Written by: Cynic, Shigeru
Origin: Decentralization from virtuality to reality
DePIN stands for Decentralized Physical Infrastructure. The name was first proposed by Messari in 2022. However, projects that meet the definition of DePIN have already existed. Considering the name, all physical devices that meet the requirements of decentralization can be called DePIN, so the earliest DePIN is undoubtedly the Bitcoin network; however, a more appropriate standard may be a system that provides physical (non-virtual) world services. The decentralized network can be called DePIN. The main application types include storage, computing, bandwidth, sensors, energy, etc. It is generally believed that Filecoin, which was created in 2014 as a decentralized storage, is the first successful DePIN project.
The reason for DePIN is people's dissatisfaction with traditional physical infrastructure. Usually, due to the huge size of physical infrastructure such as communication networks, electricity, and water, these key resources are monopolized by large companies, and users are unable to find alternatives. After entering the Internet era, computer resources such as computing power and storage are also controlled by large companies, and users have to choose between a few oligarchs. The emergence of Web3 brings hope of solving practical difficulties.
In 2008, Bitcoin was born, and cryptocurrency allowed people to see the possibility of decentralization in the financial system; a few years later, DePIN attempted to carry out a decentralized revolution for traditional physical infrastructure. From pure Crypto to DePIN, from finance to entities, in the wave of decentralization, we have finally reached the step from virtuality to reality.
Operation: perfect combination of on-chain and off-chain
The structure of DePIN can be divided into two parts: on-chain and off-chain.
The on-chain part is responsible for coordinating distributed resources and providing a trustless, permissionless decentralized ledger so that both supply and demand parties can obtain a reliable result. This part uses the blockchain as a ledger, uses smart contracts to record the operations of both supply and demand parties, and uses cryptocurrency as a transaction medium. At the same time, token rewards are given to encourage users to become resource suppliers.
The off-chain part is responsible for specific resource provision, and users provide their idle physical resources in exchange for token rewards. For highly operable computer resources, physical resource provision can often be achieved by installing designated software; for other resources with complex requirements, designated hardware is required for resource provision.
The on-chain is responsible for the consensus on the economic level, and the off-chain is responsible for the scheduling on the physical level. The operation of the DePIN project relies on the perfect combination of on-chain and off-chain, virtual and real.
Features: Tokens subvert traditional paradigms
In the process of building traditional physical infrastructure, large companies/governments often use huge capital to make upfront investments. This top-down centralized model is costly, time-consuming, and inefficient. This also leads to the need to make up for the opportunity cost through higher charges after the infrastructure is built.
DePIN completely disrupts the traditional paradigm. DePIN distributes startup costs to each participating individual through token economics, and pays for infrastructure construction costs through a crowdfunding model. Project parties only need to design the token economics appropriately, and the drive of economic incentives will cause individuals to invest their own resources into the DePIN network and build an infrastructure network from the bottom up in a decentralized form.
The infrastructure built in a decentralized form has self-expanding properties: once the infrastructure starts running, the benefits will be fed back to the resource providers, which encourages more users to join the network to provide resources; when the infrastructure resources become more abundant, More users use the infrastructure, generating more revenue and further accelerating the increase in supply. This is a wonderful positive flywheel effect.
Key: Practical drive to reduce costs and increase efficiency
We emphasize that in DePIN, tokens play an important role as a regulatory signal for the market and provide higher stability for the protocol. But at the same time, we cannot overemphasize the tokens and ignore the real value. Pure speculation cannot maintain the long-term operation of the protocol. The key to the DePIN project lies in practicality.
On the one hand, practicality comes from the permissionlessness brought about by decentralization, which ensures that users are not subject to censorship when using the infrastructure and have equal access to services. On the other hand, practicality comes from the cost reduction and efficiency increase brought by distribution. Distributed self-hosting eliminates the structural costs of centralized platforms (management, maintenance, labor, etc.). The feature of reusing idle resources also makes the cost greatly reduce.
According to the historical data of the previous cycle, DePIN’s on-chain revenue is the most resilient among all tracks, which is the core value brought by the utility drive.
