DePIN and the strategic combinability with other ecosystems are positioned to transform the economic system through data integrity and scalable solutions.
Introduction: DePIN - Current State and Outlook
Decentralized Physical Infrastructure Network (DePIN) is reshaping the blockchain field through its innovative use of existing infrastructure and data-centric business models. DePIN surpasses traditional IoT frameworks with its decentralized efficiency and cost-effectiveness.
This report explores the rapidly developing DePIN field, particularly within the Solana network, known for its robust infrastructure and innovative applications. The DePIN project prioritizes practical profitability over speculative finance and has played a crucial role in integrating privacy enhancement, zero-knowledge proofs, and artificial intelligence technologies. DePIN's strategic combinability with other ecosystems is positioned to transform the economic system through data integrity and scalable solutions.
As the leading platform for DePIN, Solana embodies the integration of high-performance blockchain technology with physical networks, promising significant economic returns and pioneering new ways to integrate technology with practical applications. This article was written by the research team under HTX Ventures. HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the world's most outstanding and promising teams. Currently, HTX Ventures has supported over 200 projects across multiple blockchain tracks, with some high-quality projects already listed on the Huobi HTX exchange.
Conclusion
Although DePIN is called a Decentralized Physical Infrastructure Network, the core business growth logic is not the hardware itself, but how to more effectively utilize data, whether it's data storage, transmission, sharing, or usage.
DePIN does not need to benchmark traditional IoT, nor does it need to be categorized as Web2 or Web3. As long as it can more efficiently utilize data and effectively distribute it economically, it is a good thing.
The development of DePIN will combine blockchain to solve data trust issues and will expand large-scale protocols in the Internet of Things, creating an infinite network between creators and people, people and machines, and machines and machines.
When examining the DePIN project, it is more important to abandon speculative or financial attributes, which are more suitable for DeFi, meme, Brc20, etc. Examining DePIN should focus on the project's actual profit-making ability.
In the short term, it is worth paying attention to the combinability of DePIN with other ecosystems, including DePIN x Privacy, DePIN x Gaming, DePIN x ZK, DePIN x AI. In the long term, DePIN's future vision includes the gig economy, sharing economy, and data trust.
Solana has become the preferred blockchain for the deployment of the DePIN project. Solana DePIN represents a FDV of over $100 billion and a market value of $40 billion.
Solana's advantages in the development of DePIN include:
Performance advantages combined with technological upgrades
Strong token standards and ecosystem
Cost advantages
Concentrated liquidity, strong ecosystem combinability, unified community
Active developer community, with innovative projects and new concepts emerging constantly
What is DePIN
In early 2023, Messari officially proposed the concept of DePIN (Decentralized Physical Infrastructure Networks) in the research report "The DePIN Sector Map," defining it as "deploying real-world physical infrastructure and hardware networks using cryptographic economic protocols." In short, DePIN incentivizes participants to collectively build physical infrastructure networks through blockchain-based tokens.
Apart from the evolution of the noun, projects that "deploy real-world physical infrastructure and hardware networks using cryptographic economic protocols" have actually existed for a long time. For example, the decentralized network Helium was founded in 2013, and decentralized storage Storj was founded in 2014. These teams have been exploring how to build physical infrastructure networks in a decentralized manner in fields such as communication and storage. Subsequently, the fields of the Internet, artificial intelligence, energy, and data collection gradually joined in. Although there are differences in specific fields, the core logic is consistent, ultimately forming the thriving DePIN track today.
Current Status of the DePIN Track
DePIN Sector Overview
According to Messari and Depin.Ninjia data, the DePIN ecosystem has developed to include over 650 projects with a market value of $35 billion in 2023, covering six sub-industries: computing (250), artificial intelligence (200), wireless (100), sensors (50), energy (50), and services (25). Messari has predicted the total potential market size of the DePIN sector to be approximately around $22 trillion, which may reach $35 trillion by 2028.
According to CMC data, there are 60 DePIN projects with issued coins, with a market value of $1.33 billion. Currently, the top 100 DePIN projects by market value include FIL, RNDR, HNT, THETA, BTT, AKT, and AR. Other relatively leading projects in the field include IOTX, ANKR, and AI-related projects such as TAO. Looking at the top 10 projects in the DePIN field by market value, most of them belong to the AI, storage, and computing fields. The share of DePIN in the entire crypto market is very small, lower than sectors such as Meme, DeFi, and NFT. Compared to the traditional IoT industry, which has 21 projects with a market value of over $100 million, there are only 4 projects with a market value of over $1 billion.
