How to grasp the new opportunities in the DePIN $10 billion market?

By Cynic & Shigeru, CGV Research

TL; DR

• The Concept of DePIN: Explores the concept of a decentralized physical infrastructure network (DePIN), emphasizing the intersection of digitization and decentralization. DePIN combines physical hardware and blockchain technology to represent a new era of digital technology merging with the physical world. The article highlights the importance of DePIN in the redistribution of data, power, and control, foreseeing a more democratic, fair, and transparent future.

• The “Chicken and Egg” Problem Faced by DePIN: Discusses one of the main challenges faced by DePIN in its development: the “chicken and egg” problem. This problem describes a dilemma: in order to build a strong decentralized network, a large number of hardware devices are needed, but in order to attract these devices, a network that is already established and working well is needed. The article highlights the need for networks to provide some form of incentive in order to attract early participants.

• How DePIN works: Describes how DePIN works, including its decentralized nature of relying on individual hardware devices and using blockchain technology to manage and secure the network. Blockchain serves as an open, transparent, and immutable digital ledger that records all transactions and interactions on the network, ensuring that all nodes follow the rules of the network. In addition, DePIN uses an incentive mechanism, usually based on cryptocurrency, to encourage nodes to participate and contribute their resources.

• Industries for which DePIN is applicable: Explores the application potential of DePIN in industries such as telecommunications, energy, data storage, Internet of Things, and supply chain. For example, in the telecommunications industry, DePIN provides a decentralized solution that allows devices to communicate directly without going through a central node. In the energy industry, DePIN provides a decentralized grid solution that allows individual nodes to exchange power directly.

——The Singularity of the DePIN Market Explosion: The impact of increased technology maturity on the DePIN market explosion is discussed, mainly including the advancement of blockchain technology and Internet of Things technology: high-throughput blockchain solutions, enhanced security and privacy protection, the development of cross-chain technology, and the growth and maturity of IoT devices all provide more nodes and data for DePIN, enhancing its network effects, etc.

1. The connotation of DePIN

As technology advances, we are at a crossroads of digitization and decentralization. Decentralization is not just a technological trend, it represents a redistribution of power, control, and data ownership.

In this context, the Decentralized Physical Infrastructure Network (DePIN) has emerged, providing us with a new perspective on the interaction between the physical and digital worlds. This interaction is not just at the level of data, but more importantly at the level of power and control.

With DePIN, we can foresee a more democratic, fair, and transparent future in which everyone can participate and benefit.

DePIN, or decentralized physical infrastructure network, is an emerging technology concept that combines physical hardware and blockchain technology. These networks, also known as Proof of Physical Work (PoPW), Token Incentivized Physical Infrastructure Networks (TIPIN), and Edgefi Networks, represent a new era in which digital technologies converge with the physical world.

In this era, data is no longer a passive number, but an entity that is intimately connected to the physical world. With DePIN, we can see a decentralized future where data, power, and control are all redistributed and everyone can participate and benefit from it.

For example: a WiFi hotspot in a wireless network or a solar home battery in an energy network. These networks are built in a decentralized manner by a variety of contributors across the globe. In return, these individuals and entities receive financial compensation and network ownership through token incentives.

2. Starting from the “chicken and egg” problem, the intrinsic value of DePIN is analyzed

In the evolution of technology, we often encounter a series of challenges, among which the “chicken and egg” problem is the most classic. This problem describes a dilemma: in order to achieve a goal, you need to have an A, but in order to have an A, you need to achieve that goal first. In the context of DePIN, this problem becomes especially prominent.

In order to build a strong decentralized network, we need a large number of hardware devices to participate. But in order to attract these devices, we need a network that is already established and working well.

**2.1 Why is the “chicken and egg” problem so critical in DePIN? **

The value of a decentralized network lies in its participants. The strength and stability of a decentralized network is directly related to the number and quality of its nodes. More nodes means more redundancy, better data distribution, and greater system resiliency.

However, for most owners of hardware devices, joining a new, unproven network is risky. They may need to invest time and resources, but there is no clear guarantee of return. Therefore, in order to attract these early participants, the network needs to provide some form of incentive.

**2.2 How to solve the problem of DePIN? **

DePIN’s solution is to provide incentives for early participants. These incentives can take many forms, from cryptocurrency rewards to special benefits within the network.

For example, a DePIN may provide additional cryptocurrency rewards to its early nodes, or give them more weight in network decisions. This incentive system encourages more hardware devices to join the network, thereby accelerating the growth and stability of the network.

In DePIN, incentives aren’t just about solving the “chicken and egg” problem. They are also key to ensuring the health and stability of the network. A healthy DePIN requires its participants to provide and maintain its resources on an ongoing basis. To ensure this, the network needs to provide sufficient incentives to encourage this behavior. This may include offering cryptocurrency rewards, offering special benefits within the network, or other forms of rewards.