Current Situation: Extremely Wide Coverage, Let a Hundred Flowers Bloom
Here's a possible real-world scenario:
At 7 a.m., Satoshi woke up from his sleep with a smart home powered by the Internet of Things provided by IoTex. Turn on your computer and check your email, connect wirelessly via WiFi Map, check out the Arkeen app, check on rooftop photovoltaic power generation, and put accumulated carbon credits up for sale. After breakfast, Satoshi drove to the company for work, using the map provided by Hivemapper for navigation. Along the way, DIMO records driving data, generating passive income for Satoshi, and the mobile network is provided by Helium Mobile. When he arrived at the company, Satoshi used a PowerPod charging station to charge his electric car. As a software engineer, Satoshi started today's programming task by opening Bittensor to select an excellent AI model for programming assistance. The training of the model is handled by Gensyn, supported by the GPU computing power provided by Akash, and the data is stored in Filecoin. After getting home from get off work, Satoshi chooses his favorite movies to watch through the Livepeer platform. After watching the movie, I played some games again. The high-definition 3A masterpieces were rendered with Render Network support.
After years of development, we have seen the Cambrian explosive growth of DePIN in a wide range of categories such as energy, logistics, mapping, telecommunications, etc. Human daily life can already be completely covered by DePIN.
Case: Looking for early layout opportunities
Deeper Network
Deeper Network is a decentralized bandwidth sharing network dedicated to building a more open, fair and trustworthy Internet and realizing the democratization of the network and the sovereignty of personal data. On the Deeper Network platform, users can establish decentralized VPNs, share bandwidth, and access decentralized applications. All services are based on blockchain technology to achieve trust, security, and decentralization.
At the software level, Deeper Network uses self-developed AtomOS to ensure network security. As the world's first lock-free network operating system, AtomOS brings high reliability, high scalability and high performance to Deeper Network. In addition, as the core communication protocol of Deeper Network, Trident Protocol's network control mechanisms such as adaptive tunneling, intelligent routing, IP multiplexing, and tunnel congestion control provide users with an excellent experience and prevent network censorship.
At the hardware level, Deeper Network has developed and produced Deeper Connect, which has plug-and-play and zero-configuration features, allowing users to enjoy uncensored secure network services without any professional knowledge and obtain token rewards at the same time.
At the blockchain level, Deeper Network built Deeper Chain and adopted the NPoW consensus mechanism. NPoW makes full use of the two-layer architecture of Deeper Network. Equipment nodes complete tasks to obtain credit, and then elect verification nodes by providing credit guarantees for verification nodes, thereby achieving an efficient, scalable and secure block production process. Compared to PoW. NPoW effectively reduces computing resource consumption.
Deeper issued platform token DPR with a total amount of 10 billion. DPR is mainly used for incentives and service payment within the Deeper Network ecosystem. The current FDV is US$14 million. 60% of the total DPR will be obtained through NPoW mining, and starting from 2021, the mining reward of DPR will be halved every year. On January 25, 2024, DPR completed a new round of halving milestones. Just as the Bitcoin halving will trigger a rise in currency prices, the DPR halving combined with the bull market expectations in 2024 has the opportunity to trigger a new wave of rising prices.
Network3
As the DePIN project of the AI ??ecosystem, Network3 has built an AI Layer2 to help AI model training. Through edge computing, federated learning, model compression and other methods, Network3 aims to democratize AI and improve user experience in an efficient and scalable way. data privacy and security.
Unlike most decentralized computing platforms, Network3 focuses on low-power, low-cost edge computing devices (such as IoT, etc.) rather than high-end industrial-grade graphics cards. On the one hand, the computing power of edge devices limits the size of the local model, and the amount of calculations performed by Network3 on the edge can only support smaller model parameters; on the other hand, the ease of availability of edge devices makes every user qualified to use it. , so you can calculate your own private data locally and conduct joint training through federated learning.
In fact, there is strong demand for AI in terminal devices (smart homes, smart manufacturing, smart health detection), and at the same time, high expenditures on large models cannot be afforded. The solution provided by Network3 has the opportunity to fill this gap. Currently Network3's software has been downloaded 50 million times, with 2 million MAUs, the number of active nodes in the network exceeds 58,000, and it serves more than 2PB of network traffic.
HPChain
HPChain is a DePIN protocol designed to decentralize high-performance GPU computing to power AI and cloud game developers.
Under the influence of geopolitics, NVIDIA restricts the import of chips from some countries, and centralized cloud computing platforms (AWS, Azure) restrict the use of some countries. At this time, a decentralized high-performance computing platform is particularly important.
Currently, HPChain has more than 1,000 GPU graphics cards, its cloud computing platform and cloud service platform have been launched, and it is formulating cooperation plans with universities such as Cambridge University and Toronto University, as well as companies such as M1 and TikTok.