If we infer based on this data, the potential profit expectations for entering the DePIN sector in the medium term are around 243 times, while the long-term profit expectations exceed 400 times.
Breakdown of DePIN Projects
Here, we refer to the breakdown method of IOTEX, which is divided into software and hardware parts.
The hardware part includes two major sections: sensors and wireless networks, while the software part includes four sections: computing, storage, network distribution, and artificial intelligence.
Although DePIN projects are called Decentralized Physical Infrastructure Networks, all core business logic revolves around how to extract value from data.
Sensors - responsible for data collection
Wireless networks and network distribution - responsible for data transmission
Computing section - responsible for data computation
Storage section - responsible for data storage
Artificial intelligence - responsible for data application
So, the DePIN project itself starts with hardware, but the real development lies in how to apply data effectively, which is very similar to the development model of the traditional internet economy.
When evaluating the prospects of a DePIN project, it is important to think from the perspective of data. The one who uses data well and controls the data is the one with a good project.
It is important to set aside the speculative part of the crypto market and focus on the practical value.
DePIN Investors
As mentioned earlier, there have always been investment institutions and entrepreneurs laying out in the DePIN track, but the market environment in early 2023 was not conducive, and the new paradigm of DePIN was still being explored, so few new DePIN projects were launched. By the end of 2023, with the improvement of the market environment and the accumulation of exploration by entrepreneurs, many projects gradually took shape from their initial concepts and began to enter the market one after another. It was only then that the market caught on, and at this time, DePIN quickly gained an important position in a market with weak technological innovation.
For example, VC firms such as Multicoin, Borderless, A16Z, and HTX Ventures have made significant investments in DePIN and have invested in projects with strong practical applications and weak speculative attributes. Of course, compared to their own portfolios, DePIN projects only account for a small portion.
The following image supplements the financing situation of top DePIN projects:
Top DePINs by Capital Raised
Solana DePIN Ecosystem Research
Solana has become the preferred blockchain for the deployment of DePIN projects
- Solana DePIN represents a FDV of over $100 billion and a market value of $40 billion.
According to CMC, the top 500 Solana DePIN projects include Render Network (RNDR), Helium Network (HNT), and Helium Mobile (MOBILE); other DePIN projects include Helium IOT (IOT) and Hivemapper (HONEY). Recently, projects in this track with high activity include the Solana-related HNT series such as MOBILE and IOT, along with the upcoming project getgrass in the bandwidth network market.
- The DePIN track and the Solana network are the result of mutual selection.
The irreplaceability of Mass Adaption, especially in DePIN and Web2 applications. Solana has successfully supported the demand for STEPN, which has truly propelled Web3 projects into the spotlight.
Solana's cNFTs provide more cost-effective authorization certificates for DePIN/PoPW nodes, which is a common practice.
The migration of RNDR and Helium projects has given the projects themselves more capabilities. For example, the transition to Render has brought new capabilities such as real-time streaming, dynamic NFTs, and state compression, significantly improving network performance and scalability, and opening up richer and more diverse application scenarios for users.
Projects like DePIN, unlike high-value DeFi applications, are more akin to traditional concepts such as edge computing and IoT, and prioritize stability and low cost. Solana naturally has an advantage in terms of synchronization speed. For example, in the case of the popular Helium, there are over 300,000 IoT devices and over 3,000 5G devices, and only Solana can meet the deployment of a large number of hardware devices.
- DePIN brings high value to the Solana ecosystem
Projects like Helium have significantly increased the number of active wallets. Helium reports over 60,000 active wallets participating in activities such as reward claiming, staking, delegation, or token burning each month, and over 30,000 wallets using other SPL programs, highlighting Helium's impact on the Solana ecosystem.
From a regulatory perspective, DePIN demonstrates the practical application of Solana in the eyes of regulatory agencies and policymakers, enhancing its legitimacy and brand recognition.
