DePIN: Building the Necessary Decentralization Physical Infrastructure for Web3

Decentralized Physical Infrastructure Networks (DePIN) are providing critical support for the Web3 ecosystem. This innovative model builds and maintains physical infrastructure in a distributed manner, allowing anyone to participate and gain economic rewards. DePIN cleverly combines cryptographic technology, the internet, the Internet of Things, and blockchain to achieve a more efficient, decentralized, and equitable infrastructure deployment method.

The Importance of DePIN to Web3

Despite the significant progress made by Web3 in areas such as DeFi, gaming, and NFTs, its core infrastructure still relies heavily on centralized cloud services and data centers. This dependency has led to issues such as data loss due to cloud platform failures and the inability to access certain services due to regulatory restrictions. Therefore, the existence of DePIN is crucial for ensuring the stable operation of Web3 projects and enhancing their robustness.

Compared to traditional centralized infrastructure, DePIN has the following advantages:

1. Lowering participation thresholds: By utilizing the collective resources of network participants, management costs are reduced.
2. Improve network resilience: Decentralization enhances the security and risk resistance of the system.
3. Promoting Innovation: Eliminated the high capital barriers of traditional infrastructure networks, creating opportunities for small-scale participants.

The Operating Mechanism of DePIN

The DePIN ecosystem mainly includes three key roles:

• Device Provider: Provides physical resources such as GPUs, storage space, etc., and earns token rewards.
• DePIN Protocol: Build a distributed network, design incentive mechanisms, and coordinate supply and demand sides.
• Network users: Use DePIN services and pay fees, which are usually more cost-effective than centralized services.

To maintain the stable development of the system, it is necessary to ensure the relative stability of the token value and that the token can effectively capture the value of the protocol.

DePIN Project Classification

The DePIN project mainly covers the following areas: Decentralization storage, computing, CDN, VPN, WiFi, and 5G networks, etc. Most DePIN projects consist of three basic components:

1. Physical Infrastructure: A distributed network of physical devices.
2. Off-chain computing infrastructure: middleware for data capture and analysis.
3. Blockchain and token systems: as ledgers, registries, and incentive mechanisms.

Typical DePIN Project Case

Filecoin: Decentralization storage network

Filecoin is the world's largest distributed storage network, with over 3,800 storage providers and a total capacity of over 17M TB. It not only provides storage services but also supports the deployment of smart contracts through the Filecoin Virtual Machine.

Render Network: Decentralization GPU rendering platform

Render Network connects users who require GPU rendering services with providers who have idle GPU resources. In the first half of 2023, the platform completed over 4.6 million frames of rendering jobs at an average cost of $20, demonstrating a certain price advantage.

Helium: Decentralization wireless network protocol

Helium incentivizes global users to collaboratively build a wireless network. Its native cryptocurrency HNT can be used to generate data credits, which are crucial for device data transmission. Helium has deployed nearly 1 million hotspots in over 77,000 towns across 192 countries.

Livepeer: Decentralization live video broadcasting platform

Livepeer provides a video infrastructure network for developers and creators, incentivizing nodes to contribute GPU and bandwidth resources for video encoding and distribution through a crypto-economic protocol.

Theta: Decentralization video streaming network

Theta utilizes blockchain technology to build a decentralized video streaming platform, incentivizing users to share computing power and bandwidth resources through tokens, improving video quality and reducing distribution costs.

Industry Outlook

The DePIN industry is developing rapidly, with a huge potential market size. According to research by Messari, by 2028, the total potential market size of this industry could reach about $3.5 trillion. Currently, the FDV of all decentralized physical infrastructure projects is only $5 billion, indicating significant growth potential. With continuous technological advancements and the expansion of application scenarios, DePIN is expected to play an increasingly important role in the Web3 ecosystem.