The current situation, applications, supply and demand, technological changes, and regional development differences in the DePIN track.
Recently, Messari and Escape Velocity (EV3) jointly released a research report titled "State of DePIN 2023," which elaborates in detail and comprehensively on the current situation, applications, supply and demand, technological changes, and regional development differences in the DePIN track.
As the original report is presented in PDF format and the English content is lengthy, and each figure has high information density, DeepTechFlow has compiled the report, processed the key charts, content, and viewpoints from the original report, and presented and interpreted them in a more readable format.
The following is the original report content.
About the Authors:
Sami Kassab: Cryptocurrency research analyst at Messari, focusing on DePIN, artificial intelligence, and Bitcoin, and co-host of the Proof of Coverage podcast. Before joining Messari, Sami worked as an aerospace engineer at Raytheon and Honeywell.
Salvador Gala: Co-founder of Escape Velocity (EV3) and co-host of the Proof of Coverage podcast. Before joining EV3, Sal worked as an investor at Ribbit Capital and as an investment banker at Goldman Sachs.
Definition, Current Status, and Industry Landscape of DePIN
DePIN = Distributed Physical Infrastructure Network, using cryptographic incentives to efficiently coordinate the construction and operation of critical infrastructure.
In a general sense, DePIN can consist of the following components:
DePIN can be more efficient, resilient, and perform better than centralized infrastructure, making it the preferred way to expand global infrastructure.
The comparison between DePIN and traditional centralized infrastructure is as follows:
The growth flywheel of DePIN = the infrastructure network becomes stronger as it scales.
The flywheel of DePIN is strong enough to increase global GDP by +$10 trillion in the next decade and by +$100 trillion in the following decade.
(Note: Due to translation issues in the PDF, "第一" in the above image should be understood as "the first.")
DePIN empowers and incentivizes citizens to improve public infrastructure around them.
In a world of untrustworthy institutions and incompetent bureaucrats, DePIN returns wealth and power to citizens and communities.
We divide DePIN into six categories, each of which disrupts an industry worth over $1 trillion.
RWAs (Real World Assets) and blockchain infrastructure networks (oracles and RPC) are related areas of DePIN but are not within the scope of this report.
- Smart money in cryptocurrencies is making dozens of bets on the DePIN track, and venture capital funds are also making significant investments.
Winners in DePIN infrastructure are beginning to emerge, with Solana in a leading position.
Solana's integrated infrastructure and performance-focused developer community are attracting DePIN at all stages.
Demand, Revenue, and Typical Use Cases of DePIN
DePIN relies on on-chain validation and/or settlement to provide critical network resources to consumers, developers, and agents willing to pay for them.
The North Star of DePIN = revenue driven by utility — not speculation.
On-chain revenue means users exchange products/services/goods by purchasing and locking/destroying tokens.
DePIN generates over $15 million in annualized on-chain revenue across six core business models.
In the previous cycle, DePIN's revenue situation proved to be the most resilient among all tracks in on-chain revenue.
The largest DePINs are transforming into platforms with diversified use cases.
These are not overnight successes: platformization often occurs in the 5th to 10th year of global decentralized network expansion.
The following are specific situations of use cases in the six DePIN tracks:
Compute Market
The compute market is the oldest and most successful DePIN business model.
Storage networks need more demand, compute networks need more supply, and retrieval networks need density to compete with web2.
(Note: Due to PDF translation issues, the text in the top left corner of the image should be understood as: What features are brought by cryptographic technology.)
Data storage looks like an obvious use case for cryptographic technology, but its development has been slow.
So far, the best customers for decentralized storage networks have always been other cryptographic networks.
The end game of storage has always been about data computation.
The mainnet phase three of Filecoin is set to begin in the first quarter of 2023, with the launch of the Filecoin Virtual Machine (FVM) in sync.
Unlike most DePINs, GPU cloud services are supply-constrained rather than demand-constrained.
However, price competition in GPU cloud services may be faster than any competition we have seen before.
(Note: In the LLM pricing unit in the image, "令牌" should be understood as "Token.")
CPU cloud services are becoming the export of the animal spirit in the crypto space.
Speculation on proof-of-work blockchains has led to a wealth transfer from speculators to arbitrageurs and DePIN token holders.
Decentralized CDNs face fierce competition: Cloudflare already has a similar flywheel effect to DePIN.
Cloudflare benefits from a flywheel effect similar to DePIN through its free CDN service, which supports 20% of websites globally.
Retrieval is the most challenging part of decentralization, but early signs show promise.
The results in early 2023 demonstrate the potential for decentralized CDNs to match or even surpass the performance of web2.
(Note: "Filecoin's Saturn" should be understood as its project name "Saturn.")
Wireless Coverage
The market for wireless services is larger than the compute market in the global economy.
Over the past 25 years, the compound annual growth rate of global data transmission has been 30-35%, with no signs of slowing down.
Each vertical area of DeWi has different fundamental economic drivers.
The mobile market is the largest market to date (in terms of dollars), but fixed internet and WiFi are the largest in usage (in terms of GB and users).
(Note: DeWi refers to decentralized wireless networks, and "关键开锁" should be understood as "key to unlocking the problem.")
Cryptographic MVNOs (Mobile Virtual Network Operators) use token economics to improve traditional wireless economics.
MVNOs acquire and manage customer relationships while paying wholesale network access fees to traditional mobile network operators (MNOs).
Early momentum for Helium Mobile shows a path to millions of users.
The question is: Can Helium start making a profit before running out of funds? … We believe the answer is yes.
(Note: "氦" refers to Helium, and "数据卸载" refers to "Data Offload," meaning the use of complementary network technologies to offload data originally carried by cellular networks.)
Mobile internet connects people to people, while fixed internet connects locations to locations.