2.3 Design Challenges and Opportunities

Although DePIN offers a solution to the “chicken and egg” problem, that doesn’t mean it doesn’t have other challenges. For example, how do you ensure that the incentive system is fair? How can you prevent malicious actors from taking advantage of incentives? How do you ensure the long-term stability and health of your network?

These problems require in-depth thinking and solutions by DePIN designers and operators. But at the same time, DePIN also presents us with a unique opportunity to rethink how we build and operate our network. Through innovative incentive systems and decentralized design principles, DePIN shows us a more fair, transparent, and democratic future.

3. How DePIN works

The working principle of DePIN is based on decentralization and blockchain technology. First, DePIN relies on individual hardware devices, also known as nodes. These nodes can be personal computers, dedicated servers, or IoT devices. Together, these devices form a decentralized network without any central node or authority. This decentralized nature makes DePIN more secure and transparent.

Second, DePIN uses blockchain technology to manage and secure the network. Blockchain is an open, transparent, and immutable digital ledger. It records all transactions and interactions on the network, ensuring that all nodes follow the rules of the network.

In addition, to encourage nodes to participate and contribute their resources, DePIN uses an incentive mechanism. This mechanism is usually cryptocurrency-based, and nodes can earn rewards by participating in the network and contributing their resources.

! [When Crypto Meets the Physical World: How to Seize the New Opportunities in the DePIN $10 Billion Market?] ](https://lh7-us.googleusercontent.com/3vlzZAgK4dI76xVWmoeMVeuONSfpTe3wpYPT3vDHsiJh9tRyeAg-Z71j11v0iYGI0D7yAcRz23MQv_faADm_8AQ0jyGW7xcCU_hB23Z3hTkAZAAhek1OKuOuk8vL2v3lUy5ihpIwYaE4az4S4GCMzt8)

Schematic diagram of the DePIN flywheel effect (Image source: IoTeX)

DePIN (Decentralized Physical Infrastructure Network) has the following advantages over traditional physical infrastructure networks:

• Co-ownership: DePIN encourages participants to jointly invest in the deployment and maintenance of infrastructure through a token reward mechanism. This bottom-up approach makes the network common to all participants, rather than controlled by just a few shareholders.

• Cost decentralization: A decentralized physical infrastructure network effectively reduces operational costs and expenses by mobilizing the common resources of network participants.

• Decentralization: Compared with traditional centralized infrastructure networks, decentralized networks provide higher security and resilience. The decentralized way of building makes the network less susceptible to the negative effects that centralized controls such as corruption, tampering, and hacking attacks.

• Open competition and innovation: DePIN brings innovation opportunities to all walks of life. It incentivizes new players to compete in markets that would otherwise be dominated by a small number of large companies by removing barriers to entry from traditional infrastructure networks.

4. What industries is DePIN best suited for?

With the rapid development of technology, the concept of a decentralized physical infrastructure network (DePIN) is gradually becoming a reality. This network model, which combines physical hardware and blockchain technology, opens up countless opportunities for a wide range of industries.

4.1 Telecommunications

The telecommunications industry is the preferred area for DePIN. Traditional telecom networks rely on centralized base stations and switches to transmit data. However, with the increase in IoT devices and the promotion of 5G technology, this centralized model is becoming less and less suitable. DePIN provides a decentralized solution that allows devices to communicate directly without going through a central node. This not only improves the efficiency and resilience of the network, but also reduces the cost of maintenance and upgrades.

4.2 Energy Industry

The energy industry is also an ideal area for DePIN. With the development of renewable energy technology, more and more households and businesses are starting to produce their own electricity. However, the traditional power grid is centralized and is not suitable for this decentralized energy production model. DePIN provides a decentralized grid solution that allows individual nodes, such as homes, businesses, or small power plants, to exchange power directly. This not only improves the efficiency of the grid, but also opens up new economic opportunities for participants.

4.3 Data Storage Industry

With the explosive growth of data volumes, data storage has become a huge challenge. Traditional cloud storage solutions rely on centralized data centers, which not only increases costs, but also presents security risks. DePIN provides a decentralized storage solution that allows individual nodes to provide storage space and be rewarded accordingly. This model not only reduces storage costs, but also improves the security and reliability of data.

4.4 Internet of Things Industry

The Internet of Things is another ideal area for DePIN. As the number of devices increases, traditional centralized networks become increasingly unstable and unreliable. DePIN provides a decentralized network solution that allows devices to communicate directly without going through a central node. This not only improves the efficiency and resilience of the network, but also provides new features and services to the devices.

4.5 Supply Chain Industry

Supply chain management is a complex process that involves multiple actors and a large amount of data exchange. Traditional supply chain solutions rely on centralized databases and applications, which adds cost and complexity. DePIN provides a decentralized supply chain solution that allows individual participants to exchange data directly without going through a central node. This not only improves the efficiency and transparency of the supply chain, but also opens up new economic opportunities for participants.

