2023 Encryption Trend: Decentralized Physical Infrastructure Network DePIN

Author: CoinList, Translation: Blockingxiaozou

Over the past decade, a few innovative companies led by Airbnb and Uber have created new internet markets. These pioneering platforms brought a new business model to the world: the decentralized sharing economy.

This innovative business model has reshaped the way individuals interact with services developed around physical infrastructure such as cars and houses. However, interestingly, the sharing economy has not been widely applied to other physical infrastructure areas, especially those at the core of the digital economy, such as telecommunications and data warehouses.

However, this situation has been changing in recent years. The emergence of a new generation of blockchain protocols has quietly and irreversibly redefined the way these physical infrastructure networks are built and expanded to better serve end users. This transformative technology paves the way for an unimaginable future full of possibilities. Therefore, as this technological revolution progresses smoothly, we find ourselves on the edge of an exciting new world. Welcome to the DePIN era!

In this article, we will explore DePIN and its importance, learn about its various types, which famous DePIN companies exist, and what impact it will have on our future.

1 , What is DePIN?

DePIN is short for Decentralized Physical Infrastructure. This innovative approach is completely changing the way we create and manage physical infrastructure and hardware networks. Just as Airbnb and Uber changed their respective industries, DePIN aims to do the same, but with an additional step – it is building the future of digital physical infrastructure on a solid foundation of blockchain technology.

DePIN projects are not just a trendy and flashy name. They have a unique operating premise: to use tokenized incentives to motivate and coordinate individuals and small businesses. For what purpose? To encourage them to deploy and operate physical infrastructure networks such as telecommunications, data warehouses, and data sensors. In this mode, tokenized incentives are a convincing means of motivation, driving participants to actively shape the infrastructure landscape.

But innovation does not stop there. Once these networks are established and operational, they are no longer exclusive to large corporations or government entities. Instead, they are for everyday consumers. How do these consumers access these services? Through network tokens. This service acquisition method itself is ingenious—it perfectly combines with the decentralized nature of the DePIN project, creating a holistic circular economy that benefits all parties involved.

The brilliance of DePIN lies in its ability to disrupt traditional infrastructure models. It’s like imagining a blockchain-based Airbnb or Uber, but it’s a digital-centric physical infrastructure. By decentralizing access and control, the DePIN project creates a more flexible, efficient, and democratic infrastructure system.

Therefore, whether you’re exploring telecom networks, delving into data warehouses, or mining the potential of data sensors, the DePIN approach offers an enticing glimpse into the future of infrastructure. It’s a future that everyone can participate in and benefit from, a decentralized model that replaces the old, top-down approach with one that is user-centric. Clearly, the DePIN revolution is not just a trend, but also the dawn of a new era of infrastructure development and management.

2. Who are the beneficiaries of DePIN?

So, who will benefit from the DePIN revolution? The answer is: everyone. From network builders and suppliers to consumers, the benefits of DePin are far-reaching.

(1) Network Builders

First, let’s focus on network builders, who will benefit greatly from decentralized physical infrastructure in DePIN. A prominent example is DePIN leveraging crowdsourcing as a catalyst for accelerating infrastructure deployment. In fact, this means that network builders can establish a wide-ranging network in less time than traditional methods, greatly speeding up the deployment process.

In addition, DePIN’s decentralized core creates an unprecedented environment for unrestricted global scaling. For example, network builders can now easily expand their network footprint from an isolated village in the American Midwest to a bustling city center in Asia. This expansion doesn’t require tedious steps or follow complex procedures, which used to be inherent in international development. The result is a seamless and efficient bridge across vast geographic divides.

The economic benefits brought by DePIN cannot be emphasized enough. This innovative system effectively reduces costs associated with traditional infrastructure projects and eliminates many of the management expenses that were once thought to be inevitable. For instance, network builders can now avoid the hefty costs associated with securing and maintaining physical locations for network operation centers, as the decentralized nature of DePIN makes these expenses largely unnecessary. As such, DePIN offers a fundamentally more cost-effective solution that redefines the economics of network construction.

(2) Suppliers

Now, let’s turn our attention to suppliers – individuals or small businesses responsible for operating and maintaining physical networks. The emergence of DePIN’s decentralized physical infrastructure brings numerous benefits to them. A notable example is the frictionless reward process that DePIN achieves through its tokenized incentive system. Imagine a small internet service provider in a rural town. With the DePIN model, that supplier will have direct ownership and control of the network, with rewards directly tied to the services provided, without the need for complicated legal agreements or third-party verification.

In addition, the system opens up avenues for increased income potential by gradually eliminating unnecessary intermediation fees. To illustrate this point, let’s take the example of a local telecommunications provider. Under the DePIN model, that supplier will receive more service fees, with no middleman taking a cut. This will result in higher revenues and a more satisfying business experience.

