DePIN, short for “decentralized physical infrastructure networks,” has become an increasingly popular application of blockchain and decentralized technologies.
Simply put, it involves using blockchain to run and maintain decentralized networks of physical hardware, such as sensors, wireless infrastructure, energy networks and other applications.
Using cryptocurrency tokenomics and blockchain technology to power and coordinate the functioning of peer-to-peer (p2p) hardware infrastructure networks, DePIN is already being used to launch and maintain real-world services. This is how it works.
What is DePIN?
DePIN uses cryptocurrency rewards to incentivize participation in physical infrastructure networks, allowing them to be built from the ground up rather than top-down.
Setting up and operating physical infrastructure networks is expensive and challenging. Therefore, historically, this has usually been carried out by established companies or governments that have sufficient capital.
Individuals participate in DePIN networks using their own hardware or specialized hardware designed for the network. This can range from hard drives to wireless network nodes and in-car tracking devices.
Filecoin: a DePIN pioneer
Founded in 2009, IPFS (InterPlanetary File System) functions like a library that is not just in one building, but spread across an entire city. To continue the metaphor, it stores copies of books (i.e. your digital files) in multiple locations. When you want to access a file, IPFS finds the closest copy and delivers it to you, ensuring fast and reliable access.
Launched in 2014, Filecoin builds on the IPFS concept but introduces an incentive layer. It’s like offering your friends coffee or a small thank you every time they help you find your favorite book. People who have extra hard drive storage space can rent it out and earn Filecoin in exchange for hosting and serving content.
DePIN decentralized storage networks like Filecoin ensure that digital assets and the data associated with them (such as the image of an NFT or transaction records) are always accessible, regardless of server status or geographic restrictions. It also maintains the integrity of digital assets. Since multiple copies exist, it becomes impractically difficult to tamper with the data. You can always verify the authenticity of an asset through its decentralized copies.
Using DePIN also improves efficiency, as retrieving data from the nearest or most available node reduces the time and resources required to access digital content.
Examples of DePIN
Filecoin is just one example of a DePIN project. There are many more, all using tokenization to incentivize participation in a different type of physical infrastructure networks. Some DePIN projects include:
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Arweave:
A decentralized file storage service where users share their available computer disk space with those who need storage capacity. -
Hivemapper:
A decentralized mapping service that rewards users for capturing images of the roads they drive on with a specially designed dashcam. -
Display:
A decentralized GPU rendering platform, where users can contribute the unused power of their PC graphics cards to render motion graphics and visual effects. -
Helium:
A decentralized wireless Internet of Things network that uses a distributed network of hotspots that are rewarded for providing wireless coverage. -
Power Ledger:
A peer-to-peer energy trading platform that aims to decentralize the energy network. -
DIMO:
DIMO, short for Digital Infrastructure for Moving Objects, is a network that allows vehicle owners to use and monetize the data from their vehicles. -
PowerPod:
A shared EV charging network that allows owners of private chargers to share them with other drivers and receive a reward for doing so.
The future of DePIN
DePIN promises to increase the resilience and reach of hardware-based networks. By enabling the efficient allocation of resources through incentives and reward mechanisms, they can help bootstrap new hardware networks without requiring the resources of centralized players.
However, challenges still remain. ThePIN networks have yet to be seriously monitored by regulators (to give an example: who is responsible if a decentralized file storage service is used to host illegal content?), while other potential hurdles include interoperability and scalability.
