Megacorporations such as Amazon, Microsoft, and Google hold a monopoly over some of the essential infrastructure services. For example, Amazon’s AWS represents 31% of the global cloud infrastructure. But it doesn’t have to be this way.
Imagine a world where infrastructure services such as cloud storage or telecommunications aren’t run by massive corporations but by decentralized networks powered by blockchain technology. This world is not far off, thanks to the rise of DePIN (Decentralized Physical Infrastructure Networks).
In this article, we’ll explain what DePIN is, how it works, and why it matters for the foreseeable future.
Decentralized Physical Infrastructure Networks (DePIN) are networks of physical infrastructure (think cloud storage, telecommunications, decentralized wireless networks) that are powered by blockchain.
How does that work? DePIN enables users to contribute their hardware or resources to a decentralized network, and receive rewards for doing so in the form of the nerwork’s native utility token. Activity on the network is tracked by an underlying blockchain, which ensures users pay for the service, and the network providers get paid.
The DePIN model shifts control from centralized corporations to a community of participants. This democratizes infrastructure services and promotes fairer, more transparent, and efficient systems.
DePIN platforms utilize blockchain technology to create decentralized networks where users own the infrastructure and the blockchain keeps the system functioning. On these networks, the blockchain serves as the foundational layer for governance, payments, and tracking contributions.
Unlike traditional service platforms, which are owned and operated by a single entity, DePINs are run by a distributed community of users who can join or leave at will.
Tokens in a DePIN network serve a couple of different purposes:
While DePIN networks can vary depending on the service they provide, they all share three core components:
We’ll use the example of Helium, a decentralized wireless network, to explain how these elements work together.
The hardware in a DePIN is the physical infrastructure that supports the network. For instance, in Helium, users deploy small wireless hotspots that allow nearby devices to connect to the internet. This decentralized hardware network replaces traditional telecom towers. Users who provide these hardware resources are rewarded with Helium tokens (HNT).
Oracles act as intermediaries between the blockchain and the real world, ensuring that the data from the hardware devices is accurately reflected on the blockchain. They validate the information, such as how much data is being transmitted through a Helium hotspot, and report it to the blockchain.
The blockchain is the backbone of DePIN platforms, facilitating secure transactions, governance, and tracking contributions. In the case of Helium, the blockchain ensures that data transmission through the hotspots is verified and rewards are distributed accurately. Finally, the use of blockchain technology guarantees transparency, security, and decentralization across the network.
While DePIN networks are a relatively new concept, several platforms have already emerged as leaders in the space. These five projects have made strides in providing decentralized infrastructure services.
Launched in July 2019, Helium is a decentralized wireless network that aims to create a global infrastructure for IoT (Internet of Things) devices. Users deploy hotspots that act as low-power wireless nodes for nearby devices, contributing to the overall network. The project was founded by Amir Haleem, Shawn Fanning, and Sean Carey.
Helium has over 356,000 active hotspots worldwide, making it one of the largest DePIN networks. Lastly, the platform uses the native token, HNT, to reward users for providing wireless coverage.
Filecoin is a decentralized storage network. The project launched in August 2017, gathering more than $200 million in less than an hour after its ICO. The Filecoin network mainnet launched in 2020. Developed by Protocol Labs, Filecoin allows users to rent out unused hard drive space to those who need it. This creates a peer-to-peer marketplace for data storage, reducing the need for centralized cloud services.
Filecoin’s native token, FIL, has use cases such as payments and rewards. Moreover, thanks to its innovative Proof-of-Replication consensus mechanism Filecoin has become one of the most prominent decentralized storage networks.
Render Network was originally launched on the Ethereum network in 2017. It allows users to contribute unused GPU power for rendering high-quality graphics and visual effects. The platform was developed by the Render Network Foundation and is especially popular in industries such as gaming, movies, and virtual reality.
After a community vote in 2023, Render switched from Ethereum to Solana. As a result, the native token received a rebrand from RNDR to RENDER. The token incentivizes participants, allowing them to earn by offering their GPU power.
Render is becoming a critical player in the decentralized cloud computing space, providing a cheaper and faster alternative to traditional rendering services.
Akash Network, launched in September 2020, is a decentralized cloud computing platform that allows users to rent out unused computing power. Developed by Overclock Labs, its mission is to make cloud computing more affordable and accessible by decentralizing the infrastructure.
The Akash Network uses AKT tokens to facilitate payments and governance on the platform. With an increasing demand for decentralized cloud services, Akash has gained traction among developers looking for alternatives to traditional providers like Amazon Web Services (AWS).
Developed by Hivemapper Inc., the HiveMapper network launched in November 2022. Hivemapper incentivizes users to contribute dashcam footage to create decentralized maps. In other words, users equip their vehicles with HiveMapper dashcams, and as they drive, they collect data to help build a global map.
The native token, HONEY, rewards contributors. HiveMapper is an example of how DePINs can disrupt traditional services like Google Maps by distributing the responsibility of map creation to individual users.
DePIN networks offer several advantages over traditional infrastructure providers. These benefits stem from their decentralized nature and token-based economies.
DePINs scale horizontally by adding more users and hardware to the network rather than relying on large, centralized infrastructure. This allows networks like Helium and Filecoin to grow organically and handle more demand over time.
Users have more control over the network and make key decisions collectively through decentralized governance models. This is in contrast with traditional infrastructure providers, where a single centralized authority makes the decisions.
DePINs offer dynamic pricing based on market demand and supply, leading to fairer prices for services like storage, wireless coverage, and computing power.
Decentralized networks reduce overhead costs by relying on distributed user hardware instead of expensive centralized infrastructure.
Anyone can participate in dePIN networks, whether by contributing hardware or utilizing services. Consequently, this inclusivity democratizes infrastructure services.
Users receive financial incentives to contribute resources to the network, creating a self-sustaining ecosystem where participants benefit directly from their contributions.
Despite their advantages, DePIN networks face several challenges. These are especially notable in the early stages of development.
Many DePIN networks are still in the early stages of adoption, which can make it difficult to generate significant revenue. As more users join, the network effect strengthens, but the early growth phase can be slow.
Setting up and maintaining hardware for a DePIN network can require technical knowledge. Consequently, this may limit widespread participation. In addition, maintaining network uptime and security remains a constant challenge.
Users are providing the hardware and the costs of purchasing and running infrastructure can be high. For example, balancing initial setup costs with potential rewards can be challenging for those joining DePIN networks.
While DePIN offers token-based incentives, the profitability of participating can fluctuate based on market demand and token value. As a result, this can deter users from participating during periods of low network activity or token price drops.
DePIN networks change how we view and interact with critical infrastructure services. By leveraging blockchain technology, DePINs offer a decentralized, community-driven approach that benefits users and participants through token-based incentives and governance.
Although still in their early stages, DePIN networks have the potential to disrupt traditional infrastructure services and redefine how we access and contribute to the digital world.