What is DePIN?
With the rise of blockchain and growing interest in decentralized solutions, DePIN has emerged as a topic of current interest. While still in the early stages, DePIN is said to have the potential to disrupt existing infrastructure models across a broad range of areas.
DePIN stands for Decentralized Physical Infrastructure Network, which is an umbrella term for networks that leverage blockchain technology to decentralize control and ownership of physical infrastructure in the real world.
In the traditional world, physical infrastructure like data networks, transportation or electrical grids have been owned and managed by centralized entities. DePIN projects seek to replace this by creating peer-to-peer (P2P) networks where individuals can contribute their own physical resources and own shared control over the network.
Like the case of Airbnb, multiple centralized projects in Web2 have successfully harnessed the power of community. DePIN projects aim to further promote active community participation by giving users decision-making authority with decentralization and cryptocurrency rewards that would grow in value alongside the size of the network.
Being blockchain-based enables DePIN projects to be more transparent, less reliant on a single authority and less vulnerable to single points of failure. Furthermore, as participants of DePINs are recognized as collective decision-makers, the driven community is capable of being more flexible and efficient in managing the platforms.
DePIN use cases
Use cases of DePIN are across a variety of fields including decentralized finance, data storage, telecommunications, transportation and healthcare. One of the more well-known DePIN projects is Filecoin, which is a peer-to-peer, decentralized data storage platform that ensures security and stability by leveraging a network of individual computers. Data storage providers are rewarded FIL tokens for storing data reliably over a certain period of time. Some other known examples of DePIN include Render, Livepeer, Akash Network, Helium, AIOZ and Hivemapper.
“In one sentence, DePIN is about making infrastructure smart and agile by aligning incentives of the participants,” said Kerem Ozkan, Founder and CEO of Soar Robotics, the company behind the mobility DePIN project, Soarchain. Soarchain aims to create a token-based data and connectivity infrastructure specifically for the mobility industry, which would allow vehicles to collect and share data securely, with the aim of improving safety and efficiency in transportation.
Other than in mobility, Ozkan told The Block that he sees DePIN benefiting the future growth of AI. One of the problems AI has today is the lack of sufficient GPUs, CPU clusters and basically computational powers, Ozkan said. “This is because in the AI domain, the innovation itself was a lot faster than the data center development, so that’s why there’s this crunch.” The Soarchain CEO sees potential in token-incentivized and community-led DePIN data networks giving the scalability and agility that AI needs at the moment.
As the concept gains more traction, multiple DePIN projects have started to gather funding from venture capitalists. Blockless, which focuses on providing decentralized computing power support, announced last month that it raised $8 million in pre-seed and seed funding rounds. WeatherXM, a DePIN project that produces hyper-local weather forecasts from environmental data stored on Filecoin, gathered $7.7 million in Series A funding.
Future challenges
Still, DePIN, as a comparatively nascent field, faces challenges. “The physical environment is not controllable, so interoperability, scalability or anything that's related to safety of the overall systems are still challenges,” Ozkan said.
Verification of DePIN participants is another remaining hurdle. “You have a permissionless entrance of different hardware and infrastructure, so that’s why you have to verify them if they are plausible, tamper-proof and all these things,” said Ozkan.
The DePIN developer said the technology has the potential to have as much impact as when railroads were first introduced, but will need to continue to innovate itself for greater adoption.
Disclaimer: This article was produced with the assistance of OpenAI’s ChatGPT 3.5/4 and reviewed and edited by our editorial team.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
