DePIN | Messari compiles industry developments and introduces various projects.

The cryptocurrency research firm Messari has compiled a report on the decentralized physical infrastructure network DePIN, summarizing the industry's development to date. The DePIN project has flourished and is no longer just a decentralized network backbone. The report covers various applications in wireless transmission, computer computation, AI, energy, sensors and data, and services.

This article is not investment advice.

Background: Introduction to DePIN

What is DePIN

A decentralized physical infrastructure network refers to the physical infrastructure provided in a decentralized manner through the sharing of individual resources, such as base stations, cloud storage space, etc. DePIN transforms the infrastructure that was originally provided by centralized enterprises into a form where users worldwide participate together.

Exploring a new era of decentralized networks: In-depth analysis of the DePIN concept, what is DePIN?

This is usually accompanied by a token economy to incentivize participants providing resources, and this economic model is the strength of a consensus network, so it is usually closely related to blockchain.

Future Vision of DePIN

According to the Messari report, DePIN will be more efficient and flexible compared to traditional centralized facilities.

DePIN empowers and incentivizes people to autonomously improve public infrastructure around them without relying on corporate decisions or inefficient bureaucratic organizations, returning wealth and power to the people.

Whether it's maps, transportation, advertising, healthcare, carbon credits, databases, energy, or even pet data, complete services can be constructed in a decentralized manner.

Classification of DePIN

There is a wide variety of DePIN types covering various services, but they can generally be divided into six major categories: wireless transmission, computer computation, AI, energy, sensors and datasets, and services.

Examples include:

• Wireless Transmission: Helium Mobile, Karrier One
• Computer Computation: Filecoin, Arweave
• AI: Frodobots, Dimo, Ocean
• Energy: GlowGreen, Energy Lab
• Sensors and Data: Hivemapper, GEOD Network
• Services: Sweatcoin, Petastic

The definitions of RWA and blockchain infrastructure, oracle, and RPC are similar to DePIN but are beyond the scope of this report.

Development Status of DePIN in 2023

DePIN Capital Market

Currently, there are approximately 650 DePIN projects, mostly focused on computer computation and AI fields. The total market value of DePIN tokens exceeds $20 billion, generating around $15 million in annualized on-chain revenue, with computing being the most successful area of DePIN at present.

Aggregate Fundraising Amounts of DePIN Over the Years

Currently, the projects with the highest fundraising amounts are still the Filecoin and Helium projects that appeared a decade ago, with fundraising amounts reaching $250 million, surpassing all crypto projects fundraising in 2023.

Solana Leading Other Public Chains

Winners in DePIN infrastructure are emerging, with blockchain, particularly Solana, in a leading position. Solana's performance-oriented infrastructure and Rust development environment have attracted many DePIN projects to join.

Decentralized rendering computing project Render and decentralized wireless network project Helium have migrated to Solana in 2023, with Hivemapper officially launching on the network in November.

Furthermore, Caldera, Eclipse, and other Rollups are rising in the DePIN field due to their speed and the Ethereum security they provide; specific chain Layer1 has major players like IoTex and peaq, offering development tools specifically for DePIN needs.

DePIN Shifting Towards Multi-Service Integration

More successful DePIN projects are gradually transitioning to a platform business model, offering more diversified use cases. For example, in addition to its core LoRaWAN network, Helium later launched Helium Mobile to provide decentralized 5G network services.

However, this diversification is not achieved overnight; DePIN platformization often takes 5 to 10 years, so the above projects are relatively older.

Development in Various Fields of DePIN

Computer Computation: Relatively Mature

• Storage: The ultimate goal of storage will likely be data computation. For example, Filecoin's roadmap includes the introduction of the Filecoin Virtual Machine (FVM) in its third phase.
• GPU: Unlike most DePIN, GPU cloud computing is in high demand.
• CPU: CPU cloud computing has become an outlet for Ethereum miners' capacity.
• CDN: Decentralized CDNs face fierce competition, especially as Cloudflare has a growth strategy similar to DePIN, supporting 20% of global websites through its free CDN service.

Wireless Transmission: Rapid Growth in Civilian Networks

The internet connection industry continues to grow: The number of Internet Service Providers (ISPs) in the United States is expected to increase from 3,000 to over 15,000, offering greater global growth opportunities.

Each vertical area of DeWi has different growth drivers. While mobile networks have the largest user base, wired networks and WiFi have the highest usage. Notable projects include Helium, Really, Karrier One, Andrena, Althea, and Wifi map.

• Helium Mobile: Early trials have shown a path to millions of users, but the question remains whether Helium can start making money before running out of funds? The report believes the answer is affirmative.
• Andrena: Andrena's test network will enable consumers and small businesses to become micro-ISP, meeting the last-mile needs on the internet infrastructure.

Energy: High Development Costs Slow Progress

The decentralized energy supply chain is a challenging area for DePIN development. Regulatory costs in the energy industry have slowed down and made experimental progress difficult, but entrepreneurs facing these challenges are attempting to make strides. The report highlights several representative projects:

• GlowGreen: Incentivizes green energy production through tokens, specifically GLW tokens rewarding users for establishing solar power plants, with electricity sales revenue collected by agreement, while users compete for a fixed amount of GLW tokens.
• DayLight: Protocol incentivizes homeowners to power residences and communities through solar panels for cashback.
• Entheos: Allows solar and wind energy operators to tokenize their potential "battery capacity" and enter the market by helping extend battery life.
• Energy Lab: Provides real-time energy usage tracking software to enterprises, with validators running nodes to extract enterprise data and verify green energy.

Sensors and Datasets: High Value in Map Projects

Major commercialized datasets include mapping projects like Hivemapper, location GEOD Network, and climate WeatherXM, all operating on a token reward data-sharing model with users distributed globally.

However, data value varies depending on the business model. Data sets are most valuable when there are many buyers, these buyers have made significant profits, and better data quality is a crucial factor in determining prices. This is why Hivemapper is receiving significant market attention.

On the other hand, compared to other decentralized infrastructures, maps have more mature application areas, leading other fields by three to five years.

Services: Market Entry by Lowering User Costs

Returning data ownership and control to users usually requires a large end-market, such as the driving or pet-owning population, and offering services at lower costs to enter the market. Common services include fitness SweatCoin, car IoT Dimo, and pet care Petastic.

• Sweatcoin: Encourages users to exercise through token rewards based on walking data and uses the data to execute an ad-based business model, but its ad system currently analyzes only step and user location data, leading to a lower conversion rate. Sweatcoin is waiting for registration to exceed 13 million users.
• Dimo: Using OBD readers and OEM integration, Dimo can decode real-time car data directly from the vehicle's OBD, with data expected to help users reduce spending on car insurance, financing, maintenance, fuel, and registration fees, attracting users. In 2023, the number of vehicles in the Dimo system grew 10 times to 25,000.
• Petastic: AI provides pet care recommendations to reduce pet ownership costs based on a pet's birthday, location, vaccination records, diet history, and other data, while allowing token rewards based on interaction frequency. It is expected to reduce American pet owners' annual expenses on food, insurance, medical care, and toys by over $600. The platform already has data for over 600,000 registered pets.

AI: Vertical Integration of Data Tokenization Industry

AI combined with the crypto space establishes application scenarios for DePIN sensor/data networks, allowing valuable datasets to be tokenized through data markets rather than competing upstream.

• Data Upstream: Projects with large proprietary datasets can model themselves and offer services directly, such as WeatherXM or Frodobots.
• Data Mining: Services from sensor and dataset projects, such as vehicle data from Dimo.
• Data Markets: Data markets led by Ocean, enabling various data tokenization.

This article is not investment advice