B, CAGR 7%
• Energy Market: $880B, CAGR 8.4%
• Computing Power Market: $95.7B, CAGR 6.8%
• Storage Market: $108B, CAGR 22%
• Wireless Network Market: $500B, CAGR 12%
• Bandwidth Market: $8.6B, CAGR 13.75%
• Mapping Market: $19B, CAGR 12.5%
• AI Market: $150B, CAGR 36.8%
• Mobile Phone Market: $484B, CAGR 7.3%
source: MT Capital
Blockchain Choices and Device Types
source: MT Capital
Currently, among secondary market DePIN projects, the highest number is on the Ethereum chain, with a total of 70 DePIN projects choosing to build on Ethereum, accounting for 81% of the total.
Among the collected primary projects, the number of Solana ecosystem projects is 28, accounting for 62% of the total. Solana is gradually becoming the primary public chain for the new round of DePIN projects.
source: MT Capital
From the perspective of device types, the newly added energy and sensor device categories have more project numbers. Additionally, there are more projects using Wearable, Portable, and Home Device types as physical hardware emerging in the primary market.
DePIN Full Industry Chain
Upstream Supply Chain
- Hardware Manufacturing and Supply
Hardware Suppliers: Produce various devices and sensors for DePIN networks, such as GPUs, servers, IoT devices, wireless devices, etc. For example, LoRaWAN hotspots provided for the Helium network and dashcams provided for Hivemapper.
Specialized Hardware Manufacturers: Some specialized hardware manufacturers provide custom hardware for specific DePIN projects, such as storage miners for Filecoin and GPUs for the Render network.
- Chips and Semiconductors
Chip Manufacturers: Companies like NVIDIA and AMD provide high-performance GPUs for computing networks like Render and Akash, which are core to processing AI workloads and complex computing tasks.
- IoT Devices
Sensor Manufacturers: Provide sensor devices needed for environmental monitoring, traffic data collection, etc. For example, Bluetooth sensors in the Nodle network and noise pollution detectors from Silencio.
Smart Devices: Such as smartphones and other mobile devices, which can be part of the sensor network for data collection and transmission.
- Power and Energy Devices
Energy Equipment Suppliers: Provide solar panels, wind turbines, energy storage batteries, etc., for decentralized energy networks. For example, solar panels and battery systems in the Daylight Energy network.
Midstream Industry Chain
- Network Operation and Maintenance
Network Operators: Such as Helium and Hivemapper, manage and maintain the normal operation of decentralized networks, including node management, data transmission, and storage.
Service Providers: Provide infrastructure services for the network, such as cloud computing services, storage services, etc.
- Software and Platform Development
Blockchain Platforms: Such as Solana and IoTeX, provide foundational blockchain technology support for DePIN projects, including smart contract execution, data storage, and verification.
Software Developers: Develop software platforms and tools for managing and operating DePIN networks, such as the distributed storage management platform provided by Filebase and video streaming management tools provided by Livepeer Studio.
- Data Processing and Analysis
Data Analysis Companies: Process and analyze data collected from sensor networks, providing valuable insights and services to users.
AI and Machine Learning Services: Such as Beam, provide cloud-based AI computing services, distributing model training and inference workloads to decentralized GPU networks.
Downstream Industry Chain
- Applications and Services
Enterprise Clients: Utilize services provided by DePIN networks to enhance their business efficiency, such as logistics companies using mapping data from Hivemapper and agricultural companies using high-precision positioning data from Geodnet.
Consumer Applications: Such as Teleport's shared mobility application and DIMO's vehicle data platform, providing convenient services to consumers and rewarding them through user-contributed data.
Smart Cities and Public Infrastructure: Utilize data and services from decentralized networks to optimize urban management and public services, such as energy management and traffic management.
Modular/Data Layer/Middle Layer
Modular blockchains optimize scalability, security, and flexibility by dividing core functions (such as execution, consensus, data availability, and settlement) into different layers. For example, Ethereum enhances data availability and processing capacity through sharding architecture and rollups, while Cosmos achieves cross-chain interoperability and high customization through the IBC protocol and Tendermint consensus mechanism. The advantages of modular blockchains include higher transaction processing capacity, enhanced security, and greater development flexibility, which will further drive the development of blockchain technology in the future.
