Binance DePIN Report: Narrative Potential and Challenges, Landscape and Industry Analysis
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Binance DePIN Report: Narrative Potential and Challenges, Landscape and Industry Analysis
In this report, we will introduce developments in the fields of computing networks, wireless networks, storage, and sensors.
Navigating Web3 tides with focused insightsAuthors: JieXuan Chua, Brian Chen
Translation: Kate, Mars Finance
Key Takeaways
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Over the past few months, the decentralized physical infrastructure networks (DePIN) sector has emerged as a prominent focus due to its vast potential market and broad scalability.
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DePIN refers to infrastructure-related projects that leverage blockchain technology and crypto-economics to incentivize individuals to allocate capital or underutilized resources, aiming to build more transparent and verifiable networks with more efficient scaling trajectories than centralized counterparts.
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DePIN is a broad field composed of several sectors, each playing a distinct role in decentralizing network infrastructure. In this report, we examine developments across computing networks, wireless networks, storage, and sensor networks.
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As the industry continues to evolve, we expect a surge in DePIN projects over the coming years. However, their long-term viability and success will ultimately depend on real-world applicability, which remains to be tested in practice.
I. Overview
Among various narratives gaining traction recently, the decentralized physical infrastructure network (DePIN) space has emerged as a focal point. Due to its expansive total addressable market and ability to scale infrastructure networks in a decentralized manner through bottom-up growth strategies, the sector is seen as having significant growth potential. Some even view DePIN as a paradigm shift in global resource allocation—both physical and digital—and a transformative approach to scaling large-scale infrastructure.
In this report, we explore this emerging narrative. We begin by outlining the fundamentals of DePIN and how it works. Then, our analysis shifts to a top-down industry view, providing an ecosystem map and dissecting the landscape of individual sub-sectors. Finally, we examine challenges facing DePIN adoption, identify key market themes, and offer insights into the sector’s future outlook.
II. What Is DePIN?
DePIN refers to infrastructure projects that use blockchain technology and crypto-economics to incentivize individuals to allocate capital or underutilized resources, creating more transparent, decentralized, and verifiable infrastructure networks.
These projects can broadly be categorized into physical or digital resource networks, each encompassing different domains. Regardless of their focus, these projects typically operate under similar models, emphasizing collective ownership and favoring distributed systems over centralized market structures.
Figure 1: Conceptual illustration of centralized vs. decentralized models
Source: Binance Research
How DePIN Works
DePIN projects typically involve several key components:
1. Target Resource: The specific resource the project aims to deliver to consumers. Common types include storage capacity and computing power.
2. Hardware: The necessary devices used by network contributors to run operations and collect data or resources for the network. Depending on the resource type, these devices may vary in cost, manufacturer, and usage.
3. Incentive Mechanism: A predefined system that rewards token-based incentives to supply-side contributors, encouraging them to provide resources and reliable services. Some projects may also implement penalties to deter malicious behavior.
4. Supply-Side Contributors: Individuals or entities that contribute unused or underutilized resources to the network. In return, they typically receive token rewards.
5. Consumers: End users who participate in the network to access services provided by the DePIN project.
DePIN projects first define the specific resource they aim to offer. These resources vary widely, including storage capacity, computing power, bandwidth, hotspot deployment, and more. At the core of these projects’ operations lies the incentive system, designed to encourage positive contributions and discourage harmful behaviors. This system primarily uses native tokens to reward compliant actions.
For example, Filecoin, a leading DePIN project in cloud storage, compensates storage providers with its native FIL token. Providers are often required to stake collateral as a security measure. If they fail to deliver reliable service or engage in malicious activities, they face penalties such as withheld rewards, slashed stakes, or removal from the network. Conversely, consumers use the project’s tokens to pay for services—for instance, using FIL to pay for storage on Filecoin.
Supply-side contributors are essential to DePIN projects, as the network relies on them to deliver services. In Filecoin, they are storage providers; in projects like Helium and Hivemapper, they are individuals deploying hardware devices to provide wireless coverage or mapping data.
