Original - Odaily
Author - 0xSekiro
In the novel The Wandering Earth, there is a debate between the spaceship faction and the earth faction regarding humans escape from the solar system. The spaceship faction believes that human beings can still continue to exist in the small ecology of spaceships, and there is no need to waste time and money to move the entire earth. But the final result is like the water in a fish tank. No matter how clean it is, it will always deteriorate again in a short period of time.
Perhaps the comparison between the current Web3 ecosystem and the real world is like the comparison between a spaceship and the earth, or a fish tank and the sea. Within a small ecological scope, things always develop very fast, are born quickly, and die quickly. A small problem can trigger a series of disasters, just like the three-month life cycle of the early GameFi project. If an ecology wants to have a longer life cycle, it needs to continuously expand its ecological scope.
Currently, the total global wealth is approximately US$454 trillion, while the market value of the entire cryptocurrency market is only US$1.62 trillion, a difference of 280 times. Web3 still has a lot of room for imagination, and the emergence of the DePIN concept may accelerate this process in the foreseeable future.
There are currently four ways of contact between the Web3 world and the real world: 1. If the BTC spot ETF is passed, it means that legal currency funds will enter Web3 with a lower threshold; 2. NFT takes the first step, through linkage with luxury goods and trendy brands in the real world. Completed the initial integration of the real world and the crypto world; 3. RWA, the asset tokenization method is also gaining favor from more people;The fourth type of contact represented by DePIN means that the connection between the two worlds will be further deepened and the two worlds will eventually merge into one.
DePIN sector fundamentals
DePIN (Decentralized Physical Infrastructure Networks), decentralized physical infrastructure, refers to the concept of real-world networks and information transmission that operate in a decentralized manner and have token economics.
DePIN stands for Decentralized Physical Infrastructure Network. This is a new way to build and maintain infrastructure in the physical world. This infrastructure is composed of hardware that provides external services in physical scenarios, from WiFi hotspot gateways in wireless networks to solar photovoltaics in energy networks. DePIN is built in a decentralized manner by individuals and companies around the world and can be used by anyone without permission. In return, these builders receive financial incentives and the value of network rights to jointly own this infrastructure.
DePIN covers projects in many fields. From decentralized storage networks such as Arweave and Filecoin, to decentralized WiFi connection devices such as Helium, and community software applications such as Hivemapper, they can all be classified under the category of DePIN.
According to Coingecko data, the DePIN sector currently includes a total of 45 issued currency projects, ranking 25th among various sectors, with a total value of US$9.7 billion, surpassing AMM, AI and other sectors, and second only to the oracle and P2E sectors. .
In a report by Messari, the total potential market size of the DePIN sector was predicted to be around US$2.2 trillion, which may reach US$3.5 trillion by 2028.
If extrapolated according to this data, then in the short and medium term, the potential profit expectation of entering DePIN is about 243 times, while the medium and long term profit expectation is more than 400 times.
According to Depinscan data, among the 161 DePIN projects listed, there are 27 products with a market value of hundreds of millions. Among them, there are 5 projects with a market value of over 1 billion, namely Filecoin, BitTenseo, TheGrap, Render, and Theta.
Currently, among the 45 projects counted by Coingecko, 42 projects have been rising in the past 7 days. Among them, 20 projects have achieved general growth this year. Among them, 6 projects have increased by more than 100%, ranking the highest. It’s Render, with an increase of 822%.
In addition to its excellent performance in the secondary market, DePIN is gradually gaining favor from the market and institutions. For example, on April 14 this year, the decentralized camera network Natix Network received US$3.5 million in financing led by Blockchange Ventures, and on November 30 DePIN provider Grove completed a financing of US$7.9 million, and Solana, which is very fond of DePIN, also received bonus funding for 5 related products including Shaga and Dain at the eighth hackathon event announced on November 4 this year. , and the IoTeX Foundation has previously provided nearly one million US dollars in development funding to 15 DePIN-related projects.
In addition, Hashkey Group even launched the initiative to build DePIN Hong Kong as early as April this year, aiming to use blockchain technology and hardware equipment to promote the development of Hong Kong’s DePIN ecosystem.Arthur Hayes even bluntly stated in his blog that he is strongly optimistic about Filecoin in the decentralized storage sector.
DePIN Summer may be coming
Perhaps for ordinary investors, the concept of DePIN is not as sexy as concepts such as BTC ecology and MEME. At the same time, it has rarely become the investment target of choice for Web3 players. We rarely turn our attention to DePIN on social media. . However, the above data shows that institutional investors are increasingly favoring DePIN, and DePIN’s influence is also rapidly expanding.
Macro level: The market needs to reduce costs, increase efficiency, and break monopoly
DePIN has significant advantages over traditional infrastructure. First, it reduces costs, obviously. Secondly, improving usage efficiency is also DePIN’s strength. In addition, decentralization is an important feature of DePIN, which results in an open, competitive and innovative environment. At present, centralized products such as large computer rooms are basically monopolized by companies such as AWS and Alibaba Cloud. This is because in the traditional Web 2 era, they laid the foundation and built the entire ecosystem. Once they accomplish this, it will be difficult for other companies to enter the market.
In fact, the idea of DePIN has been proposed before the blockchain has yet to appear (for example, some people in the communications industry are working on decentralized Wi-Fi networks, such as CDN), but now there are blocks Chain, financing is relatively easy, and its financial attributes are strong, so it is naturally combined with the blockchain, which is todays DePIN. The threshold for starting up in the blockchain world is lower, and many things will encounter great resistance in the traditional world, so entrepreneurs will choose to join the blockchain.