The modular trend of DePIN significantly enhances its scalability. Modular design allows DePIN to flexibly adapt to different application scenarios and technical requirements, simplifying network deployment and maintenance through standardized interfaces and interchangeable components. For example, the Render network achieves scalability from image rendering to AI model training through a modular structure, expanding the service range and market potential of the network. Additionally, Filecoin's modular design allows it to expand storage services, adding hot storage and data computing capabilities, further enhancing the practicality and attractiveness of its network. The modular trend not only improves the technical compatibility and upgradeability of DePIN networks but also allows independent modules to develop and optimize independently, accelerating innovation and progress across the entire network ecosystem. This flexible and efficient architecture greatly enhances the scalability of DePIN, enabling it to respond more quickly to market demands and technological changes, promoting the widespread application and development of decentralized infrastructure.
Representative Projects
DePHY
DePHY is a development framework designed for DePIN, significantly reducing development costs and time through key features such as messaging layers, DID (Device ID), open-source hardware design, off-chain computing networks, and re-mortgaging layers, supporting any standard interface hardware for rapid, efficient, and secure deployment of decentralized infrastructure projects.
PINGPONG
PINGPONG is a DePIN liquidity and service aggregator that optimizes and maximizes mining returns across multiple networks through innovative tools and solutions.
DePIN Track Platforms and Players
Solana
Solana is becoming the new super infrastructure for DePIN. Its high performance, low network fees, strong developer and user community, and high purchasing power make it the preferred launch network for many DePIN projects. Some established DePIN star projects like Render and Helium have achieved better development after migrating to Solana, demonstrating the vitality that Solana's robust infrastructure and extensive community user base bring to DePIN projects. Solana is gradually attracting emerging and cutting-edge DePIN projects from various categories, including Grass, Natix, and Exabits, and is progressively improving its DePIN ecosystem.
Representative Projects
Render
Render Network is a decentralized GPU rendering platform that connects artists with GPU providers using blockchain technology to achieve scalable, cost-effective rendering solutions.
Hivemapper
Hivemapper is a decentralized mapping network that creates detailed real-time maps using blockchain technology and crowdsourced dashcam data.
Helium
Helium is a pioneering DePIN project that has created a decentralized wireless network, allowing IoT devices to connect globally through a distributed hotspot network.
Natix:
Natix Network is a blockchain-based crowdsourced camera network for creating real-time world maps.
Exabits:
Exabits is a decentralized infrastructure for AI and compute-intensive applications. It allows users to provide distributed GPU services, data storage, or expertise to the AI community without a central authority or intermediary.
Grass:
Grass is a DePIN project developed by Wynd Network that allows users to monetize their unused network resources by adding their connected devices to a decentralized network designed to provide data for AI training.
EV3
EV3 is an investment firm driven by investment philosophy, supporting outstanding entrepreneurs building DePIN. By investing up to $1 million in early projects, EV3 aims to unlock the next $100 trillion global GDP through next-generation open infrastructure networks (such as telecommunications, logistics, energy, cloud computing, and AI). Founded by institutional-trained investors Mahesh Ramakrishnan and Salvador Gala, EV3 combines deep industry expertise and long-term partnerships to gain support from leading investors.
Representative Projects
3DOS
3DOS is the world's largest decentralized on-demand manufacturing network, aiming to revolutionize manufacturing through blockchain technology and 3D printing. The platform allows anyone to upload designs, receive royalties, and manufacture on demand globally.
Zonal
Zonal is developing a decentralized network based on micro-location protocols, utilizing wireless communication technologies such as ultra-wideband (UWB) and low-energy Bluetooth (BLE) to provide highly reliable global and indoor positioning services, validating real-world interactions. Its goal is to create a unified protocol that provides location verification tools for various services and businesses.
XNET
XNET is a next-generation mobile operator that establishes decentralized networks using blockchain technology. By utilizing CBRS spectrum, XNET aims to create a reliable industry-grade neutral host network. The project's goal is to address inefficiencies and capital intensity in the telecommunications industry through its distributed wireless access network (RAN).