The number of ISPs (Internet Service Providers) in the US will grow from 3,000 to over 15,000 in the next five years, presenting huge global opportunities.
Fixed internet may be the most ambitious plan in DeWi.
Andrena's test network will enable consumers and small businesses to become micro-ISP owners with last-mile internet infrastructure.
With billions of daily active users, WiFi is the most widely used connectivity protocol on Earth.
In 2023, WiFi Map airdropped $WIFI tokens to the 225k most active contributors in 190 countries globally.
Wholesale Data
Data sales can take many different forms, some more valuable than others.
Data is most valuable when:
1) There are many buyers who need it
2) These buyers make a lot of money from it,
3) Better data is the limiting factor for them to make more money.
Mapping is undoubtedly the most powerful real-world example of global cryptographic coordination.
The progress made by the Hivemapper community in supply, demand, and validation in 2023 surpasses that of most networks in 3-5 years.
DePINs are beginning to tap into the potential of mobile sensors.
Mobile phones are very powerful sensing devices… but mobile data as a business faces several challenges, as explained in the specific details in the image below:
Data collection and privacy conflicts
Low retention rates
Data collection accuracy issues
Suspected high-value traffic
Token rewards may not be reasonable
AI x Cryptocurrency creates an alternative path for DePIN sensor/data networks.
Networks can monetize valuable datasets by smart mining or computing beyond the data market, rather than competing upstream.
Service Market
Horizontal service markets use cryptographic incentives to attract top talent from around the world.
Whether based on people or agents, excellent service markets:
1) Attract & retain the best talent,
2) Efficiently match supply and demand.
Vertical service markets are disrupting the gig economy of web2.
Companies like Uber/Doordash are built on permanently extracting economic benefits from the local economy; web3 rewrites the script by returning ownership and control to local operators.
On-chain security services will be the most obvious winners in '24-'25.
In the previous crypto cycle, Certik laid the blueprint for an on-chain security service market worth over $100 billion.
(TAM refers to Total Addressable Market)
Vertical Advertising
Vertical advertising networks return ownership and control of data to users.
Excellent advertising networks combine:
1) Viral user acquisition,
2) Proprietary, contextually relevant data streams,
3) Large terminal markets.
Energy
The decentralized energy supply chain may prove to be the most challenging challenge for DePIN to date.
Regulatory expenses in the energy industry make experimentation slow/difficult/expensive… but the most difficult challenges attract the most resilient entrepreneurs.
Supply, Token Economics, and Incentive Models of DePINs
DePINs use cryptographic incentives to coordinate capital, equipment, and labor to scale critical global infrastructure.
DePINs added 600,000+ nodes in 2023, covering wireless, computing, and sensor networks.
In addition to those shown in the image below, dozens of emerging DePINs added 100-500 nodes this year and are rapidly expanding into 2024.
DePINs have become more efficient in expanding supply.
The next generation of DePINs focuses more on capital efficiency—sometimes at the cost of sacrificing decentralization.
We have seen three token issuance methods: time-based, supply KPI-based, and demand-based.
Most DePINs combine all three strategies, using different issuance plans for different tokens at different times.
Hardware-based DePINs operate well: targeted mining rewards bursts/boosts.
Capital-intensive DePINs benefit from using off-chain data & decision-making to incentivize high-value deployments.
Software-based DePINs operate well: may become token points or credits.
Leading software-based DePINs have expanded to tens of thousands or even hundreds of thousands of active users before actually launching tokens.
Good for DePIN investors: distinguishing market value and FDV.
The best networks will primarily trade on the market value in the circulation market, while the upside of low-quality networks will be limited by FDV.
Looking Ahead: Integration of DePIN with Other Crypto Tracks in 2024
By 2024, we will see DePINs begin to experiment more deeply with new cryptographic building blocks including ZK, meme coins, on-chain AI, and on-chain games.
DePIN x Artificial Intelligence
ZK-verifiable GPU cloud computing is expected to achieve on-chain inference economics in 1-2 years, rendering centralized service providers unable to provide services.
(Note: The second category in the image should be translated as "Decentralized AI" due to PDF translation formatting issues.)
DePIN x Meme
Like it or not, meme coins are becoming the real catalyst driving widespread adoption of DePIN.
DePIN x ZK
Web3's vampire attack on Web2 will be the next gold rush.
There is an opportunity for developers to create user-consistent clones of the most popular Web2 applications on the emerging high-performance ZK infrastructure.
These infrastructures are built by the following projects:
DePIN x Gaming
- As more and more DePIN activities move to the chain, the design space for real-world infrastructure and on-chain games will grow faster than anyone expects.
DePIN x Privacy
- ATOR will fork the Tor network in 2024, aiming to create a scalable, high-performance ecosystem for privacy-focused developers to build applications.
DePIN x Asia
DePIN is a global movement: the DePIN ecosystem in Asia is experiencing explosive growth.
We expect several top 10 DePINs to come from Asia in '24-'25
Some notable Asian institutions include: FutureMoney, HashGlobal, Hashkey, and Distributed Capital.
(Note: FutureMoney is a leading institution in blockchain venture capital and consulting research. Its investment direction covers basic public chains, application protocols, and financial services in the blockchain ecosystem, and provides comprehensive post-investment services to invested projects.)
Appendix: Practical Resources for Understanding DePIN
On-chain data analysis: https://depin.ninja/
DePIN project screener: https://messari.io/screener
Research podcast: https://podcasters.spotify.com/pod/show/proof-of-coverage
Newsletters and events:
DePIN Summit: https://www.depinsummit.xyz/
Escape Velocity blog: https://us21.campaign-archive.com/home/?u=d0453576cac1958c64f3c9e43&id=6196cdb18d
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
