DePIN (also known as Token Incentivized Physical Infrastructure Networks (TIPIN), Proof of Physical Work (PoPW), or EdgeFi) is an important step for crypto-based technologies to bridge the digital and physical spaces. Some argue that it has the potential to further cement cryptocurrencies as vital resources beyond the financial and transactional use cases of its early years—ultimately driving the development of Web3.
At its core, DePIN projects attempt to create democratized technologies to compete or replace centralized technological offerings. Those who provide the necessary hardware, and thus constitute the network, contribute to both adoption and decentralization of the service and are typically rewarded with cryptocurrency for their services.
The most popular early example of a DePIN is Helium which launched a decentralized wireless network (DeWi) in 2019 supported by individuals running interconnected hardware devices across the world. Others have since followed suit and built various infrastructure solutions to support 5G cellular networks, connect cars, and even air quality data collection.
How does DePIN work?
DePIN builds on the basic idea of the Internet of Things (IoT) which enables process automation by connecting multiple physical objects (“things”). IoT examples include automating smart home technology, managing traffic by connecting vehicles, and improving healthcare through wearable sensors.
To properly function, DePIN networks generally require:
- Hardware – Physical components that help connect networks to the physical world. For example, hotspots can be used for wireless networks, and extra space on hard drives can be used for storage networks.
- Hardware operators – Users who buy (or lend) hardware and are connected to their respective networks.
- Token – Project-specific cryptocurrency paid out to hardware operators for their services. Each token comes with different economic features based on the rules set by the project.
- End-users – Users of the infrastructure powered by the network’s hardware. For example, end-users might be those who would rather rely on a DePIN project than a corporation for their WiFi signal and pay to receive the service provided by the network.
Helium: DePIN in action
Helium was one of the pioneer DePIN projects. Its original goal was to create a type of low-power, wide-area network (LoRaWAN) for IoT devices to connect with each other. As a unique service at the time, it has enjoyed first-mover advantage in the space and drawn partnerships with projects aimed at tracking weather, monitoring air quality, and incorporating GPS.
Users who wish to maintain Helium nodes can buy (or build) hardware called hotspots that can be plugged in and join the network and provide internet to that geographical area. In return, hotspots collect Helium’s token, HNT.
Meanwhile, anyone wishing to use the networks created by the connected hardware (e.g., to run their IoT devices or surf the web) buy data credits (DCs) in exchange for burning HNT. This burn-and-mint equilibrium (BME) controls HNT’s monetary policy.
By 2022, almost 1 million hotspots had been connected to Helium. That same year, the project re-dedicated itself to becoming a “network of networks,” helping to support other DePIN projects that build decentralized solutions for Wi-Fi, 5G, VPNs, and more.
Other DePIN examples
While the DePIN ecosystem is still being explored, there are a couple projects that have made significant strides.
Launched in 2020, Filecoin offers cloud storage services akin to Web2 giants Google Cloud and Amazon Web Services. However, instead of being controlled by centralized providers, Filecoin offers a distributed storage solution secured by crypto-economic incentives.
Filecoin connects those who need space to store data with users who have spare space on their hard drives. Users who provide storage space are paid with the FIL token.
Based on the idea that your information can be useful for many purposes, DIMO offers the ability for users to monetize their own vehicle and driving data.
Downloading the DIMO app enables users to selectively share information about their cars (like battery health, trip information, etc.) and be rewarded in the Ethereum-based DIMO token. Services like used car marketplaces and ride sharing apps can then buy access to this data to improve their functioning.
Hivemapper’s goal is to provide decentralized real-world mapping through the use of dashcams to replicate the services provided by Google Street View.
After buying a Hivemapper dashcam and installing it in their car, users drive around (during daylight hours) and generate visual data associated with GPS geolocation that can be uploaded to the network. Users are rewarded with the Solana-based HONEY token. Those wishing to use the map can buy map credits that correlate with distances/areas that have been logged by the network of users.
- DePIN refers to interconnected real-world devices that provide digital services in a decentralized manner.
- Cryptocurrency tokens are used by DePIN projects to incentivize and reward those who use and/or maintain the hardware that power networks.
- Helium was a pioneer of DePIN, offering decentralized networks for Internet of Things (IoT) devices and 5G cellular data, but other uses for DePIN include cloud storage, geographic mapping, data sharing, and more.