IoTeX
IoTeX is an open platform for modular AI + DePIN infrastructure, aiming to bridge smart devices and real-world data with Web3, allowing Web2 to easily and effectively access blockchain, creating a decentralized open ecosystem of real-world data and scenarios. Through modular construction, developers can connect a full range of innovative applications from smart wearables, connected vehicles, green energy, and environmental data to smart living and smart industry in Web3.
As of the first quarter of 2024, the IoTeX network has 108 active nodes, with a total staking value of $29 million, a 73% quarter-on-quarter increase. The average staking participation rate has reached a historic high of 40.6%. Additionally, node rewards have increased by 71% quarter-on-quarter, reaching $3.3 million.
IoTeX provides a complete "plug-and-play" product and tools, enabling blockchain-driven IoT applications to be efficiently built and deployed. The platform is divided into four layers: hardware layer, middleware, tool layer, and blockchain layer. Since its inception, IoTeX has raised over $90 million to support its R&D and market expansion. IoTeX's solutions support various IoT ecosystems, such as shared economy, smart home, autonomous driving, and supply chain management.
Representative Projects
Network3
The Network3 project is a Layer 2 blockchain platform integrated with AIoT technology, aiming to provide efficient model training and validation tools for AI developers while empowering users to earn cryptocurrency by running nodes.
Inferix
Inferix is a decentralized GPU visual computing platform dedicated to 3D/AR/VR rendering and AI inference.
Wayru
Wayru Network is a decentralized wireless network that achieves various smart functions through WayruOS and the Wayru Connectivity Superapp.
DePIN Sub-Tracks by Physical Hardware Devices
source: MT Capital
source: MT Capital
Track Mapping
Sensor Track
We define "sensors" as outdoor sensors that help users collect various types of data, such as mapping, weather, and vehicle information. After collecting data, users can contribute their data to create a data value network and receive corresponding token rewards. DePIN projects can aggregate this user-shared data to provide more diverse data samples for B-end clients and capture commercial revenue from Web2.
Representative Projects
Mapping Network
Hivemapper
Hivemapper is a decentralized mapping network that creates detailed real-time maps using blockchain technology and crowdsourced dashcam data.
Connected Vehicle Data Network
DIMO
DIMO is a decentralized IoT vehicle data DePIN network that enables vehicle owners to collect, use, and monetize their vehicle data.
Positioning Network
Geodnet
GEODNET is a blockchain-based global earth observation decentralized network that significantly improves GPS accuracy using real-time dynamic technology (RTK).
Wireless Network Track
Mobile Wireless Network:
Market Size and Growth: In 2022, it accounted for over 76% of the telecommunications industry market share, driven primarily by 5G and IoT technologies. The compound annual growth rate (CAGR) is expected to be 6.2% from 2023 to 2030.
Role: Provides extensive personal and commercial connectivity through cellular technology. Supports various devices and applications, enabling mobile communication and data services.
Future Outlook: Demand for mobile wireless networks will increase due to rising demand for higher bandwidth, advancements in 5G technology, and integration of IoT devices.
Helium
Helium is a pioneering DePIN project that has created a decentralized wireless network, allowing IoT devices to connect globally through a distributed hotspot network.
Fixed Wireless Access (FWA):
Market Size and Growth: As an alternative to wired broadband, especially in areas where laying cables is impractical, it is experiencing rapid growth. The market size is expected to grow from 130 million connections at the end of 2023 to 330 million by 2029.
Role: Provides internet services between fixed points using radio waves. Typically deployed in areas lacking mobile wireless network services, it is less costly and easier to deploy than wired mobile networks.
Future Outlook: With the enhancement of 5G technology, FWA is expected to become a more common form of internet access, particularly in underserved areas such as remote and rural regions.
Andrena
Andrena is a high-speed fixed wireless access network service provider that uses cutting-edge radio technology to create high-speed, low-cost wireless networks in urban and rural areas lacking mobile wireless network services.
