IOBC Capital DePIN is an essential infrastructure for Web3

IOBC Capital DePIN The Crucial Infrastructure for Web3

DePIN, Decentralized Physical Infrastructure Networks, decentralized physical infrastructure network.

DePIN is a paradigm innovation for the deployment and maintenance of physical infrastructure. DePIN is built in a decentralized manner by individuals and companies from around the world, available for anyone to use. In return, contributors to these physical infrastructure nodes can receive economic compensation and token incentives for the network they are building. By leveraging Crypto, the Internet, IoT, and blockchain technology, DePIN can achieve a more efficient, decentralized, and fair deployment of infrastructure.

DePIN is essential for achieving true Web3 infrastructure

Web3 is still very fragile, although applications such as DeFi, Games, NFTs, Social, RWA, etc. based on Layer1, Layer2 have developed prosperous use cases, these Web3 applications still rely on centralized internet infrastructure such as cloud services and data centers.

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In the industry, there have been incidents where certain Web3 project data is lost due to the crash of large cloud computing platforms. There have also been events where centralized cloud service providers and node service providers are not allowed to serve certain Web3 projects due to regulatory sanctions. Even access to Github repositories and frontend websites can be restricted.

Therefore, DePIN is essential for achieving true Web3 infrastructure. These DePIN projects may not necessarily occupy a large market share of the total business volume, and the DePIN protocol may not necessarily have advantages in terms of performance. However, the existence of these DePIN protocols may one day guarantee the normal operation and enhance the robustness of Web3 and Crypto projects.

Traditionally, due to the high capital requirements and logistical challenges of physical infrastructure projects, the deployment and management of wireless networks, cloud services, mobile networks, and power grids are generally dominated by centralized large companies. Besides resulting in poor user experience due to lack of competition and innovation, this phenomenon also hampers the robustness of Web3.

Compared to traditional centralized physical infrastructure networks, DePIN has the following advantages:

1. Lower participation costs: A decentralized physical infrastructure network reduces management costs and expenses by leveraging the collective resources of network participants;

2. Network robustness: Decentralized networks provide more flexible and secure infrastructure that is less susceptible to single point failures;

3. Open competition and innovation: DePIN eliminates the high capital and large-scale entry barriers of traditional infrastructure networks, which helps generate more small-scale new participants.

Characteristics and categories of DePIN

The industry logic of DePIN is very simple, with several key roles:

Device providers: They provide physical device resources (such as GPUs, CPUs, memory, storage space, RAM, bandwidth, Wi-Fi hotspots, etc.) and receive token rewards;

DePIN protocol: The DePIN protocol builds a distributed network, designating token incentives for distributed device providers, and allowing DePIN network users to pay.

DePIN Network User: Connect to the DePIN protocol, use the services provided by the DePIN protocol, and pay for them. Compared to centralized physical infrastructure, these services are offered at a cheaper price.

In order to maintain stable development in this cycle, it is necessary to ensure that the value of the Token remains relatively stable. This requires the Token to have a well-established value capture for the DePIN protocol.

The DePIN project can be broadly categorized into the following types: decentralized storage, decentralized computing, CDN, VPN, WiFi, 5G networks, etc.

Looking at the commonalities, most DePIN projects have three basic components:

1. Physical infrastructure: DePIN needs to build and maintain physical infrastructure in the real world. These distributed physical infrastructures collectively form a decentralized physical infrastructure network, where each device serves as a network node.

2. Off-chain computing infrastructure: DePIN relies on middleware, which allows the capture and analysis of real-world data for user contributions.

3. Blockchain and Token: The blockchain acts as an tamper-proof ledger, a device registry, a task statistics and scheduling platform; while the Token serves as one of the incentives for DePIN network contributors. It can also be used as the currency for pricing network services and sometimes as collateral assets to ensure the quality of services provided by the contributors.

The innovations provided by these components go far beyond what centralized infrastructure can offer, and may bring new vitality and innovation to this field.

DePIN Project Examples

With low start-up costs and the ability to rapidly expand, DePIN has gained widespread attention in the industry. A number of DePIN projects have emerged:

Filecoin: decentralized storage network

Filecoin is the world’s largest distributed storage network, with over 3800 storage providers contributing more than 17 million TB of storage capacity. The vision of Filecoin is to bring open, publicly verifiable features to the three core pillars that support the data economy (storage, computing, and content distribution).

This year, Filecoin Virtual Machine has also been launched. As of now, there have been more than 1100 smart contracts deployed on the Filecoin network, and over 80,000 wallet addresses have interacted with these FVM-driven dApps.

In summary, the distributed storage network built by Filecoin has become one of the most important decentralized physical infrastructures in the Web3 industry.

Render Network: decentralized GPU rendering platform

Render Network is a decentralized GPU rendering platform that matches users with rendering tasks with users who have idle GPUs, providing distributed GPU computing for 3D rendering and AI industries.

In the first half of 2023, Render Network matched over 4.6 million frames of rendering tasks, with an average cost of $20, which gives it a slight price advantage over many centralized platforms.

In terms of Token incentive mechanisms, Render Network uses OctaneBench rendering power as the unit standard. Participating GPUs are divided into three levels, and the Token incentive price varies depending on the rendering speed of the different levels of GPUs.

Helium: Decentralized Wireless Network Protocol

Helium is an open-source protocol that incentivizes people around the world to collectively build wireless networks. HNT, the native cryptocurrency of the Helium Network, can be staked to generate Data Credits, which are essential for transmitting device data and have a consistent value in US dollars. Other subnetwork tokens, such as IoT and MOBILE, derive their value from HNT and can be exchanged among them. To use the network, HNT must be burned.

The first demonstration case built on the Helium protocol is LongFi, a Helium IoT network based on the Helium protocol and LoRaWAN technology.

Another demonstration case is Helium Mobile, created by the Nova Labs team. It is a Helium 5G network aimed at expanding the coverage of Helium 5G networks at a lower cost and continuously rewarding users.

Helium has incentivized people around the world to establish this crazy decentralized wireless network in just three years. According to official project reports, nearly 1 million hotspots have been deployed since its launch, covering over 77,000 cities in 192 countries. The Helium 5G network is also experiencing rapid growth, with over 8,000 5G radios deployed by the community in less than a year. Approximately 100,000 devices are already connected to the Helium network.

Livepeer: Decentralized Live Video Broadcasting Platform

Livepeer is a video infrastructure network for live and on-demand streaming. It aims to provide developers with innovation freedom and creators with platform autonomy. The core relies on an encrypted economic protocol to incentivize nodes to contribute GPU and bandwidth in real-time video encoding and distribution services.

Orchestrators, or nodes, run a node in the Livepeer Network, which can mine tokens while transcoding videos using GPU.

Theta: Decentralized Video Streaming Network

Theta is a blockchain-based decentralized video streaming platform that incentivizes individual users to share their surplus computing power and bandwidth resources as caching or relaying nodes for video streams. This improves video streaming quality and content while reducing distribution costs.

Theta Network consists of two complementary subsystems: Theta Blockchain and Theta Edge Network. Theta Blockchain provides payment, reward, and smart contract functionalities, while the Edge Network is responsible for storing and delivering media assets such as images and videos.

Summary

From the actual development of the industry, DePIN is a track that has been gradually developing since the very early stages of the industry and has seen significant expansion in the past two years.

According to Messari research, the total potential market size of the DePIN industry is approximately $2.2 trillion and could reach around $3.5 trillion by 2028. Currently, the FDV of all decentralized physical infrastructure projects in Crypto is only $5 billion.

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