4.6 Transportation Industry

With the development of autonomous driving technology, the transportation industry is facing a huge transformation. Traditional traffic management systems rely on centralized control centers and sensor networks. However, this model may no longer be applicable in the future world of autonomous driving. DePIN provides a decentralized traffic management solution that allows vehicles to communicate directly without going through a central node. This not only improves the efficiency and safety of traffic, but also provides new services and functions for vehicles.

DePIN offers countless opportunities for all walks of life. Through a decentralized approach, DePIN not only improves efficiency and resilience, but also provides new economic opportunities for participants. With the advancement of technology and the development of the market, we can expect DePIN to play an increasingly important role in the future.

5. The singularity of the DePIN market explosion:

In the wave of technology, innovation is a key force driving progress. Especially in the field of de-PIN, the improvement of technology maturity is not only a milestone, but also a turning point. It marks DePIN from theory to practice, from concept to reality, and the key technological advances behind the singularity will jointly shape the future of DePIN and pave the way for its market explosion.

5.1 Improvement of technology maturity

5.1.1 Advancements from Blockchain Technology

• High-throughput blockchain solutions: With the advent of next-generation blockchain protocols, such as sharding technology and sidechains, the processing speed and throughput of blockchain networks have been significantly improved. This allows DePIN to process more transactions and data, increasing its usefulness and efficiency.

• Enhanced security and privacy protection: Through the introduction of advanced technologies such as zero-knowledge proofs and homomorphic encryption, the security and privacy protection capabilities of the blockchain network have been strengthened. This provides a more secure and reliable data exchange and storage environment for DePIN.

• The development of cross-chain technology: The development of cross-chain technology has enabled different blockchain networks to communicate and exchange data with each other. This provides DePIN with wider interoperability, allowing it to integrate more resources and services, among other things

! [When Crypto Meets the Physical World: How to Seize the New Opportunities in the DePIN $10 Billion Market?] ](https://lh7-us.googleusercontent.com/MT9RNiLyJuVtFJHFpkbRgUKv9rEnCqdO4e9XOv-NvsRWGJZlKBM6raABBMB7rHK7iBjvkX-rCpW2-dEiYzQNJqW9MBHzEPXFfztpefEw_PU77FX-YAdBne-jbEYWsuqI_Zz276G-8KGfeAcez4dkDhs)

The mainstream public chain technology of DePIN in the market (Image source: Messari)

5.1.2 Advancements from Internet of Things Technology

IoT technology: The growth and maturity of IoT devices will provide DePIN with more nodes and data, thereby enhancing its network effect. Gartner predicts that the number of IoT devices worldwide will reach 25 billion by 2025. This growth will provide DePIN with more nodes and data, enhancing its network effect.

• Popularization of smart sensors and devices: As the cost of IoT sensors and devices decreases, their application in various fields is becoming more common. This provides DePIN with a large number of data sources and nodes, enhancing its network effect.

• The development of edge computing: The development of edge computing technology enables data processing to take place in the vicinity of IoT devices, reducing the delay and cost of data transmission. This enables DePIN to process and analyze data from IoT devices more efficiently.

• Improvement of IoT security: With the advancement of IoT security technology, such as stronger encryption methods and security protocols, the security of IoT devices and networks has been improved. This provides DePIN with a more secure infrastructure and source of data.

5.2 Policy & Regulatory Support

If governments and regulators can develop friendly policies and regulations that encourage the development of DePIN, this will create favorable conditions for its widespread adoption, including but not limited to:

• Innovative tax incentives: The government can implement tax incentives for DePIN projects. For example, tax breaks or tax credits are offered to businesses and individuals who deploy environmentally friendly technologies or renewable energy facilities in their DePIN networks.

• Streamlining the permitting and approval process: Governments can streamline the permitting and approval process for DePIN projects, especially for projects that are cross-border or involve multiple administrative regions. This will lower the barriers to project start-up and operation, and accelerate the pace of innovation.

• Establish a DePIN Innovation Fund: The government can set up a special fund to support DePIN-related R&D and innovation projects. These funds can be used to fund start-ups, research institutes, or public-private partnership projects.

5.3 Support from enterprises and industries

If mainstream businesses and industry leaders can support and adopt DePIN, it will provide a huge boost for them.

• Strategic investments by industry giants: Imagine if tech giants like Google and Amazon started investing in DePIN projects or forming partnerships with DePIN startups. Such an action would not only provide financial support to DePIN, but would also increase its visibility and credibility within the industry.

• Supply Chain Integration: Large manufacturing and retail companies can improve efficiency and transparency by integrating DePIN technology into their supply chain management. For example, use a DePIN-based solution to track products from production to delivery.