Wi-Fi Networks:
Market Size and Growth: The market is valued at approximately $14.5 billion in 2023 and is expected to reach $39.4 billion by 2028, with a CAGR of 22.2%.
Role: Provides local area network connectivity for devices via radio waves, supporting a wide range of consumer electronics from smartphones to home appliances, used in limited private spaces such as homes, businesses, and public hotspots.
Future Outlook: Market growth will be driven by the increasing demand for reliable internet connectivity from smart devices and the growing implementation of IoT in both public and private sectors.
Roam
Roam is a decentralized global WiFi network that provides enterprise-level OpenRoaming WiFi roaming services to the global public.
Energy Track
The traditional energy market faces the following issues: mismatched supply and demand in regional energy networks, lack of transparent and tradable energy markets, a vast untapped clean energy market, and slow and costly expansion of energy networks… However, DePIN can help shape a new generation of decentralized energy networks.
From a market perspective: The clean energy market is experiencing significant growth, currently valued at approximately $1.4 trillion, with a projected CAGR of 9.1% from 2022 to 2032. The renewable energy market is expected to grow from $881.7 billion to approximately $1.9 trillion by 2030, with an annual CAGR of about 8.4%. Energy-related DePIN projects have enormous market space.
Power Plants:
StarPower
Starpower is a pioneering DePIN project aimed at creating virtual power plants (VPPs) through a decentralized network utilizing blockchain technology, revolutionizing energy management and distribution.
Energy Trading
Daylight
Daylight is an open-source blockchain network focused on creating a decentralized market for renewable energy and carbon credits, aimed at facilitating more sustainable global energy trading and usage.
Energy Storage
PowerPod
Powerpod aims to revolutionize electric vehicle (EV) charging by creating a shared, blockchain-driven community-owned charging station network.
Home Device Track
The home device sector focuses on leveraging decentralized technology to enhance and optimize various aspects of daily life. This sector addresses key issues such as high costs, privacy concerns, and uneven resource distribution by transforming standard home devices into decentralized network nodes. By utilizing blockchain and other decentralized protocols, these devices provide low-cost, secure, and efficient alternatives to traditional cloud services and computing power. This approach not only reduces reliance on centralized infrastructure but also empowers users with greater control over their data and resources. Furthermore, the integration of these devices enhances smart home ecosystems and gaming experiences, aiming to improve daily interactions and create a globally connected community.
FX Land
FX Land offers a distributed cloud storage solution that addresses high storage costs and privacy issues through Crowd Storage nodes and the Fula protocol.
Hajime AI
The Hajime AI project aims to create a global edge computing power supply network, providing cost-effective computing services for AI startups and addressing uneven distribution of computing resources through a decentralized platform, with future seamless integration into smart home and IoT ecosystems.
FrodoBots
The FrodoBots project uses real-world robots in a gamified manner to address the issue of embodied AI.
Wearable Device Track
In the wearable device sector, the focus is on integrating smart wearable devices with blockchain technology. They utilize advanced AI and data privacy protection technologies to provide personalized health monitoring and data management services. By enabling users to monetize their data and providing reward mechanisms, these devices encourage active participation in health management. These devices are typically made from high-quality materials, have long battery life, and strong waterproof capabilities to ensure user convenience and safety. Additionally, these smart wearable devices are compatible with mainstream mobile devices and cryptocurrency ecosystems, enhancing user health and quality of life while promoting the widespread adoption of decentralized applications and the Web3 ecosystem.
CUDIS
CUDIS is a stylish, innovative AI smart ring that motivates users by rewarding their health journeys. It features core functions such as immutable data collection and control, personalized AI coaching, health incentive tasks, and social activities.
WatchX
The WatchX project aims to integrate millions of smartwatch users into the Web3 ecosystem and provide extensive opportunities for partners within the ecosystem.
Dogewalk
A DePIN platform that integrates innovative software and hardware through GameFi and SocialFi elements to enhance interaction between pet owners and Web3 users.
