Podcast Notes | Interview with Helium Founder: Running a DePin Network Requires Major Investment, Helium Will Inspire Future Projects
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Podcast Notes | Interview with Helium Founder: Running a DePin Network Requires Major Investment, Helium Will Inspire Future Projects
Helium is a methodology for building a permissionless IoT network on a global scale.
Navigating Web3 tides with focused insightsCompiled by: Revelo Intel
Translated by: TechFlow
On January 18, 2023, during Back Pack’s Twitter Space, Tristan, Kyle, and Abhay discussed DePIN networks, Helium, the Internet of Things (IoT), and more. Read our notes below for further details.
Background
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Tristan (host): Co-founder of Mad Lads
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Kyle (guest): Managing Partner at Multicoin Capital
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Abhay (guest): Founder of Helium
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Helium: A decentralized wireless infrastructure network
Definition of DePIN Networks
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Kyle explains that DePIN stands for Decentralized Physical Infrastructure Networks. It involves people worldwide collaborating toward a shared mission to build infrastructure, often involving novel hardware. The network's output combines efforts from various locations, creating solutions that are better, faster, cheaper, and more reliable than centralized alternatives.
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Abhay adds that DePIN networks aim to empower individuals to create wireless connectivity for themselves and their neighbors while complementing existing infrastructure.
Token Usage in DePIN Networks
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Kyle states that tokens serve as incentives to encourage users or individuals to contribute to network growth. For DePIN networks like Helium, achieving scale is critical for utility. A small network with only a few hotspots holds little economic value.
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He adds that token-based incentives motivate individuals to participate in building the network’s infrastructure. This system aligns individual actions with network goals more effectively than traditional payment methods.
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Kyle notes that being among the first to purchase a Helium hotspot involves risk due to uncertainty about whether the network will reach sufficient scale to function. Later adopters face less risk, having more evidence of the network’s effectiveness. Using tokens as compensation allows rewards to be distributed according to the level of risk taken. Token distribution mechanisms must be carefully designed to reward early, high-risk contributors.
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He adds that tokens enable rewarding those who take on higher levels of risk, aligning with their belief in the project’s future vision. Early adopters, who are more likely to believe in and be excited about a project, should receive greater compensation. This mechanism provides an elegant way to reward those who contribute most to achieving the project’s goals.
Scaling Payments via Blockchain
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Abhay states that building a payment system using traditional methods is slow, expensive, and complex. Sending large volumes of payments daily is nearly impossible without significant resources or established infrastructures like Square, Stripe, or PayPal. Due to limitations in traditional payment rails, paying hotspot owners across different geographic locations becomes extremely difficult.
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He adds that Helium’s work on blockchain focuses on efficiently scaling payment capabilities. Traditional payment systems lack the scalability required for mass payment distribution. Blockchain technology offers a solution to scale payments significantly, enabling payments to hotspot owners as devices move across different geographic locations.
Evolution from Web2 to Crypto and Building Blockchains
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Abhay states that Helium initially aimed to provide IoT connectivity for devices such as asset trackers and cold supply chain monitors. Establishing gateways within campuses worked well, but extending connectivity beyond campus boundaries posed challenges. For applications involving low-power devices spanning multiple geographies or relying on a single gateway, building a decentralized network became necessary.
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He adds that running both a full blockchain and a wireless network requires substantial engineering effort and overhead. To focus more on building the wireless network, Helium decided last year to migrate off its own chain. Initially launching its own chain was driven by cost and feasibility considerations compared to leveraging existing chains like Ethereum or Bitcoin.
Using LoRaWAN Protocol to Position Helium as an IoT Network
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Abhay states that Helium uses the LoRaWAN protocol for IoT connectivity. The network supports a wide range of devices, including water meters using the LoRaWAN protocol. Devices configured to operate on the Helium network can use Helium-deployed LoRaWAN connections to transmit data.
Early Investment in Helium and Vision for Wireless Connectivity
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Kyle states that the decision to invest in Helium stemmed from recognizing the massive market demand for wireless connectivity. Compared to traditional centralized telecom operators, decentralized approaches appeared far more efficient. The vision of integrating wireless systems with blockchain technology sparked interest and investment in Helium.
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He adds that at the time, Helium had a significant economic incentive component, though they didn’t fully appreciate it. They understood that removing costs from the system could be beneficial. Helium’s potential success in the crypto space excited them.
Initial Focus on IoT and Helium’s Vision
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Kyle states that initially, Helium’s focus was entirely on IoT. While discussions about Wi-Fi, 4G, and 5G occurred, limited resources meant they focused on IoT. The goal was to succeed in IoT first before expanding into other opportunities.
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Abhay states that he worked for ten years at a wireless internet service provider using microwave antennas for internet connectivity. Building large-scale wireless ISPs across countries was challenging. They believed protocols like Helium could enable the creation of globally scaled networks. Initially, Helium focused on IoT to prove the model, later evolving into a "network of networks" approach.
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He adds that designing economics and infrastructure for new networks within the Helium ecosystem allows consideration of cellular networks. He looks forward to seeing more networks deployed using Helium’s same model.
