Imagine building a big network of Wi-Fi hotspots, solar panels, or even electric cars, but instead of a big corporation owning and controlling it all, it's built and owned by many different people all over the world. The advent of blockchain technology has revolutionized various industries, ranging from finance (DeFi) to gaming (Play2Earn) to web2 brands (digital fashion and web3 loyalty). However, one area that has remained essentially unchanged is physical infrastructure.

Traditionally, the deployment and management of physical infrastructure, such as telecom networks, cloud services, mobility networks, and power grids, have been dominated by large corporations due to their enormous capital requirements and logistical challenges. As a result, these corporations have had a near-monopoly on pricing, conditions, and services offered to end-users, leading to a lack of competition and innovation.

Most are familiar with DeFi, GameFi, SocialFi, and DAO. DePIN is a rising use case with real-world exposure. It utilizes a token to bootstrap the deployment of physical infra and create a network effect that unlocks the novel design space of real-world-based dApps.

Decentralized Physical Infrastructure Networks, or DePINs for short, are an emerging crypto trend that leverages blockchain technology to build and operate real-world physical infrastructure and hardware networks in a permissionless, trustless, and programmatic way.

DePIN enables globally distributed individuals to collectively build, maintain, and operate people-owned physical infrastructure networks without needing a single, centralized entity. By leveraging cryptoeconomic protocols, DePINs incentivize supply-side participants to build out the network, offering end-users more cost-effective and innovative services than traditional models couldn't.

DePIN’s Inception

In November 2021, IoTeX became the first Web3 project to put a name to this up-and-coming economy, calling it MachineFi or the decentralized machine economy or IoT. In July of last year, Messari spoke of Web3 Infrastructure, referring to what is known as DePIN today. Also, in July 2022, TIPIN surfaced. It stands for Token Incentivized Physical Infrastructure Networks, a network that uses token incentives to motivate individuals to contribute to the deployment and operation of physical infrastructure and hardware networks, creating a more efficient and equitable infrastructure deployment model.

Then, in August 2022, Proof of Physical Work (PoPW) came, which referred more specifically to incentive structures that allow anybody to permissionlessly contribute to a set of shared objectives, such as Helium, whose users contribute to decentralized wireless with hotspots for people to connect smart devices to the intervene in a secure, low-cost and energy-efficient way.

In September 2022, EdgeFi surfaced as a variation of decentralized infrastructure networks focusing on deploying hardware resources closer to end-users at the network's edge. In short, EdgeFi is a decentralized infrastructure network that prioritizes edge computing.

In November 2022, Messari decided it was time to put a name on Web3 physical infrastructure and carried out a Twitter poll where voters had to choose from PoPW, TIPIN, EdgeFi, and DePIN. They omitted MachineFi. DePIN won with 31.6% of the votes (136). And on December 22, 2022, Messari mentioned DePIN in research for the first time, saying it "will be one of the most important areas of crypto investment for the next decade." On January 19, 2023, Messari published a report dedicated entirely to DePIN.

How DePIN Works

DePINs utilize blockchain technology and crypto-economic protocols to enable globally distributed individuals to collectively build, maintain, and operate trustless, permissionless, and programmatic physical networks. They are built on four fundamental components: 1. physical infra-network layer, 2. off-chain compute layer, 3. blockchain layer, and 4. token layer.

Here are how four components work within DePIN projects: Physical infrastructure network: DePIN networks require physical infrastructure to operate. This can be anything from solar panels and batteries for energy networks, wireless network routers, or cloud network servers.

Off-chain compute infrastructure: DePIN relies on middleware, where the data types are aggregated for further utilities and user activities are accounted for when estimating and calculating each contribution. Blockchain architecture: Each DePIN network interacts with blockchain architecture that contains intelligent contract logic. This blockchain network acts as a ledger, rewarding transactions and other value exchanges between network members, such as purchasing broadband access from someone renting out their router.

Token incentives: Supply-side participants are incentivized to join and contribute to the network through token rewards. These tokens act as a subsidy to supply-side participants, allowing them to build out the network before it generates sustainable fees from demand-side usage. Supply-side participants: Anyone can become a supply-side participant in a DePIN network by deploying their physical infrastructure and connecting it to the network. For example, a homeowner could deploy a router and provide wireless network access.

Demand-side utilities: Once the network is established, end users can begin paying to use its services or consume crowd-sourced real-world data. This creates a feedback loop that attracts more supply-side participants and investors, driving network growth and adoption.