Most importantly, DePIN offers a convenient payment solution. This feature eliminates the need for traditional financial intermediaries, resulting in a more efficient, seamless transaction process. As a result, whether it’s a small startup maintaining an electric vehicle charging station network or a local entrepreneur operating community internet services, service payments are simple, convenient, and more profitable. The result is a more beneficial and satisfying experience for suppliers in the DePIN ecosystem.

(3) Consumers

Finally, let’s not forget about consumers – the primary beneficiaries of the services provided by these networks. With the emergence of DePIN’s decentralized physical infrastructure, consumers have greatly improved service accessibility. Specifically, let’s imagine a remote rural town in the American Midwest that is often overlooked by traditional infrastructure providers. Now, it can access the digital physical infrastructure services it needs without interruption. This broad accessibility democratizes digital services and unprecedentedly enables more people to access the services they need.

Additionally, DePIN allows consumers to easily afford their services with a “Blockingy-as-you-go” pricing model, which is vastly different from the traditional fixed-rate pricing model. Suppose you are a freelance graphic designer who occasionally works from home and needs data. With DePIN, you only pay for the data you consume, eliminating the financial pressure of large monthly bills. This pricing model, combined with no unnecessary intermediary costs, provides consumers with more affordable services.

Finally, DePIN’s inherent neutrality, reliability, and transparency are significant advantages. Consumers can rest assured that their digital services are directly reliable and provided in a fair and just environment. This can both reassure consumers about the services they are using and increase their confidence.

3. Four categories of DePIN

A closer look at the world of DePIN reveals that there are four main categories, each with its unique advantages and solutions.

(1) Server network/cloud storage network:

First, there is the server network and cloud storage network category. In a data-driven world, these decentralized servers and storage networks offer a fresh perspective. They provide secure and elastic data storage, with users only paying for the exact storage they use. In traditional centralized storage services, all data is stored on a central server or data center. Although this looks efficient, it creates a single point of failure. If the central server is compromised, whether by a network attack, hardware failure, or natural disaster, all data stored there will be at risk. Additionally, users often pay for pre-defined storage packages, which can result in paying for unused space.

On the other hand, DePIN’s decentralized approach distributes data across multiple nodes or storage points in the network. Each piece of data is divided into smaller pieces, each piece is securely encrypted, and then spread throughout the network. This means that even if one node is compromised, the overall data remains secure and accessible because other nodes retain copies. This decentralized architecture also prevents data loss, making the network highly resilient.

This model is a powerful alternative to traditional centralized storage services, which have been criticized in the past for security vulnerabilities and high costs.

(2) Wireless networks (5G, Wifi):

As we delve deeper into the DePIN world, we find ourselves surrounded by vast wireless networks including technologies such as 5G and Wifi. The goal of this type of DePIN is not only to provide network coverage and connectivity, but to strengthen it by using decentralized hotspot networks, making it more democratic.

Now let’s take a closer look at the operational mechanism of traditional Internet service providers (ISPs), and compare it to the revolutionary concept of decentralized hotspots that supports DePIN methods.

Traditional ISPs operate in a centralized mode, where large-scale infrastructure such as data centers, wired-connected massive networks (think fiber optic cables), and towering cellular signal towers form the backbone of their services. These central hubs are the heart of transmitting internet signals that reach households and businesses. However, this model often results in rural or remote areas being left without internet connectivity. Why? The deployment of such infrastructure in sparsely populated areas is costly and presents logistical obstacles, often exceeding the potential return on investment for these providers.

Now, imagine a different scenario, one with a new connectivity model – decentralized hotspot connectivity. In this model, the internet service is not a beating heart, but a humming network spread across multiple independent hotspots. Each hotspot is owned and managed by individual users or small businesses, acting like personal mini cellular signal towers or Wi-Fi routers, providing internet access to their surrounding environment. By utilizing hotspot mode instead of traditional infrastructure mode, we can envision a future where rural areas and other small communities can access the internet equally and efficiently.

(3) Sensor networks:

Continuing our DePIN journey, we now arrive at the field of sensor networks. These networks are essentially composed of interconnecting devices, each designed to monitor and collect specific data about their environment. Imagine a group of digital scouts, each assigned to monitor a specific element such as temperature, humidity, or motion, and dutifully reporting their findings for collective analysis.

Let’s take a concrete example from the agricultural field. In a traditional agricultural environment, farmers may need to manually check various factors such as soil moisture, temperature, or weather conditions to determine the best time to plant or water crops. This process can be time-consuming, labor-intensive, and prone to human error.

However, with the advent of sensor networks, a large number of sensors are distributed across entire fields, each sensor continuously monitoring these key factors in real-time. They provide accurate, reliable data to help farmers make informed decisions, ultimately achieving higher crop yields and more efficient agricultural practices.