Quick Understanding of IoT and Helium
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Editor’s Note: An elevator pitch refers to clearly and accurately explaining a solution to a client within 30 seconds—such as during an elevator ride—effectively introducing your proposal quickly.
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Abhay defines IoT as devices connected to each other or to the internet, providing value through connectivity. Examples of useful IoT devices include leak detectors and practical applications in industrial settings such as factories and farms.
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He describes Helium as a methodology for building permissionless IoT networks, enabling global collaboration. Its focus is on small, low-power devices, allowing anyone to join, deploy hotspots, and create valuable applications for end users.
Perspectives on Helium’s Vision
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Abhay states that Helium is a methodology for building permissionless IoT networks at a global scale. It enables individuals worldwide to collaborate and facilitates the deployment of hotspots and sensors. Valuable applications for end users can be created within this network framework.
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He adds that Helium’s vision includes connectivity networks starting with IoT as the initial focus, but with potential expansion into other areas such as mobile connectivity.
Helium: A New Business Model for Wireless Networks
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Kyle states that Helium represents a new business model for building and managing wireless networks. It reduces system costs by eliminating the need for physical infrastructure (e.g., paper, printers, trucks). It introduces elements of risk and reward for participants, creating a unique economic configuration.
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Abhay states that the Helium ecosystem has two core tokens: $HNT and Data Credits. $HNT is the reward token for hotspot owners, while Data Credits are stable assets bound to user wallets. Data Credits are used to pay for network usage and are pegged to a specific rate.
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He adds that beyond $HNT and Data Credits, the Helium ecosystem also includes IoT and Mobile tokens. IoT tokens serve as rewards to bootstrap the IoT network, while Mobile tokens are earned on the mobile side. Mobile tokens not only reward hotspot owners but also subscribers who contribute by mapping network coverage.
Earning Tokens as a Mobile Cellular Network User
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Abhay states that users can earn tokens by registering with NOA Labs in the U.S. to become a Helium Mobile subscriber. After downloading the app and receiving an eSIM, they can begin using Helium Mobile services.
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He adds that users can choose to enable a mapping feature on their device. During daytime movement, the app passively collects data from the cell towers they connect to. This data is then sent back to Helium, contributing to network coverage information.
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Abhay states that deploying your own coverage and setting up a mobile hotspot allows you to earn money by providing coverage to others. By deploying a mobile hotspot, you can participate in revenue generation on the mobile side of the network.
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He adds that Mobile tokens serve as governance tokens for the mobile network. To participate in governance and voting, individuals must lock their Mobile tokens. Hotspot manufacturers must burn Mobile tokens to connect hotspots to the network. Service providers can use multiple tokens to designate areas they want to cover. Providers can map subscriber locations and then request coverage in those areas. When coverage is provided in designated zones, hotspot owners receive increased rewards. Mobile tokens are used for governance participation, hotspot access, and subscriber mapping.
Investing in Hardware-Centric Companies
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Kyle states that initially, there were concerns about investing in hardware-centric companies due to complexity. However, Helium’s vision and prior successful hardware shipments gave investors like Kyle confidence.
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He adds that traditionally, crypto investments had limited physical impact beyond Bitcoin mining or ATMs. With the emergence of DePIN, this is changing as more hardware interacts with blockchains.
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Kyle states that following Helium’s success, more companies are expected to follow its model and produce blockchain-interacting hardware. Other ventures inspired by Helium’s success have already emerged, such as Hivemapper.
Advice for Founders Launching DePIN Networks
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Kyle advises founders launching DePIN networks to limit the scope of complexity. Initially centralizing certain aspects of the system helps minimize workload and reduce complexity. For example, focus on specific hardware manufacturers before expanding to third-party options.
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He adds that hardware and manufacturing costs can be high, requiring investor funding at the outset. However, it’s important to retain enough tokens to incentivize network growth.
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Kyle states that launching a DePIN network requires significant effort, but with Helium’s continued success, more companies are expected to enter this space. Many entrepreneurs explicitly cite Helium as a primary inspiration for launching similar ventures.
Importance of Manufacturers in the Supply Chain
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Abhay states that partnering with manufacturers experienced in supply chain management was one of the wisest decisions. This enabled the successful global deployment of hundreds of thousands of hotspots. Country-specific regulations and certifications are handled by different manufacturers. Founders aiming to manufacture hardware should first collaborate with those experienced in hardware production.
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He adds that someone on the team must have experience delivering hardware products. Developing a product purely from a crypto perspective may fail to meet the needs of everyday users and real-world applications.
Concerns About Proprietary Hardware Systems
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Abhay states that proprietary hardware systems were not a major concern for their project. Certain applications may require firmware protection and signed firmware to mitigate risks. To achieve scale, either self-manufacturing or partnering with experienced manufacturers is essential.
Potential Disruption Enabled by the DePIN Model
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Kyle states that the cellular network industry is an exciting area for disruption. Other promising areas include smart grid systems, drone fleets, distributed logistics, and energy networks.
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Abhay highlights that power infrastructure is particularly important, considering issues like blackouts during wildfires. Power infrastructure is a key sector that could benefit significantly from blockchain technology.
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Empowering individuals to manage their own energy needs is also crucial. He mentions living in Northern California and experiencing the impact of wildfires causing power outages.
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