AI + DePIN: A Powerful Alliance or a Negative Outcome?
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AI + DePIN: A Powerful Alliance or a Negative Outcome?
We need to have patience and confidence in the development of the AI+DePIN sector.
Navigating Web3 tides with focused insightsAuthor: Fishery, Core Contributor of Biteye
Editor: Crush, Core Contributor of Biteye
Community: @BiteyeCN
*Approximately 3900 words, estimated reading time: 5 minutes
DePIN, short for Decentralized Physical Infrastructure Networks, refers to network systems that connect and manage physical hardware devices in a decentralized manner.
Although the term was formally established through a Messari Twitter poll in November 2022, the underlying ideas and practices have existed for many years.
In the two years since the unification of the DePIN name, despite significant industry promotion, we must admit that few standout new projects have emerged.
On the contrary, many projects have been short-lived, even devolving into temporary money-making schemes. However, such performance does not negate the value and potential of the entire sector. In fact, the concept represented by DePIN has a long developmental history.
Before the term "DePIN" gained widespread acceptance, this sector had already been referred to by various names, including:
1. TIPIN (Token Incentivized Physical Infrastructure Networks): Token-incentivized physical infrastructure networks
2. PoPW (Proof of Physical Work): Proof of physical work
3. EdgeFi: Edge finance, emphasizing deployment of hardware resources at the network edge
4. MachineFi: Machine finance, first proposed by IoTeX in November 2021
While these terms emphasize different aspects, they all point to the same core idea: leveraging blockchain technology and crypto-economics to build and manage infrastructure networks in the physical world.
Within this domain, several projects have achieved notable success, with Filecoin and Helium being the most classic examples.
Filecoin focuses on building a decentralized storage network, while Helium specializes in decentralized wireless networks. Both projects emerged during previous bull markets but remain strong to this day.
The success of Filecoin and Helium demonstrates that combining blockchain technology with real-world physical infrastructure can create disruptive solutions.
These projects not only innovated technically but also successfully applied crypto-economics to solve practical problems, showcasing the feasibility and potential of the DePIN model.
Through this historical perspective, we can gain a more comprehensive understanding of the concept and value of DePIN, while also providing important references and insights for future project development.
This article will delve into the development trajectory of Decentralized Physical Infrastructure Networks (DePIN), review historically successful DePIN projects, summarize their success stories, and use these as a foundation to explore future opportunities in the DePIN space. Additionally, we will pay special attention to the emerging directions and potential brought about by the integration of AI and DePIN amid the current AI wave.
01
The Value Logic of DePIN
Looking back at successful DePIN projects, they typically share several common characteristics:
First, open-source community support at the software level, and openness to third-party manufacturers producing mining-capable hardware;
Second, products with actual real-world applications that meet genuine needs;
Third, targeted design of blockchain algorithms based on specific DePIN business scenarios to ensure fair incentives not controlled by the project team—going beyond simply issuing a token on a public chain.
Let’s discuss each of these points in turn.
Open-Source Communities and Hardware
Successful DePIN projects rely heavily on open-source community support at the software level and allow third-party manufacturers to produce hardware, rather than monopolizing mining hardware production.
Open-source community support attracts global developers, accelerates technological innovation, and improves software security and stability. The open-source ethos aligns closely with decentralization principles, helping build community trust and expand the ecosystem.
Moreover, a thriving open-source community behind a project is also an indicator of solid and reliable technology—after all, pseudonymous concept projects cannot attract open-source developers to contribute out of passion.
Meanwhile, allowing third-party manufacturers to produce hardware helps reduce costs, promote hardware innovation, and prevent centralization risks. This approach enhances the network's decentralization and resilience while broadening the participant base.
This open strategy for both software and hardware creates a virtuous cycle, attracting more participants, driving continuous innovation, and ultimately forming a robust, diversified ecosystem that ensures long-term sustainability.
Take Helium and Filecoin as examples—both depend on strong open-source communities to advance technological progress and expand their networks.
Helium leverages the open-source LoRaWAN protocol, a low-power wide-area networking protocol that provides a low-cost, low-power solution for long-distance communication among IoT devices. By being open-source, LoRaWAN has attracted extensive participation from developers and enterprises, proving its practical demand in IoT communications.
Similarly, Filecoin builds upon the open-source InterPlanetary File System (IPFS) protocol, storing and sharing data via peer-to-peer networking to address many issues inherent in traditional centralized storage, such as single points of failure and data censorship.
The open-source nature of IPFS has drawn widespread involvement from developers and businesses worldwide. Even before Filecoin launched, IPFS was already widely adopted by application developers; by 2020, it had reached a total network storage capacity of 1 EiB.
Blockchain Consensus
Any successful DePIN project must be tightly integrated with blockchain technology, featuring algorithmic designs tailored to specific use cases—not merely separating DePIN operations from Web3 and simply launching a token on a public chain.
When discussing core blockchain technologies, proof-of-work and consensus mechanisms are unavoidable—and represent one of the most challenging technical aspects of DePIN.
The core issue lies in how to measure the workload of end-user devices and who distributes the corresponding rewards.
This requires designing targeted proof-of-work algorithms.
Helium ingeniously integrates its "Proof-of-Coverage" (PoC) consensus mechanism with IoT hotspot operations. Its challenge-response model simulates actual IoT data transmission, verifying the communication capability of hotspots.
Multi-hop validation reflects the need for broad IoT network coverage, ensuring stable connectivity.
Spatial-temporal proofs align well with location-based services in IoT, providing a reliable foundation for geolocation applications.