Solana Network Advantages More Evident
- Performance advantages combined with technological upgrades
Including high throughput, Solana claims to process over 65,000 transactions per second, with daily operations reaching 2,500-3,000. Other performance advantages include fast transaction confirmation, scalability, and block size. After the upcoming Firedancer upgrade, the theoretical TPS could reach over 1 million, and daily TPS is estimated to reach over 100,000, which is the main reason why Visa and DePIN chose Solana.
- Strong token standards and ecosystem
A vibrant ecosystem with well-tested DEX and established standards, such as cNFTs (compressed NFTs), pNFTs (programmable NFTs), Token Extensions, etc., provides the basic components for DePIN projects to develop and launch their on-chain products.
- Cost advantages
Even after the KanKun upgrade, Solana remains a low gas fee Layer1. Among the top L2 solutions, DA Layer has switched to Ethereum mainnet Blob, and there are ZK Rollup solutions such as ZkSync and Starknet, as well as Optimistic Rollup solutions such as Optimism and Base. The gas fees of these four L2 solutions have decreased by an order of magnitude, but they have not switched to Celestia, and the fees have not dropped to the lowest level.
- Concentrated liquidity, strong ecosystem combinability, unified community
There is a strong ideological divide between Ethereum and its Layer2 solutions, competing for liquidity. This has been particularly prominent in this recent bull market, where there is little differentiation in technology and ecosystem, and the wealth effect is not significant. General L2 solutions are not competitors to competitive chains like Solana.
With the strong push of meme coins in the recent bull market, the Solana DeFi ecosystem has also exploded, with a TVL of $3.3 billion. This also means that there will be stronger yield and speculative products on Solana, combined with RWA, AI, and DePIN projects, the combinability of DeFi products will be stronger.
- Active developer community, with innovative projects and new concepts emerging constantly
Through hackathons and various incentive measures, Solana has cultivated an active developer community, providing momentum for the development of its ecosystem. Subsequently, top projects such as Magic Eden, Stepn, and Jito emerged. Even during the bear market, Solana has maintained its developer ecosystem and community activities, continuously improving infrastructure and inspiring the development of more innovative applications, further driving the prosperity of the ecosystem.
- The wealth effect is the best marketing tool
Saga's huge airdrop has led to a new way of playing in the crypto mobile space, driving the unity of the Solana ecosystem community, including Solend, Helius, Chads, and Solcial, which have announced airdrops, benefits, and gifts for Saga 2 owners. In the recent bull market, the meme coin $BOME also achieved the miracle of being listed on Binance in 3 days.
Ecosystem Development
The Solana DePIN project breakdown is as shown in the table below:
Summary of Solana DePIN Ecosystem:
Leading Projects: RNDR, Helium
RNDR, a decentralized rendering platform.
Helium Network, a wireless network project. It has been in development since 2014 and has raised over $350 million in total, with investors including a16z, Deutsche Telekom, Google, Tiger Global, and other well-known funds. Helium migrated to the Solana blockchain in April of this year. HNT is currently ranked 64 on CMC.
Second-tier Projects: Helium series (MOBILE and IOT), io.net, Nosana
MOBILE and IOT are projects within the Helium ecosystem,
IOT: This is the protocol token for the Helium IoT network, mined by LoRaWAN Hotspots through data transfer revenue and coverage proof.
MOBILE: This is the protocol token for the Helium 5G network, rewarded to those providing 5G wireless coverage and Helium network validation. MOBILE is currently ranked 166 on CMC.
io.net, utilizing computational power for machine learning applications by integrating GPU networks from data centers, crypto miners, and established projects like Render, positioning itself as a "GPU aggregator." It has not been launched yet and currently has 426k Twitter followers. It raised a total of $30 million in Series A financing, led by Hack VC, with participation from Multicoin Capital, 6th Man Ventures, M13, Delphi Digital, Solana Labs, Aptos Labs, and others. The number of GUP miners has now exceeded 50,000.
Nosana, a marketplace connecting user-provided GPU networks and consumers aiming to develop AI products.
Potential Projects: ALEPH, HONEY, Shadow
ALEPH, a storage solution, cross-chain database.
Hivemapper (HONEY), launched in November 2022, is a decentralized global map network that rewards contributors who collect a large number of 4K street images using dashcams through the Drive-to-Earn model. In April 2022, it raised $18 million in funding, led by Multicoin Capital, with participation from industry professionals including the founder of Solana, former Apple Maps executives, and the CEO of Helium. It is currently ranked 513 on CMC.