Based on the product itself to achieve a 0 to 1 start, and then use the blockchain concept and token economics to complete the 1-100 flywheel, this will greatly reduce the teams financing difficulty and shorten the return period.
From the perspective of application implementation:
At present, the main ecosystems deployed by DePIN projects are ETH, Solana, and Polkadot. The following is an inventory of some of the more popular DePIN projects:
On April 20 this year, the decentralized IoT project Helium migrated to the Solana network. Helium currently has a market value of nearly US$800 million and is the largest DePIN project in the Solana ecosystem.
Render Network, a distributed GPU rendering network platform, has also expanded its services from Polygon to the Solana blockchain. It is worth noting that OTOY, the parent company of Render network, also has in-depth cooperation with Apple. In Apple’s official promotional video, the logo of Render network has been exposed several times. It is not ruled out that Render will become a built-in rendering component of Apple software.
In the Solana ecosystem, there are also projects such as Teleport, a decentralized permissionless ride-sharing application, HiveMapper, a distributed map network, and Tekkon, a photo collection project based on blockchain technology.
The DePIN project based on Polkadot has an off-chain computer Phala Network, which launched the LensAPI Oracle for the decentralized social protocol Lens Protocol to help various applications on the Lens Protocol protocol provide data from the real world while protecting the privacy of user data. and safety.
In addition, there are some DePIN projects that are independent of various mainstream public chains, such as the decentralized bandwidth Meson Network. BNB Chain cooperates with this project and uses its global node distribution to help BNB Chains own huge transaction data (2.5 TB) to shorten snapshot synchronization time. According to its official website, Meson has deployed more than 100,000 nodes around the world to provide services.
As well as the decentralized Internet of Things network IoTeX, the established distributed storage Filecoin, Arweave, etc., which are currently attracting much attention.
The Lego Road to DeFi
The above parts are some examples of empowering blockchain and traditional market entities based on the DePIN sector project.
also,The DePIN sector is also expanding onto the chain.
The most intuitive example: Helium chose to abandon its native public chain and switch to Solana. Based on its own product attributes, it developed three cryptocurrencies: IOT, MOBILE and DCs. Together with HNT and issued NFT, Helium ecological encryption The number of assets has reached 5 types.
The produced IOT and MOBILE can be exchanged for HNT, and DCs can be obtained by destroying HNT. In fact, the Helium ecosystem currently has the preliminary state of DeFi’s complex logic.
The investment aspect of DePIN is still mainly oriented towards the trend of blockchain and cryptocurrency. However, DePIN in different subdivisions needs to refer to the trends of its corresponding fields in the real world, such as decentralized bandwidth and decentralized computing power.
Previously, middleware, cross-chain bridges and DeFi concepts were not yet prosperous. At that time, blockchain projects, especially DePIN products, were like islands, developing independently and difficult to integrate with each other.
However, with the rise of high-performance public chains, Layer 2 and other ecosystems, while lowering the entry threshold and operating costs of DePIN, it also brings composability, providing the possibility of circulation and combination of DePIN-related encrypted assets on the chain.
Coupled with the empowerment of AI technology and the identity verification brought by zk technology, it also improves the efficiency of communication and flow between users of different products and different communities under the chain.
When the on-chain and off-chain paths are opened up, we will not only usher in the DePIN Summer on the product side, but also the DePIN decentralized finance boom with opportunities.
DePIN sector development forecast
In the current market environment, there is a general consensus: to further improve the development level of WEB3, we must establish a connection with the real economy. DePIN just meets this demand because it connects the incentive mechanisms from traditional entities, IoT devices to the new Web3, realizing mutual needs.
Mass adoption and job popularity
At present, DePIN is a bit like the early development trend of DeFi. DeFi has infrastructure, especially after the three-piece set (stable currency, trading, and lending) fully emerged. People began to make Lego based on these three-piece sets, which led to the current prosperity.
The current status of DePIN is relatively similar. After the underlying infrastructure architecture becomes more mature, infrastructure applications begin to slowly emerge. After that, the prosperity of surface applications symbolized the real prosperity of the track.
After all, rather than competing with leading projects in niche areas, the probability of success is much lower than taking the lead in new areas. Since several relatively large scenarios are currently known, such as decentralized servers, wireless communications, sensor technology and energy networks, there are already leading projects such as Filecoin, Helium, HiveMapper, etc. Most of these projects have already issued coins, and their users Stickiness and brand energy have been proven by the market. Developers do not have ten times the innovation power, and it is very difficult to defeat a protocol that has already been successful in a certain track.
therefore,The next development focus of DePIN is likely to shift to the application layer that focuses on acquiring users and traffic.Just like after the DeFi boom, the concepts of SocialFi and GameFi, which simplify DeFi logic and express it visually, exploded. After DePIN, it should also be related to concepts that can reach the users themselves to the greatest extent, can be used by users on a daily basis, and will not bring high access costs to users.
Take HiveMapper as an example. Its driving recorder with mining function is priced at US$550, which is much cheaper than the current mainstream mining machines and NFTs. It is almost universally used by car owners, plus its other Mining properties. If we make a bold guess, according to data released by the SINOMACH Automobile Association, 15.9 trillion vehicles in the world may become potential users of HiveMapper.
In fact, the development of the DePIN application layer can directly embed the concept of the Metaverse, as well as social networking, games, office work, clothing, etc. related to the Metaverse.
Every behavior of people in the DePIN ecosystem has value attributes in real life. When these people become DePIN users, they also become workers, maintaining the development of the ecosystem through their own actions, and gaining from it. Earnings, maybe this is the ultimate interpretation of X to Earn.
