Decentralization Physical Infrastructure Network: The Key Pillar of Web3

Decentralized Physical Infrastructure Networks (DePIN) are an innovative model for deploying and maintaining infrastructure. They are built in a decentralized manner by individuals and businesses from around the world, open for use by all users. In return, contributors to these infrastructure nodes can receive economic compensation and token incentives. DePIN achieves a more efficient, decentralized, and fair approach to infrastructure deployment by integrating cryptographic technology, the internet, the Internet of Things, and blockchain.

The Importance of DePIN to Web3

Despite the development of application scenarios such as DeFi, gaming, NFTs, social networking, and physical assets based on Layer 1 and Layer 2, Web3 still has vulnerabilities. Many Web3 applications still rely on centralized cloud services and data centers as their internet infrastructure. There have been incidents in the industry where data loss of Web3 projects occurred due to large cloud platforms going down, as well as cases where centralized service providers were unable to provide services for certain Web3 projects due to regulatory sanctions.

Therefore, DePIN has become an indispensable infrastructure for achieving true Web3. Although DePIN projects may not occupy a large market share and may not have advantages in performance, their existence can ensure the normal operation of Web3 and cryptocurrency projects, enhancing their robustness.

Advantages of DePIN

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

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

Characteristics and Classification of DePIN

The industrial logic of DePIN mainly involves three key roles:

1. Device providers: Provide physical device resources (such as GPU, CPU, memory, storage space, etc.) to earn token rewards.
2. DePIN Protocol: Build a distributed network, design token incentives for device providers, and charge fees to network users.
3. DePIN Network Users: Access the DePIN protocol, use services and pay fees, enjoying lower prices compared to more centralized infrastructure.

DePIN projects can be categorized into Decentralization storage, computing, CDN, VPN, WiFi, and 5G networks.

Most DePINs have three basic components:

1. Physical infrastructure: Build and maintain in the real world to collaboratively construct a Decentralization network.
2. Off-chain computing infrastructure: used to capture and analyze real-world data, compute user contributions.
3. Blockchain and tokens: as tamper-proof ledgers, device registries, and incentive mechanisms.

DePIN Project Case

Decentralization storage network

A certain global distributed storage network has over 3,800 storage providers, contributing more than 17M TB of storage capacity. The network has also launched virtual machine functionality, with over 1,100 smart contracts deployed and more than 80,000 wallet addresses interacting with these applications.

Decentralization GPU rendering platform

A decentralized GPU rendering platform that matches users executing rendering jobs with users having idle GPUs, for distributed GPU computing in the 3D rendering and AI industries. In the first half of 2023, the platform matched over 4.6 million frames of rendering jobs, with an average cost of 20 dollars, which offers a certain price advantage compared to centralized platforms.

Decentralization wireless network protocol

An open-source protocol incentivizes global users to collaboratively build wireless networks. Demonstration cases based on this protocol include an IoT network and a 5G network. It has been reported that the network has deployed nearly 1 million hotspots, covering over 77,000 towns in 192 countries. Its 5G network is also growing rapidly, with the community deploying over 8,000 5G devices in less than a year.

Decentralization live video broadcasting platform

A video infrastructure network for live and on-demand streaming, incentivizing nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through a cryptoeconomic protocol.

Decentralization video streaming network

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

Summary

DePIN is a field that has been gradually developing since the early stages of the industry, with significant expansion in the past two years. According to research, the total potential market size of the DePIN industry is approximately $2.2 trillion, and it could reach around $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5 billion, indicating significant development potential.