GM PRO DOers! 😎
Chances are, you've already come across the buzzword DePIN lately.
It stands for Decentralized Physical Infrastructure Networks – but does anyone actually know what that means?
Today, I aim to shed light on this emerging and very exciting sector to give you the insights you need to capitalize on this opportunity.
Blockchains first gave us dApps – decentralized applications – an innovation at the top level, facing the user.
Now we have DePIN, the lower level infrastructure layer that sits below and powers the application level.
Whether we’re talking about computers, cloud, internet or many other use cases of DePIN, what’s interesting is that the benefit isn’t just about decentralization.
DePIN can provide orders of magnitude cheaper and better alternatives to infrastructure services that exist today, as well as new innovations that simply aren’t possible without blockchain technology.
Take Akash for example, a decentralized cloud marketplace that provides cloud services 85% cheaper than its traditional competitors – AWS, Microsoft Azure, Google Cloud, etc.
Or Helium, a decentralized mobile network provider that offers unlimited data, talk and text for just $20/month in the USA – much cheaper than what AT&T offers for example.
Or DIMO, a new and innovative way to monetize the data that your car collects, something that’s unheard of today.
The potential results of DePIN are incredible, however it's more than just cheaper and innovative products.
This concept offers a chance for anyone around the world to earn income by sharing their unused resources.
It’s like Universal Basic Income (UBI), except you can exchange something valuable (your resources) for another form of value (tokens).
This trade means you contribute actively to receive income, leveraging assets you already have.
Of course, with any new and exciting primitive in crypto, a cambrian explosion of ideas follows. Today, we have more than 650 DePIN projects and tokens available. 🤯
But is DePIN real and sustainable or is it just another pipe dream promised by blockchain dreamers?
In today’s PRO report, we’re going to answer this question by diving deeper into the idea of DePIN, looking at its potential use cases and how it works.
Most of this report will be focused on looking into 3 of the most adopted DePIN projects today: Akash, DIMO and Helium.
We’ll dive into what each of these are, how the economics and tokenomics work and uncover if these are sustainable and even good investments. 💰️
Let’s get started by understanding the basics of DePIN. ⏬
What is DePin?
DePIN represents a potential groundbreaking advancement in the convergence of digital and physical domains.
In essence, DePIN projects leverage blockchain technology and token incentives to create a decentralized network of physical infrastructure, ranging from wireless networks to energy grids and beyond.
What sets DePIN apart is its collective ownership model and a bottom-up approach.
Unlike traditional infrastructure networks dominated by large corporations, DePIN encourages individuals to actively participate in the deployment and maintenance of the infrastructure.
Through token rewards, contributors become token holders that collectively own and shape the protocols and networks.
This shift from centralized control to a distributed, participant-driven model distinguishes DePIN as a paradigm shift in the way physical infrastructure networks are deployed and managed.
To help you wrap your head around the definition above, here are 3 easy examples:
Akash vs. Amazon Web Services
Amazon Web Services (AWS) provides cloud services to websites and applications around the world. It does this through building its own massive cloud server facilities and then selling that cloud storage.
AWS owns 100% of the infrastructure, keeps 100% of the profits and makes all the decisions.
Akash on the other hand, created a marketplace for anyone in the world with extra cloud storage from their devices to easily and permissionlessly rent it out.
Akash doesn’t own any of the servers and the profits move peer-to-peer.
What Akash does is provide the technology and security around the marketplace, which is owned and governed by $AKT token holders.
Helium vs. AT&T
AT&T or any mobile network provider owns a bunch of network towers around a specific area which provide talk, text and data services to mobile phones within that area.
AT&T owns 100% of the infrastructure, keeps 100% of the profits and makes all the decisions.
Whereas Helium uses a token to incentivize anyone to purchase a Helium hotspot device that connects to their existing internet and collectively shares the unused resources to customers who pay for the Helium talk, text and data plans.
Customers get cheaper rates and hotspot device holders share in the revenue and governance (via tokens).
DIMO vs. Car Companies
Cars collect a lot of data, which historically has benefited only the car manufacturer, as they can continuously improve their product.
Car companies own 100% of the data, keep 100% of the profits and make all the decisions.
DIMO changes this landscape by providing hardware devices to car owners that effectively give ownership of that data to the individual car owners as well as compiles them to create large data pools, which can then be monetized and distributed back to the car owners.
Once again, all of this is powered through blockchain technology and tokens.
These are just a few ways that DePIN can be used to provide cheaper services or offer new innovations.
There are many other innovations within DePIN that I won’t cover today, however I recommend you dive deeper into the ecosystem to understand this further.
By the way, I should note that blockchains themselves are a form of DePIN. Humans use physical infrastructure (validators) to create a decentralized network (blockchain) and are incentivized to do so via tokens ($ETH, $SOL, etc.).
DePIN is just a further expression of how we can use tokens to bootstrap physical networks around the globe.
Ok, let’s look into the 3 projects mentioned above a bit further. Now we’re going to attempt to briefly understand their business model, tokenomic structure and overall sustainability.
We’ll start with Akash, which is different from Helium and DIMO as it is actually a Layer 1 blockchain, so its tokenomics work in a very different way.
To clarify, many new DePIN projects opt to build on established Layer 1 blockchains such as Solana instead of creating their own from scratch.
Akash, however, predates this trend and didn't have the luxury of leveraging existing L1s when it first launched.
Akash Network
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