Cracking the Code: DePIN Ecosystem Source Analysis VS Financial Success
Costas Voliotis
Co-Founder CEO/CPO @ Code We Trust | Source Code Risk Analysis/Technical Debt Calculation
DePIN, or Decentralized Physical Infrastructure Network, aims to leverage the principles of decentralization to manage and optimize real-world infrastructure using blockchain technology. This approach distributes complex computational tasks across numerous devices, creating a collaborative network where resources are pooled for greater efficiency. Imagine your computer contributing a small fraction of its processing power along with thousands of others to tackle large-scale problems. This networked effort not only facilitates demanding computational tasks but also provides a potential avenue for monetizing idle resources.
DePIN covers a wide range of areas, including server networks, wireless networks, sensor networks, and energy networks. According to CoinMarketCap (CMC) data, 60 DePIN projects have issued tokens, collectively amounting to a market cap of $1.33 billion. The overall DePIN industry size is currently approximately $2.2 trillion and is expected to grow to $3.5 trillion by 2028.
However, as with any emerging technology, DePIN comes with its own set of challenges and considerations. While it represents an exciting evolution of blockchain, stakeholders must be aware of the inherent market volatility, technological uncertainties, and, crucially, the quality of the underlying software. In this survey, we delve into the code quality of various DePIN implementations to assess their robustness and reliability, providing a comprehensive overview for developers, investors, and enthusiasts alike.
This article analyzes the reliability of the source code implementing a selection of 20 DePINs and compares it with the reliability of successful crypto-projects and widely acclaimed software projects. We hypothesize that software quality and the maturity of the development process will eventually impact the stability and reliability of each project, with financial implications. This article provides an overview of the metrics and analysis supporting this hypothesis. It must be clearly stated that this article doesn't aim to rank the DePIN projects but proposes a systematic process for comparing software quality for products under development.
The Sample DePIN set
DePIN (Decentralized Physical Infrastructure Network), proposed by Messari in December 2022, aims to use blockchain technology and token rewards to incentivize individuals and businesses worldwide to build decentralized infrastructure. This includes facilities such as WiFi, hard drive storage, batteries, and more. DePIN represents the next stage in the evolution of cryptographic networks, dedicated to deploying real-world physical infrastructure and hardware. For this experiment, we have selected 20+1 DePIN projects that offer open-source code on GitHub [DepinProects]
Methodology
We have used CodeWeTrust’s source code and development process AI-driven assessment methodology for this experiment presented in this article. [AI in QA] CodeWeTrust specializes in technical risk assessment by offering the C2M platform, which fully automates source code assessment and consults buyers and sellers on M&As. This methodology is based on a non-supervised machine learning model that fits a quality baseline AI rule engine, ensuring a comprehensive and unbiased evaluation of the software's quality and development process.
Overview of the results
Considering maturity, maintainability, software quality, and measure software development sustainability, only three out of the twenty sampled projects maintained good performance and proved comparable with the reference projects. Projects such as DIMO, Opentensor, and DFinity compete with well-maintained and widely used ecosystems like Solana and Cosmos,as well as industry-approved standards such as Kubernetes and Docker.
The source code quality and development team assessment results can be found on this CodeWeTRust installation?
staging: DePIN-projects
user: [email protected] password:c2m!GU
Comparison with Blockchain and Software Industry Standards
From a financial performance perspective, sustainable cryptocurrencies demonstrate resilience, growth in market value, and strong fundamentals such as network security, innovation, adoption, and community support. Successful examples include Bitcoin, Ethereum, Binance Coin, Cardano, Solana, Ripple, and Polygon.
We will also compare DePIN projects with mature software development projects like Kubernetes and Docker, known for their high maturity, widespread adoption, and robust community
Metrics
For simplicity, we use only four metrics which are based? We have split the metrics into two categories,? the source code quality metrics and the development maturity metrics. All metrics are initialized by sampling and assessing source code quality and development processes using CodeWeTrust’s AI-based framework.
Source Code Quality Metrics:
Development Process Metrics:
These metrics are calculated by analyzing Git revision history along with source code assessment results using an AI-based framework.
