When Physical Infrastructure Meets the Digital Economy: Can the DePIN Sector Spark This Bull Market?
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When Physical Infrastructure Meets the Digital Economy: Can the DePIN Sector Spark This Bull Market?
From pure crypto to DePIN, from finance to the physical world, the decentralized wave has finally taken a step toward moving beyond speculation and into tangible reality.
Navigating Web3 tides with focused insightsAuthors: Cynic, Shigeru
Origin: Decentralization from Virtual to Physical
DePIN, short for Decentralized Physical Infrastructure Networks, was first coined by Messari in 2022. However, projects fitting the DePIN definition existed long before the term itself. From a definitional standpoint, any physical device meeting decentralization criteria could be considered DePIN—by this logic, Bitcoin would be the earliest DePIN network. A more suitable standard, however, may be a decentralized network that provides services to the physical (non-virtual) world. Key application types include storage, computing, bandwidth, sensors, and energy. Filecoin, launched in 2014 as a decentralized storage solution, is widely regarded as the first successful DePIN project.
The emergence of DePIN stems from dissatisfaction with traditional physical infrastructure. Typically, critical resources such as communication networks, electricity, and water are monopolized by large corporations due to their massive scale, leaving users without viable alternatives. In the internet era, computing power and data storage have followed the same path, controlled by tech oligopolies forcing users into limited choices. Web3 offers a promising solution to this real-world dilemma.
In 2008, Bitcoin emerged out of nowhere, showing the possibility of decentralizing financial systems. Years later, DePIN aims to bring a similar revolution to traditional physical infrastructure. Moving from pure crypto to DePIN, from finance to the physical realm, the wave of decentralization has finally taken a turn from virtual speculation toward tangible utility.
Operation: Seamless On-Chain and Off-Chain Integration
The architecture of DePIN can be divided into on-chain and off-chain components.
The on-chain component coordinates distributed resources, providing a trustless, permissionless decentralized ledger so both supply and demand sides can achieve reliable outcomes. This part uses blockchain as the ledger, records user actions via smart contracts, employs cryptocurrency as the medium of exchange, and distributes token rewards to incentivize users to become resource providers.
The off-chain component handles actual resource provisioning. Users contribute their idle physical resources in return for token rewards. For computer-based resources with high programmability, installing designated software suffices. For more complex hardware-dependent resources, specific devices are required.
On-chain ensures economic consensus; off-chain manages physical coordination. The operation of DePIN projects relies on the perfect integration of on-chain and off-chain, virtual and physical.
Features: Tokens Disrupt Traditional Paradigms
Traditionally, building physical infrastructure requires massive upfront capital investment from governments or large corporations—an expensive, time-consuming, inefficient top-down centralized model. As a result, once built, these infrastructures must charge high fees to recoup opportunity costs.
DePIN completely overturns this paradigm. Through tokenomics, DePIN distributes initial costs across individual participants, using a crowdfunding model to finance infrastructure development. Projects only need to design sound token incentives, after which economic motivation drives individuals to contribute their own resources, enabling bottom-up, decentralized construction of infrastructure networks.
Infrastructure built through decentralization possesses self-expanding properties: once operational, revenues flow back to resource providers, encouraging more users to join and contribute resources. As available resources grow, more users adopt the infrastructure, generating higher revenue and further accelerating supply growth—a beautiful positive feedback loop.
Key: Utility-Driven Cost Reduction and Efficiency Gains
We emphasize that while tokens play a crucial role in DePIN—acting as market signals and enhancing protocol stability—we must not overemphasize tokens at the expense of true value. Pure speculation cannot sustain long-term protocol viability. The key to DePIN lies in utility.
On one hand, utility arises from permissionless access enabled by decentralization, ensuring users are free from censorship and can equitably access services. On the other hand, utility comes from cost reduction and efficiency gains achieved through distribution: decentralized self-hosting eliminates structural costs (management, maintenance, labor) inherent in centralized platforms, while the reuse of idle resources drastically lowers overall costs.
Based on historical data from the previous cycle, DePIN has demonstrated the most resilient on-chain revenue across all sectors—an outcome directly attributable to its utility-driven foundation.
