The Current Status and Future of Decentralization Physical Infrastructure Networks

Decentralization physical infrastructure network ( DePIN ) builds an efficient P2P physical resource network by combining the financial attributes and incentive mechanisms of Web3, creating a decentralized physical network infrastructure, and enabling the network to have programmability. DePIN means the boundaries between the physical reality and the blockchain world are gradually blurring.

Overview of DePIN

DePIN combines physical infrastructure resources with blockchain technology, coordinating global resource collaboration through distributed ledgers, token incentives, and smart contracts. It creates a bilateral market of "resource sharing + economic incentives", which is more flexible than traditional point-based resource management, with stronger scalability and robustness.

A complete DePIN network consists of project parties, off-chain physical devices, suppliers, and demanders. The basic operating modes include:

1. Off-chain hardware devices
2. Proof Mechanism
3. Identity Verification
4. Reward Distribution
5. Demand Matching

The core value of DePIN includes:

• Resource Sharing and Digitalization
• Decentralization governance
• On-chain settlement
• Innovation

Current Status of DePIN Development

The DePIN projects are mainly distributed in the fields of storage, computing power, data collection and sharing, wireless, sensors, and energy. Currently, the number of DePIN projects that have gone live has reached 1,561, with a total market value of approximately 22 billion USD.

The DePIN project mainly focuses on deploying on public chains such as Solana, IoTex, and Peaq. Polygon and Arbitrum are also gradually becoming rising stars.

The current DePIN project is divided into two directions:

• Focus on the middleware of DePIN
• Focus on the expansion of the DePIN demand side

DePIN Middle Layer

The DePIN middleware aims to help project teams quickly launch DePIN applications by providing a development framework, developer tools, overall solutions, etc. It mainly includes:

• DePIN infrastructure: such as DePHY, W3bStream, etc.
• Liquidity schemes: such as PINGPONG, Parasail, etc.

DePIN Application Layer

The DePIN application layer is mainly divided into four major sectors:

1. Cloud Network: including Decentralization storage and computing power

2. Wireless Networks: including 5G, WiFi, Bluetooth, LoRaWAN, etc.

3. Sensors: Monitoring of environmental, geographical, health, and other data

4. Energy: Decentralization Energy Network

The Future Trends of DePIN

1. Combined with Web2 application scenarios, spanning multiple fields such as IoT, smart cities, and energy sharing.

2. The hardware threshold is lowered, transitioning to consumer-grade products.

3. Financialization, creating new imaginations for on-chain finance

4. Mutual feeding with AI, unleashing new development potential

Challenges Facing DePIN

1. The complexity of technical implementation is high.

2. The market acceptance needs to be improved

3. The profit model is still unclear.

4. May face regulatory pressure

Key Factors in Evaluating DePIN Projects

1. Hardware: DIY vs third-party, one-time vs recurring costs, coverage density, resource scarcity, etc.

2. Token Economics Design: BME/SFA Model, Governance Function, Staking Mechanism, etc.

Summary

DePIN, as an important component of the Web3 value network, has tremendous potential to reshape production relations and release productive forces. By integrating idle resources globally, it enhances the efficiency and risk resistance of infrastructure.

Although DePIN still faces many challenges, as technology and the market continue to mature, it is expected to become a new benchmark for future infrastructure. The development of DePIN requires long-term accumulation, and it is believed that there will eventually be an opportunity for explosive growth.