Shadow, a competitor to Filecoin, Shdw Drive reduces the cost of enterprise data center storage using efficient traditional and mobile computing, referred to as "DAGGER."
Future Development Predictions for DePIN
DePIN projects have high infrastructure requirements and need to meet high throughput requirements, so they will choose to build on high-performance Layer1, and may even choose Layer2 or Layer3.
More project possibilities, such as clean energy infrastructure and virtual power plants: projects Daylight and Etheos
DePIN projects transitioning to large platforms, such as Helium and Render, so that smaller DePIN projects can leverage them for development
Dedicated DePIN chains, we have already seen two EVM/substrate chains specifically for DePIN, such as Peaq and IoTex. In addition, one of the blue-chip DePIN projects, Dimo, is also using the Polygon CDK to build their chain, demonstrating the demand for application chains.
Combinability of DePIN with other ecosystem tracks. This is particularly evident on Solana, such as the airdrop of Bonk having a wealth effect on Saga. In the future, there will be more combinations of DePIN with DeFi, increasing yield and speculation, and the combination of DePIN with RWA, providing solutions for project financing, or providing data for the real world, etc.
For example,
- DePIN x ZK,
As technology continues to develop, technologies like ZK TLS can effectively prove the authenticity of Web2 or Web3 data, bridging the gap between Web2 data and Web3. DePIN combined with ZK technology will give rise to a wave of Web3 projects that can vampire attack Web2 projects, so this is something to keep an eye on.
For example, the project Space and Time,
Space and Time is a verifiable computation layer that extends zero-knowledge proofs on decentralized data warehouses, providing trustless data processing for smart contracts, LLM, and enterprises. Space and Time connects indexed blockchain data from the chain with off-chain datasets and uses Proof of SQL to ensure tamper-resistant large-scale computation and prove that the query results have not been manipulated.
Proof of SQL is a new ZK-proof developed by Space and Time, allowing data warehouses to generate SNARK cryptographic proofs of SQL query execution, proving that the query computation is accurate and the query and data are verifiably unaltered.
Developers can use the project to connect indexed on-chain data and off-chain data, use SQL to transform data, perform low-latency cached queries and large-scale analytics jobs, shape and transform data into patterns specific to their business, publish queries to APIs, and build dashboards, while zero-knowledge technology ensures that tamper-resistant query results are sent to smart contracts in a trustless manner or published directly on-chain.
Space and Time has already indexed Ethereum, Polygon, Sui, Sei, and Avalanche, and is continuously supporting more chains, and has also integrated with Chainlink.
- DePIN x AI,
The development of decentralized physical infrastructure networks could fundamentally change the way data is used, such as decentralized machine learning, Bittensor is an example.
Bittensor is an open-source protocol that supports decentralized, blockchain-based machine learning networks. Machine learning models collaborate for training in TAO and are rewarded based on the value of information they provide to the collective. TAO also allows external access, allowing users to extract information from the network and adjust network activity according to their needs.
- DePIN x Privacy,
It has been emphasized throughout that while DePIN is a decentralized physical network, its core revolves around the use of data. Protecting the privacy of data in a large-scale decentralized network will inevitably be a very important issue. Therefore, if DePIN is destined to develop, privacy protection is absolutely unavoidable, so the direction of combining DePIN and privacy should be closely watched.
- DePIN x Gaming,
The combination of DePIN and gaming can be understood from several perspectives,
A large-scale decentralized hardware network may to some extent bring a better gaming experience
The concept of real wearable devices + games + metaverse may become popular again
Through DePIN hardware facilities, it may change the incentive mechanism and gaming experience of games themselves
References
About HTX Ventures
This article was written by the research institute team under HTX Ventures. HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the most outstanding and promising teams globally. As a pioneer in the blockchain industry for a decade, HTX Ventures is driving the development of cutting-edge technology and emerging business models in the industry, providing comprehensive support to collaborative projects, including financing, resources, and strategic consulting, to build a long-term blockchain ecosystem. Currently, HTX Ventures has supported over 200 projects across multiple blockchain tracks, with some high-quality projects already listed on the Huobi HTX exchange. Additionally, HTX Ventures is one of the most active fund-of-funds (FOF) investors, working with top global blockchain funds such as Bankless, IVC, Shima, Animoca, and others to jointly build the blockchain ecosystem.
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