Figure 2: DePIN projects aim to foster a self-reinforcing cycle to sustain continuous growth
Source: Binance Research
A self-reinforcing growth loop helps ensure the sustainability of DePIN projects. Token rewards serve as effective incentives to overcome the “cold start” challenge of acquiring supply-side participants. As the network scales and consumers begin using its services, demand should rise. Since service payments are typically made in the network’s native token, increased adoption should drive up token prices, further motivating contributors. With synchronized growth in both demand and supply, this virtuous cycle can continue, sustaining ongoing expansion.
III. DePIN by Sector
The roots of DePIN trace back several years—even before the term was formally coined. This is unsurprising, as DePIN’s foundational principles closely align with the ethos of the crypto industry. However, the sector initially lacked significant attention or traction, hindered by factors such as immature infrastructure development, limited public awareness, and a small crypto user base. Despite these challenges, DePIN-related projects have steadily built over time, resulting in today’s diverse landscape, illustrated below in Figure 3.
It should be noted that the map shows only a fraction of existing DePIN projects. According to IOTeX’s DePINscan, approximately 160 DePIN projects have been documented. Classification of these projects may also vary depending on how one defines a DePIN project. Regardless of these nuances, the industry’s continued growth and expansion remain evident.
Source: IOTeX, Binance Research
As shown in the ecosystem map above, DePIN is a broad field comprising multiple sectors. Each plays a distinct role in decentralizing network infrastructure and enabling different use cases. In this section, we examine each in greater detail, explaining how they work and highlighting relevant case studies.
Note: Mention of specific projects does not constitute endorsement by Binance. Rather, cited projects are used solely to illustrate conceptual use cases.
Computing Networks
Decentralized computing networks utilize distributed computing resources to perform complex computational tasks. These may include analyzing large datasets, running sophisticated artificial intelligence (AI) algorithms, or any other task requiring significant computing power. By connecting idle systems with those in need of computation, decentralized computing networks act as a bridge between supply and demand for computing resources.
Given the importance of computing in today’s digital era, along with the rise of emerging technologies such as blockchain and artificial intelligence, demand for computing resources has grown steadily. Moreover, the surge in AI development has led to massive demand from cloud computing companies for specialized chips, resulting in long waitlists—sometimes extending nearly a year. This is where decentralized computing networks come into play. They offer an alternative to existing solutions dominated by centralized cloud providers and hardware manufacturers. In doing so, decentralized computing networks are shifting power away from centralized cloud providers (such as Amazon Web Services and Google Cloud), introducing competition through an open market operated by numerous providers.
Broadly speaking, decentralized computing networks create a two-sided marketplace, incentivizing suppliers of computing power to offer their idle resources to those in need. Additionally, prices on decentralized computing networks are competitive, as suppliers incur minimal incremental costs when providing computing capacity to the network.
Case Study: Akash Network
Akash Network enables users to deploy their own cloud infrastructure or sell idle cloud resources to others. Akash likens itself to Airbnb for server hosting.
It creates a marketplace allowing users to rent computing resources with spare capacity from others. This enables Akash to tap into an estimated 8.4M underutilized data centers globally.
Currently, the network offers over 8.9K central processing units (CPUs), 171 graphics processing units (GPUs), 45 TB of memory, and over 583 TB of storage. Practically, Akash users can leverage the network for any general-purpose computing function.
Akash serves two key markets for computing demand, bringing underutilized computing resources to market in an open and permissionless way:
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High-performance chips: Critical for complex computing tasks like AI training, but with limited market supply.
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Consumer-grade chips: Used for general-purpose tasks and areas with abundant unused computing power.
Notably, pricing for Akash services is highly competitive, often just a fraction of what other centralized cloud providers charge. A key factor is its “reverse auction” system, allowing customers to bid their desired price while suppliers compete for business.
