Decentralization Physical Infrastructure Network: An Important Pillar of Web3

Decentralized Physical Infrastructure Networks (DePIN) are an emerging model for the deployment and maintenance of infrastructure, built in a distributed manner by individuals and businesses around the world for the use of all. The core of this model is that contributors to the infrastructure nodes can receive economic compensation and token incentives. DePIN achieves a more efficient, decentralized, and fair way of deploying infrastructure by combining cryptographic technology, the internet, the Internet of Things, and blockchain.

DePIN: The Key Infrastructure of Web3

Although Web3 has developed a rich application scenario based on Layer1 and Layer2, such as DeFi, games, NFTs, social networking, and physical assets, it still heavily relies on centralized cloud services and data centers as internet infrastructure. This dependency has led to a series of problems, such as data loss due to cloud platform outages, and situations where certain services cannot be used due to regulatory restrictions. Therefore, DePIN has become a necessary infrastructure for achieving a true sense of Web3.

Although DePIN projects may not capture a major market share and may not have performance advantages, their existence can enhance the robustness of Web3 and crypto projects, ensuring their normal operation in special circumstances.

Compared to traditional centralized physical infrastructure networks, DePIN has the following advantages:

1. Low participation cost: By leveraging the collective resources of network participants, management costs and expenses are reduced.
2. Network Robustness: Provide a more resilient and secure infrastructure that is less susceptible to single points of failure.
3. Open competition and innovation: Eliminating the high capital and large-scale entry barriers of traditional infrastructure networks facilitates the entry of small-scale new participants.

Characteristics and Classification of DePIN

The industrial logic of DePIN is straightforward and mainly includes the following roles:

• Device provider: Provides physical device resources (such as GPU, CPU, memory, storage space, etc.) to earn token rewards.
• DePIN Protocol: Build a distributed network, design a token incentive mechanism, and provide services for network users.
• Network users: Access the DePIN protocol, use services and pay, which is usually more economical than centralized infrastructure.

The DePIN project can be broadly classified into categories such as decentralized storage, computing, CDN, VPN, WiFi, and 5G networks.

Most DePIN projects have three basic components:

1. Physical Infrastructure: Build and maintain distributed physical infrastructure in the real world.
2. Off-chain computing infrastructure: Used to capture and analyze real-world data, calculate user contributions.
3. Blockchain and Tokens: As tamper-proof ledgers, device registries, and incentive mechanisms.

DePIN Project Case

Decentralization storage network

A certain global largest distributed storage network has over 3,800 storage providers, offering more than 17M TB of storage capacity. The project is committed to introducing open and publicly verifiable characteristics into the three main pillars of the data economy: storage, computing, and content distribution.

Decentralization GPU rendering platform

A decentralized GPU rendering platform will need to match users who need to execute rendering jobs with users who have idle GPUs, for distributed GPU computing in the 3D rendering and AI industries. In the first half of 2023, the platform completed over 4.6 million frames of rendering jobs, with an average cost of 20 dollars, which has a certain price advantage compared to centralized platforms.

Decentralization wireless network protocol

An open-source protocol incentivizes global users to jointly build a wireless network. The native cryptocurrency of this protocol can be used to generate data credits, which are crucial for transmitting device data. Based on this protocol, demonstration cases of Internet of Things and 5G networks have been constructed. Reports indicate that the project has deployed nearly 1 million hotspots in over 77,000 towns across 192 countries in just three years.

Decentralization live video broadcasting platform

A network that provides video infrastructure for live and on-demand streaming, incentivizing nodes to contribute GPU and bandwidth for real-time video encoding and distribution services through an encrypted economic protocol.

Decentralization video streaming network

A decentralized video streaming platform based on blockchain technology, incentivizing individual users to share excess computing power and bandwidth resources through tokens, serving as cache or relay nodes for video streams, improving video quality and reducing distribution costs.

Summary

DePIN, as a track that has been developing since the early days of the industry, has seen significant expansion in the past two years. According to research institutions, the total potential market size of the DePIN industry is estimated to be around $2.2 trillion, and it could reach approximately $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects stands at only $5 billion, indicating a huge growth potential.