DePIN: P2P Infrastructure Trend 2024

Messari stands out as a leading crypto research firm, offering comprehensive coverage through its Messari Research and Messari Data products, catering to a wide range of informational needs in the cryptocurrency space .Messari lists DePIN as one of the Top 10 Trends in Peer-to-Peer Infrastructure in 2024.

In November 2022, Messari initiated a Twitter poll to consolidate the space under a single acronym, offering voters a choice between PoPW, TIPIN, EdgeFi, and DePIN. DePIN emerged victorious, securing 31.6% of the votes.

Come December 22, 2022, in its annual "Theses," Messari introduced "DePIN" in its research for the first time, asserting that it "will be one of the most crucial areas of crypto investment for the next decade."

Fast forward to January 19, 2023, and Messari unveiled a comprehensive report exclusively dedicated to DePIN, marking a pivotal moment in the timeline of this emerging technology.

Lets understand what exactly is a DePIN, or Decentralized Physical Infrastructure Networks!

What is DePIN?

DePINs means Decentralized Physical Infrastructure Networks and it represent blockchain protocols designed to manage physical-world infrastructure in an open and decentralized fashion. These networks leverage cryptocurrency tokens to encourage the growth of tangible infrastructure.

DePIN employs blockchain technology to guarantee the utmost security and tamper resistance for all data transmitted across the network. By enabling devices to connect directly without intermediaries or centralized servers, DePIN establishes a highly dependable and efficient network.

Additionally, this technology seamlessly integrates with smart city infrastructure, facilitating smooth incorporation into existing urban frameworks. This adaptability enhances the feasibility of cities embracing and implementing this innovative technology.

From a business perspective, DePINs signify a prospective advancement beyond the Internet of Things (IoT) in the Web3 ecosystem. They embody a decentralized IoT model wherein infrastructure ownership and monetization are shared among users, device owners, and businesses, presenting a collaborative approach to the evolution of connected technologies.

Essentially, it employs tokens to encourage individuals to collaboratively contribute to the crowdsourcing and construction of interconnected, real-world physical infrastructure.

Types of DePIN

So, DePINs can cover a spectrum of services, spanning from mobility and energy to connectivity and storage solutions. However, the question arises:?

• Are all DePINs created equal?
• Isn't mobility more of a tangible asset compared to data storage?

Distinguishing Physical Resource Networks from Digital Resource Networks Understanding DePINs: Physical vs. Digital Resource Networks Weighing Physical against Digital Resource Networks

As per Messari's categorization, DePINs fall into two main categories based on the nature of the hardware and the resources, goods, and services they provide.

Physical Resource Networks (PRNs) incentivize individuals to deploy location-dependent hardware for offering tangible, real-world, and non-fungible goods and services. Think of services related to mobility, energy, or connectivity.

Digital Resource Networks (DRNs) incentivize individuals to deploy hardware for providing fungible, digital resources. Consider services related to storage, bandwidth, or compute networks.

The Four Dimensions of DePIN

Explore the decentralized physical infrastructure through these four fundamental categories:

1. Cloud Storage Networks/Server Networks: DePIN introduces decentralization to storage and server networks, ensuring resilient and secure data storage. Unlike centralized services with single points of failure, DePIN offers a robust alternative by distributing data across multiple storage nodes. This encompasses file storage, CDN, relational databases, and VPN networks.
2. Energy Networks: DePIN's decentralized energy network revolutionizes energy trading and sharing, allowing for the direct selling or trading of surplus energy within local communities. This fosters a community-centric approach to energy distribution, aggregating various distributed energy sources and enhancing grid resilience and efficiency.
3. Sensor Networks: DePIN's decentralized sensor networks gather precise, secure, and transparent data from diverse environments, ensuring the integrity and accessibility of sensor data. This involves interconnected devices embedded with sensors collecting real-time data, ultimately enhancing mapping capabilities and data integrity.
4. Wireless Networks: DePIN transforms wireless networks, including 5G and WiFi, by establishing a decentralized hotspot network. This approach democratizes internet access, addressing connectivity gaps often present in remote or rural areas due to traditional Internet Service Providers (ISPs). Moreover, DePIN supports technologies like 5G and LoRaWAN (Internet of Things).

DePIN Landscape Report 2023

Sami Kassab and Salvador Gala, co-founders of Escape Velocity (EV3), have collaboratively authored EV3's annual State of DePIN report. This comprehensive document offers a detailed analysis of the DePIN landscape throughout 2023, providing insights into the current state and a forward-looking perspective on what lies ahead for DePIN in 2024.

To access the complete report, you can download the PDF version.

Key Observations:

• Decentralized Physical Infrastructure Networks (DePINs) employ crypto-incentives to effectively coordinate the development and operation of vital infrastructure.
• The DePIN ecosystem has expanded significantly, encompassing over 650 projects in 2023, distributed across six subsectors: compute (250), AI (200), wireless (100), sensors (50), energy (50), and services (25).
• The collective market cap of DePINs with liquid tokens has surpassed $20 billion, contributing to an annualized onchain revenue of approximately $15 million.
• Notably, DePIN revenues, grounded in utility rather than speculation, demonstrated remarkable resilience in the last market cycle. While the broader crypto market witnessed a substantial decline of 70-90%, DePIN revenues experienced a more moderate drop ranging from 20-60% from their peak values.
• The addition of over 600,000 nodes was observed in DePINs, predominantly stemming from software-based implementations capitalizing on the sophisticated sensors within mobile phones.

