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Decentralized Physical Infrastructure Networks (DePIN) are projects that utilize the blockchain, other decentralized protocols, and physical facilities to develop real-world solutions. Projects in this category have gained relevance beyond the crypto space, stretching to sectors like AI development, human mobility, and geology, but the concept is still in its earliest stages. DePIN was one of the biggest narratives of 2024 and is set for an even bigger 2025. In this article, we discuss how DePIN is shaping up for the future;
The Rise of Decentralized Physical Infrastructure Networks
Web3 media and research firm – Messari, coined the term DePIN (decentralized physical infrastructure networks) to define projects that use decentralized protocols to manage physical facilities. However, even before this, several projects in this category had already gained traction. In H2 2023 and throughout 2024, the term has become quite popular. DePIN projects are a response to the poor management and remuneration of centralized resource networks, creating issues such as human error, malfunction due to the localized architecture, and lack of transparency in finance and administration.
DePIN projects also presented more secure and cost-effective alternatives. Thanks to the viability of the crypto market, the number of projects in this category has been on an exponential rise. According to data from Depinscan there are about 296 active DePIN projects at the time of writing. This is a testament to the rapid growth in this sector.
The Evolution of DePIN in the Cryptocurrency Landscape
Alongside AI and meme coins; DePIN is arguably the most trendy narrative in the crypto space in 2024. However, DePIN projects date back to early 2016 with the launch of IOTA, Filecoin, and the Render Network. The launch of Helium in 2019 marked a significant point for decentralized connectivity projects.
Following the coinage of the term DePIN, other projects that fit the definition were categorized together. Since this time, DePIN projects have succeeded in creating a decentralized alternative to crowd-sourced resources. In the past two years, this has expanded to additional sectors like health and mobility. DePIN projects have also gained better coverage on reputable crypto websites like Coinhint.com.
How DePIN Works
DePIN projects employ blockchain technology for two purposes – data management and the distribution of incentives. Using blockchain protocols like network nodes, they present a ‘plug and play’ system that enables the interconnection of independent infrastructures and allows them to communicate.
These infrastructures could be Internet of Things (IoT) devices connected to cars or personal computers in a decentralized GPU grid. The blockchain is capable of sorting, processing, and keeping an immutable store of data. Data generated on physical infrastructures on DePIN networks are relayed to the blockchain through connected middleware like a decentralized oracle protocol. The collated data is processed and the blockchain also assumes an administrative role. Rewards for contributions to the network, as inferred from the data submitted are remitted to the appropriate network participants.
This way, DePIN projects can achieve a collaborative system for several purposes. Depending on the type of data and resources generated on the network, DePIN networks could serve as simple networks for data collection and distribution or for more advanced use cases like decentralized ride-sharing, decentralized storage networks (as seen on DePIN projects like Filecoin and the Arweave network), or networks for computing resources (as seen on projects like Render Network, io.net, and Bittensor).
Current DePIN Market Status
At the time of writing, DePIN is a $33 Billion sector, and several projects in this category have grown to a market capitalization of over $1 Billion. The largest DePIN project by market cap is Internet Computer (ICP), a decentralized network for Internet connectivity and computing resources. DePIN is a thriving market, and over $14 Billion worth of projects in the DePIN category get traded daily on cryptocurrency exchanges.
The Developments You Should Watch In 2024-2025
Going into the end of 2024 and 2025, some of the developments to watch out for DePIN projects include
- An increased expansion into the AI sector
- Multi-token ecosystem as seen in Helium network.
- Expansion of DePIN into trade finance.
The Future of DePIN: What Lies Ahead?
Considering the rapid progress made in this space, Decentralized Physical Infrastructures could be set for an interesting future. Industry leaders see a clear path to increased adoption of DePIN as an idea in larger settings. DePIN itself is flexible, it fits into numerous sectors as a system for managing diverse facilities and a tool for building collaborative solutions through progressive incentivization. A possible trend that could emerge in the future is the mainstream adoption of this concept as a way to overcome the challenges of crowd-sourced utilities.
Like Anatoly Yakovenko, Co-founder and CEO of the Solana blockchain said “DePIN Is the biggest winner today. Hardware rollout is really hard, token incentives are a way to overcome that hurdle.”
However, DePIN networks face challenges like legal uncertainties and factors related to the complicated nature of blockchain technology. A possible future trend could be DePIN projects modifying their technologies to make them easier to understand and use. We could also see increased efforts by DePIN projects to comply with legal specifications to expand into countries with stricter regulations, which could result in significant changes in how they operate.
Some Final Thoughts
DePIN projects expand the scope of blockchain’s utility, from regular P2P transactions, and blockchain technology has gained new applications in some of the most important sectors. As the DePIN narrative grows, Decentralized Physical Infrastructure Networks could emerge as the go-to platforms for several resources currently controlled by centralized organizations.
DePIN networks support removing the middleman and single points of failure and creating a balanced network where participants have the upper hand. This idea has helped cryptocurrencies and blockchain technology to thrive and could also be the case for DePIN blockchains.
Having said this, it is recommended that you do your own research before investing in any DePIN project or interacting with DePIN networks.