Figure 4: Akash Network offers competitive pricing
Source: Cloudmos, as of January 25, 2024
Note: Pricing based on 1 CPU, 1GB RAM, and 1GB disk
As explored in our recent report on the intersection of AI and crypto, beyond growth driven by competitive pricing, decentralized computing networks like Akash have also ridden the wave of AI expansion, witnessing increased platform activity. High-performance GPUs are crucial for numerous machine learning and AI applications, and the widespread adoption of large language models has caused a surge in demand. Over the past year, active leases on the Akash network have more than tripled compared to early 2023 levels. Leases represent rentals of computing resources.
Figure 5: Surge in active leases on Akash Network in Q4 2023
Source: Cloudmos, as of January 25, 2024
Wireless Networks
Decentralized wireless (DeWi) networks support the deployment of networks such as 5G, WiFi, low-power wide-area networks (LoRaWAN), and Bluetooth using cryptographic incentives.
Given the substantial capital required to build wireless infrastructure, this sector has traditionally been dominated by large telecom companies with the necessary scale and financial strength. As a result, the industry has historically been controlled by a few major players. DeWi networks offer an alternative, where many independent entities or individuals coordinate to deploy wireless infrastructure with the help of crypto incentives.
Broadly speaking, there are currently four types of decentralized wireless networks:
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Cellular 5G: Offers high download speeds and low latency.
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WiFi: Provides network connectivity within a certain area.
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LoRaWAN: Widely used for communication in Internet of Things (IoT) applications.
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Bluetooth: Transmits data over short distances.
In terms of mechanism, DeWi networks typically use tokens to bootstrap the initial phase, incentivizing operators to invest in and deploy hardware. These token rewards provide monetary support and a modest return on investment, encouraging continued operation even if the network hasn’t yet generated sufficient revenue from users. Over time, as the network grows and economies of scale are achieved, the combination of lower unit economics and improved coverage could attract more users, generating higher revenues for operators. The ultimate goal is a self-sustaining network where user fees exceed operating costs and any additional investments needed for network development.
Case Study: Helium
Helium is a global decentralized wireless infrastructure project providing wireless coverage for IoT devices supporting LoRaWAN and cellular devices. Its flagship product, the Helium Hotspot, launched in 2019, provides wireless access for IoT devices. Since then, Helium has expanded its offerings to include 5G coverage.
1. Helium IoT Network
The Helium IoT Network is a decentralized network using the LoRaWAN protocol to connect IoT devices to the internet. Use cases include vehicle diagnostics tools, environmental monitoring, and energy usage tracking.
2. Helium 5G Network
The Helium 5G Network is powered by thousands of user-operated nodes. Helium envisions a future of mobile networks combining large carriers with crowdsourced 5G hotspots. This stems from growing consumer demand for higher bandwidth and lower latency, necessitating denser networks and more nodes—which increases site acquisition costs. Helium’s crowdsourced model eliminates site acquisition costs, enabling users to participate in delivering high-bandwidth coverage. Interested operators can purchase FreedomFi gateway hardware to provide cellular coverage.
Operators are rewarded with MOBILE tokens.
Following the nationwide launch of Helium Mobile’s $20 monthly unlimited data, text, and call plan, and a surge in Solana Saga smartphone sales (which include a free 30-day subscription to Helium Mobile), the Helium Network has seen a surge in new hotspots over recent months.
Figure 6: Increase in newly added Helium hotspots over recent months
Source: Dune Analytics (@helium-foundation), Binance Research, as of January 25, 2024
Helium’s ecosystem is supported by several tokens:
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HNT: Helium’s native token, critical for network usage, as it is burned when “data credits” are used for data transmission. Hotspot hosts can also exchange network tokens (e.g., IOT, MOBILE) for HNT.
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IOT: The protocol token for the Helium IoT Network, mined by LoRaWAN hotspots through data transmission earnings and proof of coverage.
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MOBILE: The protocol token for the Helium 5G Network, awarded to those providing 5G wireless coverage and validating the Helium network.