Status Quo: Broad Coverage and Diverse Ecosystem
Here’s a plausible real-world scenario:
At 7 a.m., Satoshi wakes up. His smart home runs on IoT technology powered by IoTeX. He opens his laptop to check emails, connecting wirelessly via WiFi Map. He checks Arkeen to monitor solar power generation on his rooftop and lists accumulated carbon credits for sale. After breakfast, he drives to work, navigating with maps provided by Hivemapper. During the commute, DIMO records driving data, generating passive income, while mobile connectivity is delivered by Helium Mobile. At the office, Satoshi charges his electric vehicle using a PowerPod charging station. As a software engineer, he begins coding, using Bittensor to select advanced AI models for assistance. These models are trained by Gensyn, supported by GPU computing power from Akash, with data stored on Filecoin. On his way home, he watches a movie selected via Livepeer. Later, he plays a high-definition AAA game rendered by the Render Network.
After years of development, we’ve witnessed a Cambrian explosion of DePIN across diverse sectors including energy, logistics, mapping, and telecommunications. Human daily life is now fully encompassable by DePIN.
Cases: Identifying Early Investment Opportunities
Deeper Network
Deeper Network is a decentralized bandwidth-sharing network aiming to build a more open, fair, and trustworthy internet, democratizing network access and securing personal data sovereignty. On the Deeper Network platform, users can set up decentralized VPNs, share bandwidth, and access dApps—all services secured through blockchain-based trust, security, and decentralization.
On the software side, Deeper Network uses its proprietary AtomOS to ensure network security. As the world's first lock-free network operating system, AtomOS delivers high reliability, scalability, and performance. Additionally, the Trident Protocol—the core communication protocol—employs adaptive tunneling, intelligent routing, IP multiplexing, and tunnel congestion control to provide superior user experience and resist network censorship.
On the hardware side, Deeper Network developed the Deeper Connect device—a plug-and-play, zero-configuration hardware unit allowing users with no technical expertise to enjoy censorship-resistant secure networking while earning token rewards.
On the blockchain layer, Deeper Network built Deeper Chain using the NPoW (Network Proof of Work) consensus mechanism. NPoW leverages Deeper’s two-tier architecture: device nodes earn reputation by completing tasks, then provide credit guarantees to elect validator nodes, achieving an efficient, scalable, and secure block production process. Compared to PoW, NPoW significantly reduces computational resource consumption.
Deeper issues its native token DPR with a total supply of 10 billion. DPR is primarily used for ecosystem incentives and service payments within Deeper Network, currently with an FDV of $14 million. 60% of the total DPR supply will be mined via NPoW, with mining rewards halving annually since 2021. On January 25, 2024, DPR completed another halving milestone. Similar to Bitcoin halvings driving price increases, the DPR halving combined with bullish 2024 market expectations could spark a new upward trend.
Network3
As a DePIN project in the AI ecosystem, Network3 builds an AI Layer2 designed to assist AI model training. Using edge computing, federated learning, and model compression techniques, Network3 aims to democratize AI by enhancing data privacy and security in an efficient and scalable manner.
Unlike most decentralized computing platforms, Network3 focuses on low-power, low-cost edge computing devices (such as IoT devices) rather than high-end industrial GPUs. While edge devices limit local model size—only supporting smaller parameter models—they are widely accessible, enabling users to compute private data locally and participate in joint training via federated learning.
In fact, end-user demand for AI is strong—in areas like smart homes, smart manufacturing, and health monitoring—yet many cannot afford expensive large models. Network3’s approach has the potential to fill this gap. Currently, Network3’s software has been downloaded over 50 million times, boasts two million monthly active users (MAU), over 58,000 active nodes, and serves more than 2PB of network traffic.
HPChain
HPChain is a DePIN protocol aiming to decentralize high-performance GPU computing, providing support for AI and cloud gaming developers.
Due to geopolitical tensions, NVIDIA has restricted chip exports to certain countries, and centralized cloud platforms (e.g., AWS, Azure) have imposed usage limitations. In this context, a decentralized high-performance computing platform becomes critically important.
Currently, HPChain operates over 1,000 GPU cards. Its cloud computing and service platforms are live, and it is developing collaboration plans with institutions like Cambridge University and Toronto University, as well as companies including M1 and TikTok.
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