A Short Introduction to DePIN
The acronym DePIN, short for Decentralized Physical Infrastructure Network, is often used when talking about physical or “real-life” blockchain use cases. It is a decentralized system that incentivizes users to contribute to the network.
The number of DePIN projects has been growing rapidly. Messari reports the ecosystem has grown to over 650 projects in 2023, spanning six subsectors: compute (250), AI (200), wireless (100), sensors (50), energy (50), and services (25).
This short introduction will explain DePIN, its functions, and its applications in various fields, such as telecommunication, storage, maps, and computing.
What is DePIN?
DePIN is a set of physical infrastructure that utilizes a network of nodes. It allows anyone to bootstrap the network and receive rewards for doing so. This concept offers a fresh approach to traditional businesses, enabling organizations to self-start, expand, and incentivize their users without depending on initial capital or being controlled by large corporations.
DePINs are categorized into two main types:
1. Physical Resource Networks (PRNs) are decentralized networks of physical resources, such as hardware related to connectivity, mobility, and energy. These resources are specific to a location and are not easily transferable.
2. Digital Resource Networks (DRNs) involve providers contributing digital resources like computing power, shared bandwidth, and storage facilities. These resources are not tied to a specific location.
In summary, PRNs are physical resource networks providing hardware systems for connectivity and energy distribution, while DRNs supply network resources such as computing, bandwidth, and cloud storage.
We can better understand DePIN by using torrenting as an example. Torrenting is the act of uploading and downloading files using the BitTorrent network. It was widely popularized in the 2010s, and people used it to download movies, games, and even software. The plus side is that it offers higher download speeds. It is still used today, but there have been other alternatives for downloading music, movies, etc., without hassle. But how did torrents achieve higher download speeds? The answer is DePIN.
BitTorrent is an early file-sharing decentralized protocol. In this protocol, a network of computers provides data. You can download data from someone else’s computer who is nearby, which is why it can achieve low latency.
Let’s say you want to download a movie of 4GB. There will be someone on the network who already has this movie on their computer. They are called seeds/seeders. They will first create a torrent file of this movie containing relevant information like name, size, location, and subfiles. They will then upload this torrent file to the web. Now, consider that 4 nearby users want to download this same movie. The seeder will divide the movie into 4 parts of 1GB and send 1 part to each.
Now, they will also become seeders and send each other the 1GB they possess. This way, each person can receive the whole file in parts and rearrange it.
This is precisely what a Decentralized Physical Network (DePIN) relates to — that is, a network of nodes (devices/computers) that help each other. However, one important aspect of DePIN is “incentivization,” which we will explore further in the next section.
What Role Does Blockchain Play?
For DePIN to work, we need a distributed set of nodes/networks. Distributed systems have nodes at different physical locations. The main difference is where the decision is made and how it is distributed across various nodes in the system. Some systems have centralized decision-making, while others, such as blockchains, have decentralized decision-making. Blockchains are a specific type of decentralized system that typically uses consensus mechanisms for decision-making. Using blockchain, we can implement a decentralized, permissionless, and incentivized model for distributed networks.
Tokenization allows greater benefits to reward the users. As we saw, torrenting improves download latency by adopting a decentralized network approach that splits the data among multiple seeders. However, there is one flaw in torrenting, which I deliberately missed before. There is something called leechers — they are users who disconnect from the torrent as soon as they have the full copy of their desired file. Let’s consider our previous example of downloading a movie. At the stage where each person receives 1GB, if one of those persons closes the torrent and exits the network, the latency will increase, resulting in longer download times. Because of the dynamic nature of torrenting, the download won’t stop, but the latency will increase. This is called leeching. Leeching is when more data is downloaded than uploaded (taken without sharing), eventually killing a torrent.
How does one resolve this problem? You incentivize them; you reward users with tokens for letting others use their unused resources. That’s where DePIN comes in. It rewards users who contribute to the network, which increases the chances of retaining contributors. The contribution could be in the form of data or services.