Additionally, data credits (DC) are the sole accepted payment method for data transmission on the Helium network, priced at $0.00001. For example, on the IoT network, users pay 1 DC per 24-byte data packet transmitted. As more data is transferred and more DCs are burned, subnets (e.g., the IoT network) earn more HNT tokens, rewarding and incentivizing their activity.
Overall, the above tokens serve as utility tokens within the network and provide incentives for operators to maintain and operate necessary infrastructure. Since launch, Helium has grown its network to over 970K hotspots, enabling decentralized coverage for countless IoT and mobile devices.
Storage
Decentralized storage systems operate on a peer-to-peer (P2P) network model, where user-driven storage providers (SPs) or miners allocate unused computing resources and earn compensation in the project’s native token. Unlike centralized systems, where a single entity manages data, decentralized storage encrypts and shards data, distributing it across the network. This process enhances accessibility and ensures data redundancy.
Figure 7: Conceptual illustration of centralized vs. decentralized storage systems
Source: Binance Research
The distinction between centralized and decentralized storage primarily hinges on two aspects: security and cost.
Centralized storage systems store data through a single institution using one or a few servers, posing potential single points of failure. This can lead to data breaches and potential system outages, jeopardizing customer data. Additionally, user privacy is at risk. The infamous Facebook-Cambridge Analytica data scandal serves as a stark reminder of these concerns. In contrast, decentralized storage systems reduce security risks and enhance data resilience by distributing data across a global network of nodes.
Cost is another key factor in the comparison. An analysis released in May 2023 highlighted that decentralized storage is, on average, about 78% cheaper than centralized storage. This price difference is even more pronounced in enterprise-level data storage, where costs can be up to 121 times higher. This disparity stems from factors such as the substantial capital investment required for centralized storage infrastructure and associated overhead costs. In contrast, decentralized storage leverages the availability of surplus global computing resources. Furthermore, while the centralized storage market is oligopolistic—with a few tech giants influencing pricing—the decentralized storage market is largely driven by open market forces.
Despite potential security vulnerabilities and higher costs, centralized storage still excels in certain areas, particularly user experience and product maturity. These systems typically offer more user-friendly interfaces for the average user, complemented by comprehensive product suites addressing various computing needs beyond just storage. The combination of intuitive design and all-in-one solutions contributes to their continued dominance.
Figure 8: Centralized vs. Decentralized Storage
Case Study: BNB Greenfield
BNB Greenfield is the third blockchain within the BNB Chain ecosystem—a storage-centric blockchain supported by a network of SPs. Greenfield aims to serve as the foundational storage layer for the BNB ecosystem and EVM-compatible addresses, distinguished by its inherent integration with BNB Chain. This unique connection allows it to leverage BNB Chain’s extensive DeFi ecosystem and large developer community.
BNB Greenfield operates on a dual-layer architecture: a PoS-based blockchain secured by BNB staking validators, and a storage network maintained by storage nodes. Validators store metadata on-chain, verify data availability, and protect Greenfield. In contrast, SPs handle actual data storage and provide various storage services.
A key feature of BNB Greenfield is its cross-chain programmability, allowing users to integrate their data with financial applications in the BSC ecosystem. The cornerstone of this cross-chain functionality is a native cross-chain bridge, combined with a relay system connecting Greenfield and BNB Chain. Together, these components facilitate interaction between the two ecosystems.
Figure 9: BNB Greenfield’s Cross-Chain Architecture
Source: BNB Greenfield
Decentralized storage services like BNB Greenfield have a wide range of applications.
Their use cases extend beyond blockchain-related scenarios to include various practical applications. Examples include:
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Blockchain Data Storage: Layer-1 blockchains contain vast historical data.
This data can be efficiently stored on BNB Greenfield to reduce latency on L1 and improve data accessibility. Additionally, BNB Greenfield offers a cost-effective solution for storing Layer-2 transaction data.
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Decentralized Social: Decentralized social networks can leverage BNB Greenfield, allowing creators to retain ownership of their content and data.
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Personal Cloud Storage: Users can transfer encrypted documents, images, and videos across devices. Access to these files is managed via personal private keys.