Now, when we talk about the DePIN sensor network, we are actually talking about a similar system, but with a key difference – decentralization. Unlike traditional sensor networks, which may rely on a central system for data storage and analysis, the DePIN sensor network distributes data across a decentralized network. This approach provides secure, transparent sensor data storage, ensuring data integrity and accessibility.

(4) Energy Networks:

Finally, we come to the field of energy networks. These decentralized networks will bring a fundamental transformation in the way we share and trade energy resources (including solar) within our communities.

To understand the upcoming transformation, let’s take a look at how people currently monetize solar energy without using blockchain technology. Take the concept of “net metering”, for example. This is a system that connects solar panels or other renewable energy generators to the public grid. Excess power generated by homes or businesses using these devices is fed back into the grid, and they are credited on their electricity bills according to the amount of electricity they feed back, effectively reducing their electricity costs.

While this traditional system has its benefits, it also has its limitations. It typically depends on utility company policies and does not allow individuals to directly sell or trade their excess energy within the community.

Now let’s look at the DePIN energy network. With the decentralization of the energy network, DePIN enables users to profit from their surplus energy production in a simple and direct way. This revolutionary approach not only encourages more responsible energy consumption, but also reduces reliance on traditional energy suppliers.

Imagine: a household that installs solar panels on its roof may produce more energy than it consumes, especially during peak sunlight hours. With the DePIN energy network, this excess energy is not wasted, nor is it bought back at a low price from the grid. Instead, they can now directly trade or sell this excess energy to their neighbors or local community members. These transactions form a local energy market, promoting community-centered energy distribution.

Essentially, the system returns power—whether literally as ‘energy’ or metaphorically as ‘control’—back to the people. It is a community-driven approach to energy management where everyone wins—homes and businesses can monetize their surplus energy, consumers can potentially get cheaper energy, and the entire community moves towards more sustainable and efficient energy consumption practices.

The DePIN approach to energy networks can provide a more democratic, efficient, and profitable model for energy production and consumption. This demonstrates the transformative potential of decentralized physical infrastructure, paving the way for a future where communities are more self-sufficient, sustainable, and economically empowered.

4. Focus on three famous DePIN companies

(1) Filecoin (decentralized storage):

Filecoin is a peer-to-peer (P2P) storage network that aims to create a decentralized market for storage space, competing with existing providers in terms of price and decentralization. By using Filecoin, users can securely store their data, while suppliers can receive Filecoin tokens to provide storage space for token payers.

This contrasts sharply with centralized providers such as Amazon Web Services, which have experienced data security issues and vulnerabilities in the past.

(2) Helium (wireless network):

Helium is a wireless infrastructure network that provides wireless connectivity and 5G coverage for the Internet of Things. Users can purchase Helium hotspots and earn HNT native tokens by providing wireless coverage. Helium has over 900,000 hotspots and aims to improve network coverage in underserved areas, providing an alternative to traditional telecom companies like AT&T and Verizon.

(3) D IMO (sensor network):

The DIMO network enables users to monetize their mobile data by connecting their cars to hardware devices. This data can be used by automotive finance, insurance, maintenance, and other departments. Users receive DIMO native tokens while optimizing vehicle health and sale price. This innovative approach helps reduce automotive financing costs and promotes data monetization.

5. The Three Impacts of DePIN

As DePIN continues to gain attention, it has the potential to significantly alter the landscape of physical infrastructure. By harnessing the power of decentralization, blockchain technology, and tokenized rewards, the DePIN network can provide safer, more transparent, and accessible solutions for infrastructure deployment and operation.

(1) Democratization of physical infrastructure – One of the most important impacts of DePIN is the democratization of physical infrastructure. By allowing individuals and small businesses to participate in the deployment and operation of infrastructure networks, DePIN can create more equitable opportunities to access basic services and resources, which in turn can stimulate innovation and drive economic growth, especially in areas where traditional infrastructure providers have difficulty making a significant impact on underserved services.

(2) Secure and efficient infrastructure solutions – The DePIN network can bring more efficient and sustainable infrastructure solutions. By harnessing the power of decentralization, the network can optimize resource allocation and reduce waste, resulting in more environmentally friendly outcomes. In addition, the transparency of blockchain technology ensures that data and resources within the DePIN network are managed with a high degree of integrity and accountability.

(3) Community and ownership – Finally, the tokenized reward system used in the DePIN network can help cultivate a strong sense of community and ownership among network participants. By incentivizing individuals to contribute to the network, DePIN can encourage broad participation and collaboration, forming a stronger, more resilient infrastructure network.

6. Conclusion

DePIN is a groundbreaking concept that has the potential to fundamentally change the way we approach physical infrastructure. By harnessing blockchain technology, decentralized networks, and tokenized rewards, the DePIN network can provide safer, more transparent, and more accessible solutions for infrastructure deployment and operation. As our world continues to adopt blockchain technology and digital currencies, the DePIN network will play a key role in shaping the future of physical infrastructure.

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