Besides tokenization, smart contracts can spread authority and management throughout a network instead of concentrating it in one organization’s hands. Consider a DePIN application, such as a decentralized energy grid. In this setup, individual solar-powered homes can generate electricity and sell extra energy to the grid or neighbors directly, bypassing the need for a centralized utility provider. Every transaction — whether it involves the production, consumption, or sale of energy — is recorded on a blockchain, ensuring openness and confidence between parties. When specific criteria are met, like when excess energy is available for sale, smart contracts automatically carry out these transactions, ensuring efficiency and reliability in energy distribution.
Use Cases
DePINs span various domains, such as telecommunications for resilient internet access, data storage for secure and distributed data management, and computation services for utilizing unused resources.
Telecommunications & Wireless Networks
A telecommunication network is a group of interconnected devices (e.g., computers, phones, or routers) that allow information (e.g., voice, data, or video) to be sent and received over a distance. Consider a telecommunications network. There are antennas all across the world that provide specific information-related services. The cost to set it up is high, and continual maintenance is required. Through DePIN, anyone can join the network and set up a small device at home. People passing by in that area can take advantage of the services. Similarly, decentralized WiFi can be formed using the same concept.
Helium is the biggest DePIN project. Its innovative and open protocol means that anyone can truly be a commercial radio operator, add wireless coverage to their neighborhood, and earn for their work. The Helium Network uses a unique consensus algorithm called "Proof-of-Coverage" (PoC) to verify that hotspots accurately represent their location, configuration, and the wireless coverage they create. Proof-of-Coverage incentivizes hotspot operators to deploy hotspots in underserved areas and report their deployments accurately so that users of the Helium Network can see where coverage is likely to be available. What makes Helium special is that it uses a network of vast amounts of LoRaWAN hotspots, giving them coverage over a larger amount of area without the need for large antennas.
Helium operates on Solana and is powered by its native token, HNT, which is vital for network operation, as it's used to purchase 'Data Credits' essential for data transfers. The network offers two primary services:
- The Helium IoT Network, which provides connectivity for IoT devices via $IOT mined by LoRaWAN Hotspots
- The Helium 5G Network, which integrates large-scale operators with community-based 5G hotspots, is incentivized through $MOBILE tokens
Another example is WiFi Dabba, which targets consumer WiFi needs within India. It differentiates itself by initially focusing on demand and offering paid services by aligning with Local Cable Operators (LCOs) across India. WiFi Dabba aims to deploy WiFi in areas with high consumer density, such as residential buildings.
Map
Big players like Google have extensive mapping data collected through various means, including employees, self-driving cars, and user contributions. Users can add reviews and mark places on Google Maps, contributing to its comprehensive database. However, Google and other major companies charge businesses significant fees to access and use this data.
DePIN offers an alternative approach. By incentivizing users worldwide to contribute mapping data, DePIN creates a system where individuals are rewarded for their input. This model provides several advantages:
- It ensures maps are continuously updated, offering a fresh perspective without companies needing to physically map the entire world
- Local residents and frequent users can quickly contribute updates on construction, accidents, road closures, and new roads
- Users are motivated to add information to DePIN apps because they receive rewards for their contributions
This decentralized approach could potentially create a more dynamic, up-to-date, and democratized mapping system while providing economic incentives to contributors.
Hivemapper is pioneering a global mapping network that leverages vehicle dashcams to collect high-resolution (4K street-level) imagery, creating up-to-date maps in a permissionless way. Governed by the $HONEY token, this vibrant network boasts over 50,000 contributors ranging from rideshare to delivery drivers and hobbyists, who have mapped over 25% of the world. Hivemapper offers dashcams ranging from $300 to $650, rewarding contributors in $HONEY tokens for sharing footage and metadata.
Another emerging project is Proto, which focuses on building its database with a particular emphasis on India, specifically in Mumbai and Bengaluru, through a user-friendly app that rewards contributors with tokens for their data submissions.
