Starting from scratch to sort out the investment logic of DePIN: Alpha opportunities still exist

The DePIN field has yet to see a flagship project. Leading projects like Helium emerged before the concept of DePIN, while Bittensor, Render, and Akash are more aligned with the AI track. This suggests that there may still be Alpha opportunities in the DePIN track in the next 1-3 years. This article attempts to outline the investment logic of DePIN from scratch, analyze its investment value, and propose a simple analytical framework.

Why Pay Attention to DePIN Investment

DePIN is not just a buzzword.

Decentralizing physical world infrastructure is not an empty concept, but a practical direction that can be implemented. There are indeed scenarios in DePIN where decentralization can "enable" or "optimize" certain situations.

Taking the telecommunications field as an example, traditional communication operators need to invest heavily in spectrum license auctions and base station deployments. Helium Mobile, through a community crowdsourcing approach, distributes the early costs among each user, allowing individuals to simply purchase hotspot devices to connect to the network and become "micro-operators." This model significantly reduces the overall investment.

In the field of AI data, traditional AI companies face high costs and copyright restrictions in acquiring training data. Grass allows users to share idle bandwidth through distributed Web Scraping to help scrape publicly available web data, significantly reducing the data acquisition costs for AI companies while achieving diversity and geographical distribution of data.

as the intersection of infrastructure and users

DePIN effectively addresses the challenges faced by infrastructure projects and user-end projects respectively:

1. DePIN is built on the real demand in the physical world, where high-quality projects have a solid product-market fit and revenue, making them hard to disprove and easy for the market to understand.

2. DePIN also has user-side usage demands and can capture user mindset. For example, Grass has reached 2.5 million end users, many of whom are non-crypto native users.

DePIN Investment Framework

Direction

Evaluate the market size and demand intensity. For example, 5G and wireless networks are large markets, while in-vehicle data and weather data are small markets. Even if DePIN can only capture a small portion of the traditional market, it is still quite substantial under the scale of cryptocurrency.

product

The DePIN model is particularly suitable for industries with high capital requirements, high entry barriers, obvious monopolistic patterns, and underutilization of resources. Considerations include:

1. Supply Side: Has DePIN achieved functionalities that were previously unattainable, or does it have significant advantages over existing solutions?

2. Demand Side: The products provided by DePIN must have real market demand, preferably with a strong willingness to pay.

hardware

The timeline of hardware can be summarized as "Manufacturing - Sales - Distribution - Maintenance". Considerations include:

• Is the hardware self-designed and manufactured, or is existing hardware used?
• Hardware Pricing Strategy
• Distribution methods and potential issues
• The ease of maintaining hardware for users

Ideally, the threshold and friction for user participation should be minimized in the early stages of the project.

Token Economy

The design of the token mechanism is the most challenging aspect of the DePIN project, requiring reasonable incentives for all participants in the network at the early stage of the project.

Team

In team configuration, the founder must have at least one person with the following backgrounds:

1. Worked in traditional companies in this field with rich experience, responsible for technology and product implementation.
2. Encrypted native, understand token economics and community building

Others

Regulatory issues need to be considered, such as the sensitivity of data collection in certain regions.

Summary

DePIN has the potential to achieve sustainability and large-scale adoption of applications. Although the development cycle is long, projects like Helium Mobile have already shown promise. The unique advantages of DePIN include:

1. Compared to traditional monopoly enterprises, DePIN deployment is more flexible and can align internal incentives within the ecosystem through a token model.

2. DePIN may bring positive externalities, creating value for real life and other industries.

Despite facing many uncertainties, DePIN is still a key sector to watch in 2025.