Th RISE of DePIN: The Next Big Thing in Crypto

The world of cryptocurrency is constantly evolving, with new trends and technologies emerging regularly. One such trend that has recently caught the attention of venture capitalists is Decentralized Physical Infrastructure Networks, or DePIN. This innovative concept is reshaping the way we perceive and interact with physical infrastructure, promising to revolutionize industries and empower individuals in unprecedented ways.

What is DePIN?

Decentralized Physical Infrastructure Networks (DePIN) refers to the application of blockchain technology and decentralization principles to physical infrastructure and systems. In essence, DePIN involves taking real-world infrastructure like a wireless network and running it with a blockchain-powered system. This approach promises a direct tie to the real world, running infrastructure with blockchains, and has attracted significant investment from venture capital firms.

DePIN projects are blockchain-based and operate physical hardware infrastructure in a decentralized way. They often use token reward systems to incentivize users to help build out their networks. The sector covers a wide range of areas including wireless connectivity, data collection, computing, and data storage.

Why is DePIN Attracting Attention?

Venture capitalists have already pumped billions into the DePIN sector, with some dedicating entire funds to DePIN protocols. According to a Crypto.com report, the top DePIN projects have raised more than $1 billion combined. This significant investment indicates that venture capital firms see potential in this emerging trend. Borderless , for instance, has been investing in projects since 2021 and was an early backer of the Helium network. It runs a dedicated DePIN fund that has done more than 30 investments in the space and has raised money from the likes of Jump, Telefónica , and OKX .

However, despite the obvious interest from the VC community, DePIN faces one of the oldest challenges in crypto: relatively few customers. The industry faces the challenge of demonstrating that the demand for the underlying service is clearly identifiable, meaning that the customers already exist.

Nonetheless, DePIN is quickly shooting up the list of crypto buzzwords. The potential of DePIN lies in its ability to host a killer app with a billion users. These users would be using public blockchains without necessarily realizing they are interacting with a crypto product.

Key DePIN Projects

Several DePIN projects have already made a significant impact in the crypto world. Here are a few notable ones:

1. Helium: This project drives a wireless network with a token-powered ecosystem. Helium’s DePIN-driven network is decentralized; members of the public can set up hotspots and get rewarded with HNT tokens for helping run the wireless network. Other DePIN projects have similar community-driven systems.
2. Filecoin (see also Filecoin Foundation ): This data-storage platform is another leading player in the DePIN space. It allows users to rent out their excess storage space, creating a decentralized, blockchain-based market for data storage.
3. peaq : is a blockchain-based platform that allows for the creation of decentralized networks and applications. It uses a unique approach to blockchain technology, known as Directed Acyclic Graph (DAG), which allows for faster transaction times and greater scalability than traditional blockchain networks. - "DePIN summer is just getting started", with peaq
4. Overclock Labs, creators of Akash Network : This project is a decentralized cloud computing marketplace that allows anyone to rent out their unused computing power. It’s a great example of how DePIN can be used to create a more efficient and equitable digital economy.
5. Ritual : is a decentralized AI network that allows users to train machine learning models on their own devices, without the need for centralized servers. This approach not only reduces the cost and environmental impact of AI training but also helps to democratize access to AI technology.

The total market capitalization of all DePIN tokens exceeded $25 billion as of February, according to Crypto.com research. Computing, storage, and artificial intelligence accounted for the majority of that.

The Future of DePIN

Despite the challenges, the future of DePIN looks promising. As the computing needs for AI surge, the true utility of decentralized hardware is coming to life. Companies and protocols like Akash Network and Ritual are leading the way here, and we expect to see more players leveraging decentralized networks for non-crypto use cases.

However, DePIN projects pose a higher risk for investors compared to more established investments like exchanges, mining, or staking infrastructure. Incentivizing the development of physical infrastructure is another level of commitment towards a project.

In wrapping up, imagine a world where everyone has a say in how infrastructure is built and managed. That’s the potential of DePIN.