Decentralization Physical Infrastructure Network: A Key Pillar of Web3

Decentralized Physical Infrastructure Network (DePIN) is leading the innovation in the deployment and maintenance of physical infrastructure. This model is built in a decentralized manner by individuals and enterprises around the world, accessible to all users. In return, contributors to these infrastructure nodes can receive economic compensation and token incentives. DePIN achieves a more efficient, decentralized, and equitable way of deploying infrastructure by integrating cryptographic technology, the internet, the Internet of Things, and blockchain.

DePIN: The Necessary Foundation of Web3

Although Web3 has developed a rich array of applications such as DeFi, gaming, NFTs, social networking, and physical assets based on Layer 1 and Layer 2, these applications still rely on centralized cloud services and data centers as internet infrastructure. There have been incidents in the industry where data loss occurred in Web3 projects due to downtime of major cloud platforms, and some Web3 projects have been unable to access centralized services due to regulatory sanctions.

Therefore, DePIN has become a key infrastructure for achieving true Web3. Although DePIN projects may not occupy a significant market share and may not have advantages in performance, their existence may ensure the normal operation of Web3 and crypto projects at critical moments, enhancing their robustness.

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

1. Low participation cost: By leveraging the collective resources of network participants, management expenses and costs are reduced.
2. Network Robustness: Provide a more resilient and secure infrastructure that is less susceptible to single points of failure.
3. Open competition and innovation: Eliminating the high capital and large-scale entry barriers of traditional infrastructure networks facilitates the emergence of small-scale new participants.

Characteristics and Classification of DePIN

The industrial logic of DePIN is simple and clear, mainly including the following key roles:

• Device Provider: Provides physical device resources (such as GPU, CPU, memory, storage space, RAM, bandwidth, Wifi hotspots, etc.) to earn token rewards.
• DePIN Protocol: Build a distributed network, design token incentives for device providers, and charge network users.
• DePIN network users: Connect to the DePIN protocol, use services and pay, with prices more favorable compared to centralized infrastructure.

Maintaining the stable development of this cycle requires ensuring that the token value is relatively stable and that there is a comprehensive capture of the value of the DePIN protocol.

DePIN projects can be roughly divided into the following categories: Decentralization storage, Decentralization computing, CDN, VPN, WiFi, 5G networks, etc.

Most DePINs have three basic components:

1. Physical infrastructure: Build and maintain in the real world, forming a decentralized physical infrastructure network.
2. Off-chain computing infrastructure: relies on middleware to capture and analyze real-world data, calculating user contributions.
3. Blockchain and Tokens: Blockchain as a tamper-proof ledger, device registry, task statistics, and scheduling platform; tokens as incentives, service pricing currency, and staking assets.

DePIN Project Case

Decentralization storage network

A certain global largest distributed storage network has over 3,800 storage providers, contributing more than 17M TB of storage capacity. The project aims to bring open, publicly verifiable characteristics to the three core pillars of the data economy (storage, computing, content distribution).

Decentralization GPU rendering platform

A certain platform is a Decentralization GPU rendering platform that connects users executing rendering jobs with users who have idle GPUs, used for distributed GPU computing in the 3D rendering and AI industries. In the first half of 2023, the platform facilitated over 4.6 million frames of rendering jobs, with an average cost of 20 dollars, which offers a price advantage compared to many centralized platforms.

Decentralization wireless network protocol

An open-source protocol incentivizes people around the world to collaboratively build wireless networks. The native cryptocurrency of the protocol can be minted to generate data credits, which are crucial for transmitting device data and maintain a consistent dollar value. Demonstration cases built on this protocol include IoT networks and 5G networks.

Decentralization live video broadcasting platform

A certain platform is a video infrastructure network for live and on-demand streaming, aimed at providing developers with innovative freedom and creators with platform autonomy. Its core is to incentivize nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through a cryptoeconomic protocol.

Decentralization video streaming network

A certain platform is a decentralized video streaming platform based on blockchain technology, incentivizing individual users with tokens to share surplus computing power and bandwidth resources as caching or relay nodes for video streams, thereby improving video stream quality and content while reducing the cost of video distribution.

Summary

DePIN is a field that has been gradually developing since the early stages of the industry, with significant expansion in the past two years. According to research institutions, the total potential market size of the DePIN industry is approximately $2.2 trillion, which could reach around $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5 billion, indicating a huge growth potential.