Sensors
A sensor is a device that detects and measures physical input from its environment, such as temperature, pressure, light, sound, or motion, and converts it into a signal that a machine or human can interpret. Sensor data is helpful when considering a network of sensors spread out in different locations because it makes information more reliable. Furthermore, these sensors can communicate with each other and assist in making predictions, like climate forecasting.
The sharing of weather data involves a sophisticated network of public and private entities, including organizations that operate various sensor networks, develop weather models, and provide forecasts. WiHi aims to serve as the unified platform that links all these entities, streamlining data sharing, enhancing forecast accuracy, and improving climate monitoring. This means any entity operating a weather sensor can apply to contribute data to WiHi.
Onocoy is working on improving GPS data accuracy using Real-Time Kinematics (RTK) technology. While GPS satellites are effective for determining location, they lack high accuracy. To enhance precision, additional sensors like RTK which employ ground-based receivers to refine GPS accuracy from meters to millimeters. Onocoy encourages the deployment of these RTK receivers, even though they are relatively expensive, to ensure robust coverage. High-quality positioning data is valuable for applications such as deformation monitoring, agriculture, mining, natural disaster warnings (tsunamis/earthquakes), drone/robotics positioning, and autonomous vehicles. The company operates on a dual-reward system: customers pay for the services in cash, while contributors are compensated with $ONO tokens, fostering an aligned incentive network.
Computing
Cloud computing is quite relevant today. It is a form of Internet-based computing whereby shared resources, software, and information are provided to computers and other devices. Outsourcing work to cloud servers is more accessible. Still, it comes with a cost. Most of them are owned by a central entity. Recently, Google Cloud accidentally deleted the data of its customer UniSuper. Luckily, they had a backup with another provider. But this may not always be the case.
Additionally, a gigantic amount (understatement) of computing power is being wasted. Consider that in a middle-class family of 4, there will be at least 5-8 devices: mobile phones, laptops, PCs, tablets, smart fridges, etc. Imagine letting other people use the dormant computing power on these devices and earning from it. That’s the power of DePIN.
In an episode on Silicon Valley, a renowned tech sitcom, the gang thought Anton (their server) couldn't handle the load and died. Later, they realized that the network was still alive; on looking, Gilfoyle (who made Anton) discovered that the smart fridge where he had installed the software (Pied Piper) had previously communicated with other fridges. The data they thought was lost and gone forever was hosted on 30,000 smart fridges. Smart fridges, being an IOT device, can connect to the internet and store data. Even though the technical aspects of this reference are messy, it demonstrates that the computing power of any device can be utilized. Likewise, zombie computers exist. A zombie computer is a computer that has been compromised by malware or a hacker, and an unauthorized person has gained control over the device. This allows them to use the compromised device for malicious purposes without the owner’s knowledge or consent. Both examples correctly point out that devices that are sitting idle can be utilized for their computing power.
Demand for computing power is at an all-time high. However, with uneven distribution, users seeking computing power find it challenging to obtain machines. DePIN acts as a marketplace where hardware owners can lend computational power to users looking to leverage it.
Render is a well-established computing network used by 3D artists for graphic rendering in games and movies. The network offers GPU computing power for rendering, which artists can access by uploading files and choosing rendering plans. Miners can rent out their idle GPU computing power to become rendering nodes on the network. It also offers a software suite called Octane for artists to outsource their rendering tasks to the GPU network. Originally based on Ethereum, Render has recently shifted to Solana. Additionally, Render now also includes AI/ML and spatial computing services.
Akash, built on Cosmos, is a leader in this category. It serves as a generalized computing network of CPUs/GPUs. Built on Kubernetes, it offers a reliable platform for hosting applications, ensuring high performance and lower costs.
Aethir is a decentralized cloud infrastructure built on Arbitrum. It serves as an intermediary between people who want to lend their underutilized GPUs and people or companies who need them to train AI models for the gaming industry.
