Remember the buzz around DAOs in the last crypto cycle?
Decentralized autonomous organizations had to radically change governance. Instead, countless projects misused the term and labeled themselves as DAOs without embodying the core principles of decentralization, autonomy, or even functioning as an organization. As the hype grew, the definition became confused, leaving many investors and enthusiasts with a distorted view of what DAOs really represent.
We are witnessing a similar trend with DePIN (decentralized physical infrastructure networks). The term has quickly gained popularity, with experts predicting that the DePIN market will reach a $1 trillion valuation within the next decade.
Every day, new projects claim to be part of this transformative wave. But like DAOs, many of these projects abuse the label and fail to deliver on the fundamental aspects of DePIN.
The rise and slow burn of DePIN
DePIN did not arise overnight. Its roots can be traced back to early decentralized networks such as BitTorrent and the Tor Network, which demonstrated the power of decentralized systems to distribute data and improve privacy. These groundbreaking projects laid the foundation for what we now know as DePIN.
Fast forward to today, and DePIN has evolved into a distinct vertical within the blockchain space.
Investors are taking notice and are pouring significant capital into ventures such as decentralized wireless networks and storage solutions. For example, Helium has deployed more than 3,780,000 active hotspots worldwide, while the Render Network uses decentralized GPU power to transform 2D and 3D computer models into lifelike images. As of now, the Render Network has approximately 5,600 nodes onboard and over 33 million rendered frames completed.
Shout out: your dapp is probably not DePin
To qualify as true DePIN, the project must be concerned with providing physical infrastructure – and the network formed by that physical infrastructure must be governed purely by the consensus vote on the network’s hardware in a way that incentivizes network operators to their participation.
These elements ensure that the network functions without central control, uses physical resources, and rewards contributors fairly.
But there are countless projects that claim to be part of the DePIN ecosystem without meeting the essential criteria.
Some of these projects focus on providing off-chain computation or integrating AI services, which, while decentralized, do not involve the creation or management of physical infrastructure. Others within various blockchain ecosystems improve decentralized computing or offer financial services, but lack the physical infrastructure component necessary for true DePIN projects.
Read more in our opinion section: Don’t give your life for free to Big Tech
The term DePIN has become a buzzword and many projects abuse it to attract attention despite not adhering to the fundamental principles of managing decentralized physical infrastructure. This misuse can mislead investors and stakeholders, dilute the meaning of the term, and undermine the integrity of genuine DePIN initiatives. Clear definitions are essential to preserve the promise and potential of DePIN and revolutionize the management of physical infrastructure.
By understanding and recognizing the core principles that define true DePIN projects – direct linkage to physical infrastructure and governance purely through the consensus vote on the network’s hardware – we can better distinguish between innovative projects and those that merely piggyback on the hype wave.
Understanding what is and is not DePIN is critical to the health and growth of the industry.
DePIN has the potential to democratize access to critical infrastructure, reduce costs and increase resilience by eliminating single points of failure. It could revolutionize the way we interact with technology and resources, from energy networks to internet access.
DePIN’s core vision is to empower individuals and communities to create a more just and sustainable future. To achieve this vision, we must maintain clarity and integrity in defining what a DePIN project entails.
If you build or invest in a DePIN project, make sure it meets the fundamental criteria of decentralization, physical infrastructure and the right incentives.
Let’s deliver on the promise of DePIN and drive real innovation in decentralized infrastructure.
Frank has a varied career spanning creative writing, day trading and a twelve-year stint in financial planning. After experimenting with blockchain and being an early adapter for the Solana ecosystem, Mathis founded GenesysGo in 2021 to create a faster, more reliable, and more secure decentralized data storage protocol. Their flagship product, shdwDrive, is built on Solana and aims to bridge the gap between blockchain technology and traditional business infrastructure. GenesysGo is powered by a new type of decentralized data storage consensus mechanism, built from the ground up by the GenesysGo team.