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Website Hosting: Users can utilize BNB Greenfield as a tool within their website deployment toolkit.
Looking ahead, BNB Greenfield is undergoing several developments aimed at improving user experience and advancing the utility of decentralized storage. According to its recently released roadmap, users can expect enhanced performance, cross-chain support, and AI integration.
Figure 10: BNB Greenfield Roadmap
Source: BNB Greenfield, Binance Research
For more information on decentralized storage networks and BNB Greenfield, refer to our previous report, "Traversing Decentralized Storage."
Sensors
Decentralized sensor networks help monitor and capture data from various environments in a secure and transparent manner. These networks consist of grids of sensor-equipped devices capable of collecting a wide range of data—from traffic and weather conditions to local street maps. By adopting a decentralized, bottom-up approach, decentralized sensor networks enhance data integrity and reliability, reducing the likelihood of data manipulation or censorship.
In a world where countless devices continuously generate data around us, decentralized sensor networks optimize the utilization of our data-rich environment by aggregating such data.
The sector comprises several subdomains, each involving different forms of data collection:
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Environmental: Monitoring and analyzing air quality, weather conditions, water levels, and other environmental metrics.
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Energy: Measuring energy-related data such as production and consumption levels.
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Location & Mapping: Collecting geographic information useful for urban planning, navigation, and other location-based services.
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Supply Chain: Gathering and verifying information such as sustainability claims and material origins to enhance supply chain transparency.
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Smart Environments: Monitoring data such as traffic patterns, pollution levels, or foot traffic.
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Mobility: Collecting traffic-related or vehicle-specific data.
Case Study: Hivemapper
Hivemapper is building a global, decentralized mapping network that collects up-to-date, high-resolution data in a permissionless manner. Hivemapper relies on a community of contributors using vehicle dashcams to capture 4K street-level imagery. These contributors range from rideshare drivers to delivery personnel and hobbyists. Additionally, a group known as “AI Trainers” uses Hivemapper’s Map AI engine to analyze images and transform them into valuable insights for clients.
In exchange for data consumption, the network’s native HONEY token is used by map data consumers (e.g., companies). Contributors are also rewarded with HONEY tokens for their services, incentivizing network expansion. Effectively, contributors share in the value created by demand for map data.
Figure 11: Illustration of how contributors participate in Hivemapper
Source: Hivemapper, Binance Research
Hivemapper covers over 1,920 regions, mapping roads across all continents except Antarctica. Specifically, it has mapped over 112M kilometers of roads, including over 7.2M unique road kilometers. The ratio of total road kilometers to unique road kilometers indicates coverage frequency, translating to higher accuracy due to repeated data collection. Hivemapper claims its network revisits locations 24 to 100 times more frequently than services like Google Street View.
Hivemapper’s extensive coverage benefits from a global network of 38.5K contributors across different countries and regions. Similar to trends observed in other DePIN projects, we’ve also seen increased activity on Hivemapper over recent months. For example, the number of new weekly contributors has recently risen.
Figure 12: Increase in weekly new contributors over recent months
Source: Dune Analytics (@murathan), as of January 17, 2024
The opportunity in the digital mapping market is immense—estimated at $18.3B in 2023 and projected to reach $73.1B by 2033.
By providing up-to-date maps, Hivemapper unlocks new use cases unattainable with existing solutions. These include accessing the latest data on external home conditions for home insurers and obtaining updated road and construction zone information for autonomous vehicle developers. Hivemapper’s Bursts feature also allows map data users to request new data on-demand, further enhancing the network’s utility.
IV. Key Themes and Challenges
In this section, we explore potential future trajectories for DePIN projects and discuss some challenges they must overcome to achieve broader adoption.
Key Themes
Looking ahead, we anticipate several developments worth watching.
