Decentralized Physical Infrastructure Networks (DePIN) are the new way of thinking about blockchain and other decentralised technologies.

DePIN embodies a radical shift in dynamic: a decentralised set of dApps that motivates communities to use tokens to build and maintain physical infrastructure networks. This is why blockchain promises the next major shift in digital thinking – and the physical world itself.

Venture capitalists should already be salivating over the prospect of DePIN, as billions of dollars have already been poured into the sector. There is even a fund designed specifically to invest in DePIN protocols, as the sector is viewed as a standalone step-change investment, rather than just another new evolution in the DeChain world. As reported by Binance Research, DePIN is already considered one of the core crypto trends for 2024.

The market capitalisation of DePIN stands at some $27 billion with a daily trading volume of approximately $1.8 billion. That signals a substantial transactional interest in DePIN projects and a robust and rapidly growing sector.

Prominent figures in the field, including Lex Sokolin from Generative Ventures, talk up the possibilities of DePIN. He envisions the sector crunched through DePIN, Web3 services and artificial intelligence unleashing unprecedented novel experiences on the internet.

This is an article about that concept and what is concealed behind it, and why it has become increasingly popular.

What is DePIN and How Does It Work?
DePIN is most innovative blockchain development concept as it fundamentally shifts the paradigm away from infrastructure built for profit of some central players to infrastructure owned and maintained by those players arising from a community. DePIN leverages blockchain with tokens, smart contracts and dApps to incentivise the creation and maintenance of physical infrastructure.

Concept
Based on this simple principle of decentralisation, dePIN is a system where the cost and benefits of maintaining infrastructure are distributed to a network of actors instead of being largely controlled by a central authority. This results in greater resilience and efficiency of the system, by mitigating single points of failure and encouraging local buy-in and ownership.

Technology
Blockchain Technology: Blockchain, at the core of DePIN, is a distributed database that establishes a transparent, secure and immutable ledger for the recording of transactions and activities to ensure the immutable and verifiable recording of all contributions and rewards, while ensuring participants’ trust.
Smart Contracts: Smart contracts assist in automation of the execution of the agreements and workflows – they are self-executing (if and when the specified conditions are met, whether it is a payment or service provisioning). They wouldn’t require a mediator and can therefore ensure efficiency and precision of performance.
Tokens: A reward system of tokens that encourages the network’s participants to contribute energy and resources. In the DAO vision, tokens (such as those of Ethereum) would be accumulated by the participants as a reward for providing services, infrastructure or any resources to the network. These tokens can also be traded or used as digital cash within the ecosystem to support other economic activities.

Use Cases
Indeed, DePIN’s possible uses span many social sectors and demonstrate the promising ability of this technology to completely change common infrastructure models of ownership: Some examples of possible use cases are:

Field Brief Description How DePIN Can Benefit the Field Real-Life Use Case Brief Use Case Description
Transportation Better shared services and logistics with distributed platforms DOVU Token rewards for data sharing
to improve collective logistics.
Telecommunications Build decentralized wireless networks with community hardware Helium Network Antennae owners help create a decentralised internet of things (IoT) network.
Energy Grids Enable ‘decentralised renewables’ energy grids to run off common resources. LO3 Energy Community members commission solar panels and use tokens to sell back solar-enriched power.
Health Care Allow for the decentralised access of health data and collaboration through blockchain Medicalchain medicalchain blockchain / medicalchainEU is a system that operates on a similar path. Health Care – Grant decentralised access of medical data and cooperation through blockchain – medicalchain blockchain / medicalchain
Using blockchain-based smart contracts and tokenised assets such as ERC-20 tokens – developed on the Ethereum blockchain – DePIN offers a robust foundation for a decentralized infrastructure paradigm, which is able to better govern and co-develop infrastructure that is more efficient, resilient and fit-for-purpose. This contributes to reducing the role of governments, while at the same time strengthening the communities, which ultimately creates opportunities for innovation and entrepreneurialism in the sector.

Benefits of DePINs
DePINs represent a radically different way to plan infrastructures, and provide all the advantages of decentralisation, incentivisation, transparency, efficiency and robustness that are inherent in any peer-to-peer, bottom-up, micro-payments platform. Here, we explore those benefits in detail.

Decentralization
Decentralisation of Authorities: DePINs remove the dependency on central authorities by spreading control across a network of participants. Such decentralisation removes the associated vulnerabilities to single points of failure inside a centralised system. For instance, if something goes wrong at the electrical power plant that supplies power to the grid for the entire US, there are chances of a widespread system crash, since there are only so many points of control. If the same grid design was implemented in a decentralised system, where energy generation was broken up and distributed, the dependencies of every component on each other would be substantially reduced, making the overall system more resilient to failure.
Increased Security: A hacker’s task becomes considerably more difficult when every piece, every system in a network operates as a node and is not dependent on a single, central reference point for coordination of its activity. It would be like hitting hundreds of thousands of tiny flies with a fly swatter, an astronomically more difficult task than trying to kill a fly on the wall. The operational code of DePINs, built on the blockchain, offers a reliable, immutable, time-stamped ledger of all transactions among all participants, correcting errors based on consensus; it enforces itself.
Incentivization
Token-Based Rewards: utility tokens for services, infrastructures and resources with DePINs, users are incentivised to contribute to the network with these utility tokens. Once a user puts in effort to provide services, infrastructure or resources for the network, users get rewarded. For example, with decentralized wireless networks like the Helium Network, users who have their own hardware (can be as little as an antenna and a router) can provide coverage for the network and earn the platform’s tokens.
Economic Participation: not only does it incent participation, it also builds an economy around the network. Community members can trade with one another or use utility tokens within the network, chasing and creating economic activity and sustainability in the network. In this way, the success of the network ties in to the individual’s success, which makes us work together.
Transparency
Immutable Records: The activities and exchanges will be listed in an immutable ledger; no one can delete any activity and any records of activities, which allows for real-time audit and verification to ensure all participants’ interests are not stolen. The electricity users can report records of their electrical use with transparent verification that the records of use cannot be tampered with; both entities benefit from the same PIN ID and the same record information. Any participants can verify their own records for their use, agree on the terms and engage in the contract.
Open Access: Decentralised communications imply open access for all users to the same information. Equality is enhanced and asymmetry in information reduced.Big Data: DePINs focus on local communities. Cities and regions are autonomous and exchange information only with neighbours. DePINs host information cores (nodes with long-distance connections to other nodes) and information satellites that share information ranging from village events to news about collaboration in national networks. Decentralised communications enable a completely new access to big data.Finally, consider the inherent social and political nature of information. It is important to pose the counterfactual question. What if we had not readily absorbed this model, and instead set out to secure freedom of information as a distinct form of autonomy?
Efficiency
Automation: Contractual processes are automated in the form of ‘smart contracts’, a kind of pre-programmed autonomous agent. Smart contracts cause actions (eg, payment or service provisioning) to take place only when conditions specified in advance are met. This eliminates the need for mediating third parties, and reduces both administrative overhead and transaction times.
Cost Savings: Cutting out the middlemen and automating communication can drastically cut down the development and maintenance costs of infrastructure. For instance, decentralised energy grids can use smart contracts to automatically allocate energy to users and bill them, rather than relying on elaborate administrative systems.
Resilience

How DePIN works:
https://upstaff.com/blog/blockchain-web-3-0/depin-decentralized-physical-infrastructure-networks/