Looking forward to 2024, DePINs are poised to explore innovative technologies such as ZK technology, memecoin integrations, onchain AI, and onchain gaming. These advancements mark the next phase of evolution for DePINs.

Top 4 DEPIN Cryptocurrencies to Monitor in 2023

1. Helium: Revolutionizing IoT ConnectivityHelium operates as a decentralized wireless network, utilizing blockchain technology to offer cost-effective, low-power coverage for Internet of Things (IoT) devices. With a network of over 400,000 Helium Hotspots worldwide, it stands as a successful DePIN.Features:Low-cost ConnectivityLow-power TechnologySecurity through BlockchainDecentralizationCommunity-driven Ecosystem
2. Akash Network: Transforming Cloud ComputingAkash Network focuses on decentralized cloud computing, leveraging blockchain to provide low-cost, scalable, and secure resources. Participants are rewarded with AKT tokens for contributing idle computing resources.Features:Cost EfficiencyScalabilitySecurity through BlockchainDecentralizationOpen-source Collaboration
3. Filecoin: Revolutionizing Data StorageFilecoin is a leading DePIN crypto concentrating on decentralized storage solutions. It employs blockchain for secure and reliable storage, utilizing a global network of storage providers rewarded with FIL tokens.Features:Security through BlockchainReliabilityDecentralizationOpen-source InnovationMarket-driven Pricing
4. Iotex: Transforming IoT Connectivity and ManagementIotex is a groundbreaking DePIN crypto specializing in decentralized IoT connectivity and management. It uses blockchain to provide a secure and scalable solution for connecting and managing IoT devices, with IOTX tokens as rewards.Features:Security through BlockchainScalabilityReliabilityDecentralizationOpen-source Development

Advantages of Decentralized Physical Infrastructure (DePIN)

The future outlook for DePIN is highly promising, anticipating substantial advancements in both physical infrastructure and blockchain technology. With the rapid proliferation of connected smart devices and decentralized applications (dApps), DePIN stands poised to play a pivotal role in the industry.

Let's explore some of the benefits that set DePIN apart from traditional physical infrastructure:

1. Decentralization: DePIN signifies a transformative shift from a centralized to a decentralized model. This eliminates dependence on a single entity or corporation for the establishment and maintenance of physical infrastructure.
2. Competition and Innovation: DePIN projects foster open competition and innovation by dismantling barriers to entry prevalent in traditional infrastructure networks. This encourages new entrants to enter markets previously monopolized by centralized entities.
3. Cost Efficiency: DePIN users experience reduced costs compared to conventional models. For example, choosing Filecoin or Storj for data storage not only offers affordability but also provides opportunities to earn tokens in return.
4. Incentives: DePIN projects leverage token rewards and blockchain technology to incentivize the development of physical infrastructure. In contrast to traditional projects owned by centralized entities, contributors receive financial compensation and stakes in network ownership.
5. ‘Sharing Economy’ Model: DePIN operates on the principles of the sharing economy. It distributes the costs and responsibilities of infrastructure setup and maintenance among service providers, fostering a more cost-effective and equitable model.

The DePIN Momentum Cycle

By incorporating tokens, DePIN projects can leverage a favorable momentum cycle. Elevated usage (demand) not only propels token prices through burns or buybacks but also amplifies incentives for contributors to actively expand the network as the value of the tokens they receive sees an increase in dollar value.

As the network experiences growth, investor interest intensifies, leading to increased support for the project through funding. In scenarios where a project embraces an open-source approach or shares contributor/user data publicly, developers gain the opportunity to construct dapps on the foundation of this data. This, in turn, generates supplementary value within the ecosystem, drawing in more users and contributors alike.

Final Thoughts

As DePIN technology reaches new levels of maturity, we find ourselves standing on the brink of a transformative era in infrastructure development and management. These decentralized networks, fueled by blockchain technology, hold the potential to elevate efficiency, transparency, and democratic practices, all while reducing costs and bolstering resilience. Helium, Akash Network, Filecoin, and Iotex offer just a glimpse into the diverse applications of DePINs. With an influx of innovative projects, the potential for blockchain-driven physical infrastructure advancements is boundless. Equipped with robust and scalable blockchain protocols, and with growing awareness from both the public and businesses, DePINs are set to redefine how we construct and oversee the infrastructure that forms the backbone of our contemporary world. The decentralized future of infrastructure is unfolding, led by the pioneering strides of DePINs.

PrimaFelicitas is ready to guide you in adopting DePIN. Dive into the transformative world of Decentralized Physical Infrastructure Networks (DePINs) with PrimaFelicitas. Our team is at the forefront of harnessing blockchain-driven innovations, reshaping the landscape of infrastructure development. Explore the possibilities!

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