DePIN vs. Traditional Physical Infra Network

Blockchain technology for DePIN networks allows globally distributed individuals to collectively bootstrap a network in a permissionless and trustless manner. By distributing the costs associated with building and maintaining a network to supply-side participants, a more cost-effective method of bootstrapping a network is uncovered.

DePIN has several benefits over traditional physical infrastructure networks.

[Collective ownership] DePIN's use of crypto-economic protocols incentivizes network participants to bootstrap the network's supply side. Participants are encouraged to deploy and maintain infrastructure using inflationary token rewards. DePIN's bottom-up approach means that the network is collectively owned by its participants rather than a small group of shareholders. This incentive mechanism enables DePIN networks to scale rapidly globally while remaining cost-effective.

[Distributed Infra Network Cost] DePIN networks offer a more equitable and efficient way of deploying physical infrastructure. By leveraging the collective resources of a network's participants, DePIN networks reduce the need for large corporations to deploy and maintain infrastructure. This leads to lower costs for end users and a more efficient deployment process.

[Decentralization] DePIN networks offer a more resilient and secure infrastructure than traditional physical ones. By utilizing blockchain technology, DePIN networks are trustless and permissionless. Participants can verify the integrity of the network, ensuring that a single point of failure does not compromise it. This decentralized ownership structure means the network is less susceptible to corruption, rent-seeking, and other negative externalities associated with centralized control.

[Open Competition and Innovation] DePIN networks enable new levels of innovation across various sectors. By removing the barriers to entry associated with traditional infrastructure networks, DePIN encourages new entrants to compete in markets previously dominated by a few established players. This increased competition drives innovation and enables new use cases.

DePIN Verticals

DePIN is still in its early stages, but some notable projects in various sectors already demonstrate this new paradigm's potential. DePIN has several projects already leveraging the technology to create new use cases across multiple sectors. Some examples of DePIN projects include:

• (Wireless) Helium and XNET are decentralized wireless networks that enable IoT devices to communicate with each other without relying on centralized infrastructure. Helium rewards individuals for deploying wireless hotspots, enabling the network to expand rapidly.

(Mobility) DIMO and Hivemapper

(Energy) React and Arkreen The platform uses blockchain to enable secure and transparent energy transactions, with token incentives for energy producers and consumers to participate in the network.

(Environmental) WeatherXM and WeatherFlow

(Smart City) Spexigon and Smart Point

(Personal Health) Healthblock. DePIN also has the potential to transform the personal health sector by providing secure, decentralized data-sharing platforms. Projects like Healthblocks aim to offer a secure health data sharing and coordination platform, leveraging blockchain and token incentives to create a more efficient and patient-centric healthcare system.

(Sweat Economy) The move-to-earn apps such as STEPN, Sweatcoin and Walken.

Overall, these DePIN projects demonstrate the potential for this new paradigm to disrupt a wide range of industries and provide more efficient, decentralized infrastructure.

What is the Future of DePIN?

The future of DePIN is bright. As the demand for decentralized infrastructure continues to grow, more individuals and companies will look to DePIN to build out their networks. Leveraging blockchain technology and token incentives, DePIN offers a more efficient, cost-effective, and collective ownership approach to reimagining the way we build physical infrastructure networks tomorrow.

Overall, DePINs represent an exciting new frontier in blockchain technology. They offer a new way of building and operating real-world infrastructure that is more equitable, efficient, and aligned with network participants' interests. As technology evolves and new use cases emerge, DePINs will play an increasingly important role in developing our physical world.

Conclusion

In conclusion, Decentralized Physical Infrastructure Networks (DePIN) represent a paradigm shift in the deployment and operation of physical infrastructure. DePIN enables a more efficient, decentralized, and equitable approach to infrastructure deployment by leveraging crypto-economic protocols and blockchain technology. With the ability to scale rapidly and disrupt traditional industries, DePIN has the potential to become a significant player in the infrastructure world. As more DePIN projects are developed and deployed, we can expect significant disruption and innovation in how we build and maintain physical infrastructure networks. With the support of innovative companies like IoTeX and many others, the future of DePIN is bright and full of possibilities.

**IMPORTANT NOTE: This article was written with research done on several websites, including IoTeX, Crypto Insight, Metaverseller, and others, and thanks to the knowledge I acquired during my two-year stint at a DePIN focused blockchain startup.