Gaming requires a high level of processing power. We are familiar with the term “lag”; gamers like to bring up this word when their internet connection is bad, or their device is not powerful enough, or when they suck at gaming. Lag is an issue in gaming. Additionally, cloud gaming has been sub-par due to expensive service and latency issues from accessing servers. Cloud gaming is a type of online gaming that runs video games on remote servers and streams the game's output (video, sound, etc) directly to a user's device.
Shaga solves the high-latency problem of cloud gaming. It ensures ultra-low latency and high-performance gameplay on smart devices while also securing data transmission through our peer-to-peer architecture. It transforms individual gaming PCs into nodes that are closer to the gamers.
Storage
Cloud storage allows users to save data at another location, which can be accessed using the public internet or a dedicated private network connection. Typically, cloud storage services like Dropbox, Sync, and Google Drive use centralized cloud providers such as Amazon Web Services and Azure to store their data. However, centralized storage has a major downside. Storing data in a central location gives significant power to the host, such as the ability to disclose data to third parties without consent, the risk of data loss due to hardware or network failure, and vulnerability to cyberattacks.
Decentralized storage distributes data across multiple nodes, making it more resistant to single-point failures, cyber attacks, and data breaches. DePIN can further let users offer their unused resources and earn tokens by providing storage.
Initially, we discussed BitTorrent as an early file-sharing system. Later, BitTorrent became a pioneer in decentralized file distribution. It combined this with the adoption of blockchain technology and the utility of the BTT token. The native BTT token serves multiple roles within this ecosystem. It incentivizes users to share bandwidth, which improves network performance. It also acts as a transactional currency for buying better download speeds or premium content, enabling engagement with dApps.
Filecoin is a decentralized storage network that enables users to leverage their unused storage to earn FIL tokens. Participants in the Filecoin network can rent out their spare storage capacity and receive FIL tokens as compensation. These tokens are then utilized to pay for the network's storage and retrieval services.
ShdwDrive by GenesysGo is an alternative approach built on Solana. It is designed for users seeking a platform similar to Filecoin but harnesses high-powered traditional and mobile computing to lower the costs of enterprise-grade data center storage. It utilizes the native token $SHDW for transactions. ShdwDrive provides services like web hosting, social media backlog storage, archival storage, accessible datasets, and personal storage options similar to Google Drive. Synx is a private cloud storage solution that works with ShdwDrive and is supported by a mobile and desktop app.
Arweave (AR) offers an innovative solution in the decentralized storage space by introducing the Blockweave protocol, designed for permanent, low-cost data storage. Unlike traditional storage methods susceptible to data loss and censorship, Arweave's approach ensures data availability for future generations. Users can use the AR token for a one-time fee to guarantee indefinite data storage. Meta, the parent company of Instagram, has integrated Arweave's technology to permanently store digital collectibles, including NFTs, on Instagram.
Storj stands out by emphasizing security and privacy. It encrypts and distributes data across a network of nodes, ensuring high data protection. The STORJ token serves a dual purpose within this ecosystem: to pay for storage services and reward node operators for making their unused storage space available to the network.
Conclusion
DePIN is a new approach to using digital technologies to improve physical networks. By leveraging the principles of decentralization through blockchain technology, DePIN not only addresses some of the inherent limitations found in traditional systems, like that of Torrent's leecher problem, but also paves the way for more efficient, transparent, and participant-rewarding mechanisms across various sectors. DePIN stands at the forefront of innovative solutions to complex challenges, from improving telecommunications and data storage to revolutionizing energy distribution. As we witness the ecosystem flourish with over 650 projects in diverse domains, it's clear that the journey of DePIN is just beginning. The movement towards a more decentralized, secure, and efficient world is not only possible but is already underway, promising a future where technology empowers everyone to contribute to and benefit from a collective, interconnected network.
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Resources
State of Solana DePIN 2024 by Superteam
State of DePIN 2023 by Messari
Decentralized Physical Infrastructure Network - DePIN explained
