Original author: humanityprot
Original compilation: Block unicorn
Amid concerns about meme coin mania and the alleged moral crisis of cryptocurrencies, the rise of the DePin network once again strongly establishes the popularity of cryptocurrencies for their real-world utility. Messari coined the term DePin in 2023, which is a new term, but the idea behind it is as old as cryptocurrency itself. DePin is the abbreviation of Decentralized Physical Infrastructure, which refers to a community network driven by protocols and token incentives to coordinate hardware resources.
Bitcoin, as the original blockchain, is a typical DePin network. This is because it invites anyone in the world to contribute computing resources to ensure the security of its distributed ledger, and is rewarded with “digital gold”. This model is revolutionary not only because of its technology, but also because of its economic impact. However, as cryptography has evolved, it has often veered into abstract speculation and often lost touch with its proven ability to smoothly coordinate physical resources. Today’s DePin network is more sophisticated, offering a path back to cryptocurrency’s origins and promising to silence cryptocurrency’s critics by promoting more just economic relations.
Better carrier economics
The DePin network creates a new economic model that improves on existing models within the operator economy. The operator economy—more commonly known as the “gig” or “sharing” economy—has emerged with the emergence of companies such as Uber and Airbnb, which use vast networks of independent operators to coordinate and provide valuable services. Such as online car-hailing and housing. Their reliance on a network of private companies to use crowdsourced labor and material resources has proven to be highly successful, validating a new service paradigm capable of competing with, and even surpassing, more traditional business-to-consumer models.
This Web2 operator economy is extremely profitable for unicorns and their shareholders. However, the picture is less positive for other stakeholders, such as workers who contribute time and resources to the network and early adopters who see long-term value in the product. Like many large tech companies, carrier economics often embody an extractive logic that favors monopolies, creates a precarious workforce, and relies on subsidized venture capital and unpredictable governance, leading to platform risk.
DePin improves operator economics by making it more democratic, economically inclusive, and transparent. Like other blockchain applications that have found product-market fit, such as DeFi, the DePin Protocol replaces idle monopolies and rent-takers at the core of Web2 operator networks with software and code. As a result, they are able to redistribute economic value to participants based on their contribution to the network. Take ride-hailing service protocol Teleport as an example. Teleport is very similar to Uber, except it disbands the company behind the ride-hailing market. That means it can return more value to drivers and passengers through higher wages and lower prices.
Companies like Uber and Grubhub rely on a class of gig workers who are deprived of employee benefits and are unstable. In contrast, the DePin network is specifically designed to reward network participants who invest their hardware and time into the network, giving tokens through permissionless smart contracts. This means that every contributor to the DePin network can become an economic stakeholder and not just an input in a company’s spreadsheet. More inclusive capitalism drives a Web3 operator economy that is not only fairer to network contributors; it also ensures that risk rewards are earned not just by a handful of venture capital firms, but also by the participants who spend their time and money growing the network obtained. Making participants owners is also good for the business; these initial owners will become network evangelists and help guide the growth of the next wave of users.
The more permissionless nature of DePin networks also means they lower barriers to entry, attract a wider range of participants, and expand geographic coverage, making them ideal for serving edge cases. On the supply side, they open the ecosystem to all qualified manufacturers, ensuring that a single hardware supplier does not become a monopoly and ensuring that the network delivers better products at lower prices.
Finally, the protocol-driven nature of the DePin network provides additional protection against platform risk and censorship. Unlike centralized ones, code is harder to block or censor. This means that DePin-based hardware services will be more difficult to disrupt for political or other illegal reasons. However, it may also mean that the DePin network will be better able to maintain services across legal boundaries, thus posing governance and regulatory challenges.
Different areas of Depin
Most Web3 operators are honing their skills in more and more specific areas, which signals the maturity of the Web3 operator economy.
hardware operatorIt is the key to the DePin revolution, matching physical assets with user needs. Take io.net, for example, which connects companies in need of artificial intelligence processing power with a network of GPU providers. Helium works similarly, connecting small cell hardware owners with users who need 5G connectivity. These examples highlight a key trend. In the expanding operator economy, hardware becomes a shared commodity, with each participant playing the dual role of consumer and provider.
data operatorTransform raw data into valuable assets. They deploy hardware to collect and process data, creating datasets and APIs for commercial use. Examples such as DIMO and Hivemapper illustrate this trend, with operators collecting vehicle data for insurance companies or capturing street imagery for real-time street mapping. In addition to pure collection, these operators often enhance the data before packaging it into a marketable product. They also play a vital role in transmitting real-world data across networks, leveraging IoT sensors to not only collect data but also provide services.
storage operatorForms the backbone of data persistence in the Web3 operator economy. Projects such as Arweave and Filecoin are pioneers in this field, providing decentralized solutions for file storage. They ensure that data is not only saved but also available for future use. KwilDB is a decentralized database that operates on a similar principle. It provides secure and durable storage for structured data. These platforms are critical because they protect information
Computing operators provide basic processing and communication services. Projects like Aethir demonstrate the potential of decentralized cloud rendering networks, enabling developers to build a range of decentralized consumer applications and enabling users to tap into collective computing power. Likewise, Akash provides a marketplace for cloud services to challenge legacy providers like AWS and GCP with decentralized alternatives. These platforms embody DePin’s transformative spirit because they not only decentralize access to computing resources, but also democratize it.
challenge
The Web3 economy powered by DePin faces many challenges. First, the DePin project must effectively deal with the complex regulatory environment of the real world. For example, data collection services like Hivemapper need to juggle a patchwork of governance, data management, and security regulations, each with its own set of strict compliance requirements. Likewise, 5G networks will encounter various spectrum licensing laws that vary widely between jurisdictions. These barriers create significant friction that slows progress and requires a delicate balance between innovation and compliance.
Secondly, DePins own market dynamics may bring instability to the DePin project. While the token can quickly attract more hardware operators, it does not ensure user adoption. Oversupply with little demand for the final product can lead to imbalances that destabilize the network. The design of the token economic mechanism is crucial; too large an incentive to participate may trigger inflation, eroding the value of the token and the credibility of the network. If there are too few incentive programs, then the network runs the risk of not being able to scale to meet market demand.
Third, and finally, although decentralization is the cornerstone of the Web3 spirit, it also brings a series of challenges. Centralized services benefit from hierarchical coordination and management, which can lead to superior performance. In contrast, decentralized networks may struggle to match these governance efficiencies and technical efficiencies. For example, the distributed nature of compute sharing can cause delays in processing machine learning tasks compared to the centralized capabilities of data centers. If decentralized systems fail to deliver comparable performance, their cost-effectiveness alone may not be enough to dissuade users from established centralized services.
Summarize
DePin has the potential to unlock market efficiencies and create fairer operator economics. However, its ultimate success will require more effort and time, especially for projects launching two-sided markets in highly regulated industries. Assuming DePin can solve the challenges of a complex regulatory environment, challenging token economic models, and comparable performance, its success could be revolutionary. More importantly, it will prove even the most ardent critics wrong about Web3s practicality in the real world.