Quality Benchmarks
When it comes to quality, it is crucial to justify it against a known standard, otherwise, we compare apples and oranges. In this context, we will define two standards. CodeWeTrust offers a unique method to calculate and apply quality benchmarks by selecting reference projects. We have defined two different benchmarks:
The results of the source code and development process assessment
Based on this analysis, only four projects demonstrated sufficient maturity to be compared with industry standards in blockchain and software development. Among these, DIMO-Network emerged as a clear leader. DIMO ranked in the top five across all categories, showcasing its development by a robust team using a modern tech stack. Other projects, such as IOTEX, StorJ, and Filecoin, ranked highly due to their active development communities. However, they lose points when assessed for code quality and development complexity
In-Depth Analysis of Top Performers
We analyzed the development process of the top four projects by reviewing their GitHub revision histories over the last three years. While Functionland's development appears suspended (and will therefore be excluded from the next steps of the analysis), the other three projects demonstrated robustness and continuous development.
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Quality Tests Against Industry Standards
All four selected projects performed well in quality tests against both blockchain industry and software development standards. While DIMO and Opentensor need improvements in web security, updating linked packages should address these issues.
We have analyzed the majority of the active open-source code for each DePIN ecosystem. Functionland stands out as a massive ecosystem with 95 million lines of code (MLOC) spread across more than 80 repositories, similar in scale to LivePeer and IOTEX. In contrast, DIMO has a more solid and manageable implementation, as do Dfinity and Opentensor. It is commonly understood that maintaining high code quality becomes challenging when the size of the codebase exceeds the development team's capabilities.
For simplicity, we have considered only a few of the code quality characteristics, as shown in the figure below.
Quality test against Blockchain industry standards
The overall quality is quite good, although Opentensor would benefit from some partial code refactoring
DePIN projects Quality test against Software industry standard industry standards
The overall quality is good. However, DIMO and Opentensor projects would benefit from some partial code refactoring.
For your reference, we will include the quality analysis results of the flagship blockchain projects used to establish the Blockchain Benchmark
Does quality have any impact on the financial performance of DePIN projects?
DePIN projects incentivize developers, users, and network participants by offering cryptocurrencies. The long-term sustainability of these cryptocurrencies is expected to impact the long-term growth of DePIN projects. As of March 2024, there are 13,217 cryptocurrencies in existence. The total market cap of all cryptocurrencies is $1.32 trillion, with a 24-hour trading volume of $172 billion. However, not all cryptocurrencies are active or valuable. Discounting many “dead” cryptos leaves only around 8,985 active cryptocurrencies. There are approximately 420 million cryptocurrency users across the globe, and around 18,000 businesses now accept some form of crypto as payment.
While precise data is challenging to obtain, it is estimated that only about 20% of these active cryptocurrencies have maintained more than 50% of their value over the last three years. This indicates that approximately 1,797 cryptocurrencies have demonstrated a degree of financial stability during this period, reflecting the impact of quality and robust development practices on their long-term viability.
Sources: CoinGecko, investing.com, Triple-A
The volatility of the coins offered by DePIN projects has crucial importance for the growth and sustainability of these projects, as participants are rewarded with these cryptocurrencies. Fluctuations in coin value can eliminate participants' earnings and developers' rewards, potentially leading to project collapse sooner or later.
Although several factors affect the performance of cryptocurrencies, apart from source code quality, it is useful to provide the last year's performance of the coins of? selected three projects
Last year's performance of DePIN projects that failed to be ranked in the top 10 considering any of the four selected metri
Moreover, let’s consider the quality footprint of three famous cryptocurrency projects that have collapsed loudly:
It appears that the source code development process shows evidence of decline long before these coins collapsed. Both coins lost the majority of their developers and failed to take advantage of the recent bullish trend in cryptocurrency markets. When a software product's source code becomes problematic, it is hard to maintain, especially if the maintenance relies on the volunteer contributions of the open-source community. However, this is just a hypothesis.
Conclusions
The quality of source code and the robustness of development practices are critical factors that can significantly impact the long-term viability and financial performance of DePIN projects. This analysis has demonstrated that projects with high-quality code and stable development teams tend to maintain their value better and show greater resilience in the volatile cryptocurrency market. By focusing on continuous improvement in software quality and adhering to industry standards, DePIN projects can enhance their prospects for sustainable growth and success.
Understanding the intricate relationship between code quality, development practices, and financial performance provides valuable insights for developers, investors, and stakeholders in the DePIN ecosystem. As the industry evolves, maintaining rigorous quality standards and fostering strong development communities will be essential for navigating the challenges and opportunities ahead.
While source code analysis alone may not predict the short-term growth of each DePIN project, it provides strong evidence of potential long-term success or failure. Projects with poor code quality are more likely to face significant challenges, potentially leading to their downfall. Thus, prioritizing high-quality development practices is crucial for the sustainable growth of DePIN projects.
Takeaways?