Portable Device Track
Portable devices share common characteristics, such as providing convenient mobile devices and applications to enhance the Web3 experience. They focus on simplifying user interactions, improving security, and implementing data ownership and reward mechanisms. These projects integrate hardware and software solutions to facilitate the development and use of decentralized applications, particularly in mobile environments. The goal of this section is to promote the adoption and application of Web3 technology by lowering entry barriers, optimizing user experiences, and providing practical use cases.
Solana Mobile Saga
The Solana Mobile Saga project aims to lead the Web3 mobile revolution by providing top-tier hardware and robust developer resources, offering a secure and user-friendly decentralized application experience.
Universal Phone Oyster Labs
The Universal Phone project, launched by Oyster Labs, targets 800 million Telegram users, focusing on emerging markets such as India, Indonesia, and Nigeria.
Puffpaw
Puffpaw is a "quit smoking and earn" project incubated by Arweave and OrangeDAO. It helps users quit smoking and earn financial rewards through e-cigarette devices and blockchain technology.
Token Economics of DePIN Projects: Evolution from Fixed Incentive Models to Dynamic Incentives
Intrinsic Logic Analysis: Taking Helium as an Example
Early Incentive Mechanisms and Their Impact
In the early stages of the Helium project, early participants could earn very high token rewards by purchasing and deploying mining machines. This high yield attracted a large number of early users and rapidly propelled the expansion of the network. However, this incentive mechanism also brought some issues:
High profit share for early participants: Early users quickly realized high returns due to the large number of tokens they received. While this phenomenon initially drove rapid network growth, it also led to a swift increase in the token supply in the market.
Token economic volatility adjustments: Due to the large number of tokens held by early participants, they began selling tokens in the market, leading to price fluctuations and declines. New users entering the market found that the returns were far lower than those of early users, causing a slowdown in new user growth.
Network growth stagnation: As the early high yields gradually disappeared, the willingness of new users to enter decreased, slowing the expansion speed of the network and hindering project growth.
Introduction of Dynamic Incentive Mechanisms
To address the above issues, the Helium project introduced dynamic incentive mechanisms to ensure sustained growth and healthy development of the network.
Adjusting incentives for new and old devices: Helium adjusted the incentive mechanisms for new and old devices so that new device users could also receive attractive rewards. For example, increasing the initial rewards for new devices while gradually reducing the reward share for outdated devices to encourage users to purchase and deploy new devices.
Regional incentive policies: To promote balanced development of the network globally, Helium formulated differentiated incentive policies based on the deployment situation of devices in different regions. In areas with fewer devices, higher token rewards are offered to attract users to deploy devices in those areas.
Time-based incentive adjustments: Helium provides different rewards at different times to balance network load and improve device utilization. For example, users running devices during off-peak hours can receive additional rewards, ensuring stable network operation around the clock.
Device density incentives: In areas with low device density, Helium offers additional incentives to promote stable operation of devices and efficient data transmission. This not only enhances user earnings but also improves the overall performance of the network.
Specific Implementation of Dynamic Incentives
The Helium project implements dynamic incentive mechanisms through smart contracts and algorithms, ensuring real-time adjustments and fair distribution of incentives. These measures not only increase the participation enthusiasm of new users but also stabilize market expectations, preventing market fluctuations caused by early high yields.
Smart contract adjustment incentives: Through smart contracts, different device rewards are dynamically adjusted based on usage and market demand. This mechanism ensures the flexibility and timeliness of incentives.
Real-time data feedback: By collecting and analyzing operational data from devices, the Helium project can timely adjust incentives for different regions and time periods, ensuring optimal allocation and utilization of network resources.
Transparent incentive mechanisms: The transparency and openness of dynamic incentive mechanisms enhance user trust, encouraging more users to participate in network construction.
Changes in Incentives for New and Old Devices
New device incentives: To lower the entry barrier for users, new devices typically have higher initial incentives to attract early adopters. Project parties may incentivize users to purchase and deploy new devices through high token rewards and lower initial costs, making it easier for new users to participate.
Old device maintenance incentives: To prevent users from abandoning old devices, project parties provide ongoing incentives, but these incentives may gradually decrease over time. By offering device upgrade rewards and maintenance cost subsidies, project parties can adjust the operational costs of old devices to ensure their continued effective operation.