• Energy management innovation: Energy giants can optimize energy distribution and trading by adopting DePIN technology. For example, building a decentralized energy trading platform that allows users to trade renewable energy directly.

5.4 Expansion of technical cooperation and partnerships

Cooperation and integration with other technologies and platforms, such as 5G, edge computing, etc., will provide more possibilities for the application of DePIN. For example:

• Convergence of 5G and DePIN: Combined with the high speed and low latency of 5G networks, DePIN can achieve faster data transmission and real-time communication. For example, build a DePIN-based intelligent transportation system that uses 5G networks to achieve instant communication and data sharing between vehicles to improve road safety and traffic efficiency.

• Combination of edge computing and DePIN: By integrating edge computing technology into DePIN, data can be processed instantly at the location where it is generated, reducing dependence on centralized data centers. This is especially useful for use cases that require a quick response, such as security monitoring and emergency response systems in smart cities.

• Collaboration between Internet of Things (IoT) devices and DePIN: IoT devices can act as nodes in a DePIN network, collecting and transmitting data. By combining with DePIN, more secure and efficient data management can be achieved. For example, in the field of agriculture, data collected by IoT devices is analyzed through DePIN to optimize crop cultivation and resource allocation.

• Convergence of artificial intelligence (AI) and DePIN: Combined with artificial intelligence technology, DePIN can achieve more intelligent data analysis and decision support. For example, in healthcare, patient data collected through DePIN can be combined with AI for in-depth analysis to provide personalized treatment options.

5.5 Globalization and strengthening of cross-border cooperation

The concept and application of DePIN are not geographically restricted. The global vision and cross-border cooperation will bring a larger market and more opportunities to it. For example:

• Global Disaster Response Network: Imagine a global DePIN system for disaster response. In the event of an earthquake, flood, or other natural disaster, this decentralized network can quickly mobilize global resources, including drones, sensors, and communication equipment, to provide real-time data and support for relief operations.

• International Clean Energy Grid: DePIN can be used to build a cross-border clean energy sharing network. For example, using solar energy from the Sahara Desert and wind power from Northern Europe, through a decentralized energy grid, energy is distributed across the globe to optimize energy use and reduce waste.

• Global medical and health surveillance system: The global deployment of DePIN-based medical and health surveillance systems can track the spread of infectious diseases in real time, monitor public health conditions, and share important medical data globally, so as to respond more effectively to global health crises.

In short, the explosion of DePIN requires a combination of factors. Technology, policy, the economy, communities and markets will all play a key role in this.

6. DePIN section of typical projects

With the popularity of the concept of DePIN, many projects have begun to explore this field. Here are some examples of projects that have successfully applied the DePIN concept and how they are using this new technology to innovate and deliver value.

6.1 Helium

Helium is a decentralized wireless network designed to provide internet connectivity to low-power devices. Helium’s network is made up of hotspots deployed by individuals and businesses. These hotspots not only provide wireless coverage, but also verify other hotspots in the network. In this way, Helium creates a decentralized, self-verifying network. Participants can earn Helium tokens as rewards by deploying hotspots and validating network activity.

6.2 HiveMapper

HiveMapper is a decentralized mapping network that uses video data to create 3D maps. HiveMapper allows anyone to upload video data and use that data to create and update 3D maps. In this way, HiveMapper creates a decentralized, community-driven mapping platform. Participants can earn rewards by providing video data.

6.3 Render

Render is a decentralized cloud computing platform designed for 3D rendering, machine learning, and other compute-intensive tasks. Render allows users to provide unused GPU power as part of the network. These GPU resources are pooled together to support tasks that require a lot of computing power. Participants can earn Render tokens as rewards by providing GPU resources.

6.4 Filecoin

Filecoin is a decentralized storage network designed to provide users with secure and reliable data storage services. Filecoin allows anyone to provide unused storage space as part of the network. These storage resources are pooled together to serve users who need storage space. Participants can be rewarded with Filecoin tokens by providing storage space.

These projects are all successful applications of the DePIN concept. Not only do they demonstrate the potential of decentralized technologies, but they also provide new economic opportunities for participants. As technology advances and the market evolves, we can expect more DePIN projects to emerge in the future, providing us with more innovation and value.

Conclusion

As we delved deeper into DePIN, we realized that this was not only a technological breakthrough, but also a challenge to the existing social and economic structure. DePIN presents a picture of a future based on decentralized power, data transparency, and broad participation. In this picture, each participant has the opportunity to influence the development of the network, and this decentralized nature not only drives technological innovation but also promotes social equity and justice.

Therefore, DePIN not only marks a major advance in the field of technology, but also heralds a shift in the way human society is governed. It represents an evolution from centralized control to decentralized governance, from a closed system to an open network.

Fueled by DePIN, we can envision a future of a more connected, smart, and humane digital world.