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Coexistence of DePIN and Traditional Infrastructure Players: Given the latter’s substantial capital resources and mature infrastructure, DePIN is unlikely to replace traditional networks in the short term. Nevertheless, DePIN enables a sharing economy driven by idle resources and can provide last-mile coverage in areas financially unviable for traditional players. Thus, a more likely scenario is one where DePIN networks coexist with traditional infrastructure providers, supplementing last-mile coverage and offering solutions that allow smaller entities or individuals to participate in infrastructure development.
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DePIN Powering Web2 Frontends: Undeniably, direct interaction with DePIN may be technically too complex for the general public, potentially slowing adoption compared to existing Web2 services. Beyond focusing on improving user experience and interface design, we expect DePIN projects to collaborate with traditional players or Web2 companies to expand their reach. In practice, users may interact with Web2 frontends without realizing the underlying backend leverages DePIN and blockchain technology. This can lower the steep learning curve and perceived risks associated with crypto, making DePIN products as user-friendly as Web2 equivalents—while offering added advantages of cost efficiency and transparency.
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Enhanced Token Utility and Composability: Most DePIN tokens primarily serve as payment mediums for accessing project services. While this provides basic utility, one of blockchain technology’s most compelling aspects is its composability within broader on-chain ecosystems—especially in DeFi. Enabling users to earn additional yields or explore diverse use cases with their earned tokens can further boost engagement with DePIN projects.
Filecoin’s Filecoin Virtual Machine and BNB Greenfield’s intrinsic integration with BNB Chain exemplify this potential. These projects go beyond basic utility—using FIL and BNB solely for data storage—offering users opportunities to engage their tokens within broader ecosystems. Although these extended use cases are still in early stages, they hint at future directions that could stimulate DePIN project growth and adoption.
Challenges
Despite their transparent and verifiable systems, DePIN projects are not without challenges affecting large-scale adoption.
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Price Volatility Affecting Supply-Demand Dynamics: The inherent price volatility of tokens may deter some from participating in DePIN projects. Since supply-side contributors are compensated in the project’s native token, price fluctuations introduce uncertainty that could impact profitability. While hedging strategies might mitigate this, they may not be feasible for less sophisticated participants or tokens with smaller market caps.
This also affects the demand side, given that tokens are used to pay for network services. A rapid spike in token price without corresponding adjustments in service pricing could deter potential users. Therefore, well-designed tokenomics and operational models are crucial to mitigating price volatility.
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Users Primarily Driven by Profit: Despite clear value propositions, the performance of native tokens plays a critical role in attracting and retaining users. When token prices are rising, it’s generally easier to attract users interested in riding the momentum. Conversely, during bear markets, declining token prices and reduced profitability may lead network participants to exit. This is especially challenging for tokens with smaller market caps and thinner liquidity, potentially triggering a downward spiral.
Overcoming this challenge isn’t easy, but projects offering genuinely valuable services and aligned with product-market fit will attract a broader audience beyond purely profit-driven participants.
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Lack of Public Awareness: Awareness is critical for adopting DePIN products. While these projects often offer services more transparent and sometimes more cost-effective than centralized alternatives, they remain largely unknown outside the crypto industry. This limited awareness stems from the general public’s unfamiliarity with blockchain technology and the complexity of digital assets. As a result, only a small segment currently appreciates the advantages of these decentralized services.
V. Conclusion
DePIN projects leverage distributed and transparent systems to enhance the scalability and efficiency of infrastructure. This approach aligns with the principles of the crypto industry. By utilizing token economics, DePIN can crowdsource resources such as storage capacity and computing power, eliminating the need for substantial upfront capital investment. Their potential applications across various sectors suggest a massive total addressable market.
However, challenges remain in achieving widespread adoption. In the short term, fully replacing centralized counterparts is unlikely; instead, we are more likely to see an intermediate state where DePIN and traditional infrastructure providers coexist.
Looking ahead, achieving more seamless user experiences and expanding on-chain use cases for DePIN tokens are key trends to watch. While we expect the number of DePIN projects to grow as the industry evolves, their ultimate long-term viability and success will depend on real-world applicability, which has yet to be thoroughly battle-tested.
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