Changes in the Physical Market
Device price adjustments: Based on market demand and device lifespan, project parties will adjust the prices of different types of devices. Due to capacity, supply, and orders, new devices typically have higher costs but also higher incentives. Old devices have lower prices but can still generate stable returns, attracting users at different levels.
Secondary market trading: Devices can be traded in the secondary market, where project parties can collect transaction fees and use part of the revenue for token buybacks and burns to support token prices. This approach not only increases the liquidity of devices but also stabilizes the value of tokens.
Different Regional Markets
Regional incentive policies: To promote balanced deployment of devices globally, project parties will formulate differentiated incentive policies based on market demand and development conditions in different regions. For example, in areas with low device density, higher rewards may be offered to attract more device deployments, achieving global network coverage.
Localized support: Project parties will provide localized technical support and training in different regions to help users better install and maintain devices, improving operational efficiency and user participation enthusiasm. This localized support can effectively promote project promotion and development in various regions.
Device Density
Density rewards: In areas with low device density, project parties may offer additional rewards to achieve growth in lower density areas, promoting stable operation of devices and efficient data transmission. These rewards can include higher token incentives and device upgrade subsidies, encouraging users to maintain devices in good operating condition.
Dynamic adjustments: Project parties can dynamically adjust device density in different regions based on real-time data to ensure balanced development of the network and optimal allocation of resources. Through such dynamic adjustments, project parties can flexibly respond to market changes and optimize network performance.
Device Operating Time Periods
Time-based rewards: To balance network load and improve device utilization, project parties can set different rewards for different time periods. For example, devices running during off-peak hours can receive additional incentives to ensure stable network operation around the clock.
Load balancing mechanisms: Project parties can dynamically adjust incentives for different time periods through smart contracts and algorithms to achieve balanced distribution of network load and optimal utilization of resources. Through this mechanism, project parties can effectively manage network resources and improve overall operational efficiency.
Conclusion and Outlook
We believe that in the DePIN track, whether classic DePIN or new generation DePIN, there are sufficient categories and vast markets, with the potential to give birth to great projects with large-scale user adoption. In the future, it is highly likely that a Web3 project will emerge in this field that enters the Top 20.
The core logic of DePIN lies in the cost reduction and efficiency improvement of existing world businesses through WEB3. By bringing real-world users into Web3, DePIN not only achieves cost reduction and socialization but also significantly increases the quantity and accuracy of data sources. In the three generations of DePIN devices, from fixed devices to flexible and portable devices, market prospects continue to expand, covering various needs from high-tech to daily life.
In recent years, the variety and number of investments in the DePIN market have significantly increased, and the number of institutions and projects continues to grow. From the demand side, DePIN shows enormous potential across multiple markets (such as weather, air quality, health, AI, etc.) and device types (such as wearable devices, mobile phones, etc.). The upstream and downstream industry chains are also gradually improving, including aspects such as on-chain interaction data, device middleware, data, and hardware.
It is particularly noteworthy that the lifecycle of DePIN is theoretically longer than that of non-DePIN projects due to the combination of physical devices and token design. This gives the DePIN track enormous potential, warranting high attention and investment from investors.
Looking ahead, with the development of DePIN projects and advancements in technology, we have reason to believe that this track will give birth to more innovative and impactful projects, injecting new vitality and possibilities into the Web3 ecosystem.
Thanks for the support:
Salvador @DAnconia_Crypto from EV3
Anna @gizmothegizzer from Solana
Raullen @raullen from IoTeX
Peter from Hashkey
EO @ Future money group
Reference:
-https://messari.io/report/state-of-depin-2023
-https://messari.io/report/infrastructure-sector-brief-gpu-networks
-https://messari.io/report/navigating-the-depin-domain
-https://messari.io/report/the-depin-sector-map
-https://public.bnbstatic.com/static/files/research/depin-an-emerging-narrative.pdf
-https://htxresearch.medium.com/depin-current-state-and-prospects-ad6b1a59b3d4
-https://foresightnews.pro/article/detail/50839
-https://twitter.com/rsarrow/status/1778471355425386928?s=46