Filecoin similarly features targeted consensus design through its innovative Power Fault Tolerance (PFT) mechanism, which converts miners’ used storage capacity and generated spatial-temporal proofs into voting power to elect leader nodes responsible for creating new blocks.
This mechanism not only improves network efficiency but also significantly reduces energy consumption. Through token incentives, Filecoin effectively drives network expansion and strengthens the practical adoption of the IPFS protocol.
The greatest benefit of purpose-built consensus algorithms in DePIN projects is ensuring fairness and securing the economic system. Such designs guarantee users receive accurate and reasonable rewards proportional to their actual contributions, while effectively preventing potential misuse by the project team.
By anchoring contribution measurement and reward distribution directly onto immutable blockchains, transparency and immutability of incentive allocation are ensured.
This means the project team cannot maliciously withhold deserved rewards nor secretly increase their own quotas.
Looking back at recently launched VC-backed DePIN projects, results so far appear underwhelming—likely due to this very reason.
Most of these projects opt to launch tokens on public chains like Solana or Ethereum, featuring high token emissions and concentrated holdings, where incentives operate outside the constraints of consensus mechanisms.
Real Demand
Another critical factor often overlooked in DePIN project success is the alignment between long-term development and real-world demand.
This is clearly demonstrated in the development journeys of Filecoin and Helium. Filecoin is built on the open-source IPFS (InterPlanetary File System) protocol, which itself was created to address numerous shortcomings of current centralized storage systems. The existence and widespread use of IPFS prove the real demand for decentralized storage.
By introducing a token incentive mechanism, Filecoin further expanded the application scope and participation levels of IPFS, creating a positive feedback loop.
Likewise, Helium is based on the open-source LoRaWAN IoT communication protocol. The broad adoption of LoRaWAN already demonstrates substantial market demand for IoT connectivity, and Helium’s incentive model greatly accelerated the deployment and expansion of LoRaWAN networks.
The combination of open protocols with DePIN projects not only confirms the existence of market demand but also shows how DePIN can drive further development and adoption of open-source technologies through economic incentives.
In summary, successful DePIN projects exhibit clear advantages in open-source community support, hardware openness, long-term development, and meeting real market demands. Their tight integration with blockchain technology and innovation further solidify their standing within the industry.
As successful exemplars, Helium and Filecoin illustrate how DePIN projects can achieve long-term sustainable growth through effective integration of technology and market demand.
02
AI + DePIN: Value or Speculation?
Window of Value
The integration of AI and Web3 is still in its exploratory phase, with no mature roadmap yet established in the industry. However, from an asset perspective, AI inherently involves two key elements—hardware and algorithms—which closely align with the characteristics of the DePIN sector.
DePIN projects typically involve decentralized networks of physical hardware and smart contract-driven incentive mechanisms—making them ideal candidates for AI implementation.
When exploring the convergence prospects of AI and DePIN, we must confront a key challenge: the mismatch between decentralized AI training demand and technological development.
Currently, mainstream open-source AI toolkits used in academia and industry are primarily designed for centralized servers, reflecting the lack of scale in decentralized AI training demand.
Indeed, developing genuine decentralized demand is often a lengthy process.
Reviewing past successful DePIN cases, we observe a relatively healthy development path: first, the emergence of decentralized demand; then, community-driven development of corresponding open-source decentralized frameworks; finally, the introduction of incentive mechanisms into the ecosystem.
However, current trends in the AI+DePIN space seem somewhat inverted. Many projects rush to introduce incentive mechanisms, but without genuine decentralized demand to support them, these incentives often end up in the hands of "farmers" rather than true contributors and users.
This incentive-first model not only fails to stimulate authentic demand but may also lead to misalignment between technical development and actual market needs.
Without clear demand guidance, projects may overly focus on short-term gains, neglecting the technical accumulation and ecosystem building required for long-term sustainability.
Therefore, for AI+DePIN projects, the immediate priority should be patiently cultivating real decentralized AI demand while promoting open-source communities to develop decentralized AI frameworks.
Only once there is community-driven demand can the introduction of rational incentive mechanisms truly function, driving healthy ecosystem development.
This requires patience and focus on long-term value creation from project teams, developers, and investors alike.
Only in this way can we hope to see truly successful AI+DePIN projects emerge, opening new possibilities for the future of decentralized infrastructure.
Actively Participating in New AI Narratives
Based on the above analysis, short-term value investing may not be viable—but this doesn't mean the AI+DePIN market lacks opportunity. Considering the broader landscape, AI remains the hottest sector for capital.
Currently, the dominant approach in AI+DePIN is to provide distributed computing resource networks for AI, aiming to lower the cost of AI training and inference while fully utilizing idle global computing power—especially GPU resources.
At the beginning of this bull market, participating in such projects using existing hardware offered decent returns. But as time progresses and more similar projects emerge, leading projects gradually lose momentum.
This suggests the importance of actively engaging with new AI narratives—appropriately participating in each emerging sub-narrative under the AI umbrella (long-term holding is not necessarily safe). Crucially, it must be *new* narratives!
For example, Xai pioneered the sale of nodes; early adopters enjoyed substantial returns, recouping investments in less than half a month.
03
Final Thoughts
Currently, market conditions are poor, and sentiment is generally low.
We should maintain patience and confidence in the development of the AI+DePIN sector. Growth in this emerging field may take time, but its potential cannot be ignored.
During downturns, take time to review existing projects and identify those with genuine decentralized demand, strong open-source community support, open hardware manufacturing, and purpose-built consensus algorithms.
Finally, closely monitor developments in open-source communities, filter out promising new narratives with real technological merit, and contribute to the healthy evolution of the AI+DePIN ecosystem.
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