Blockchain technologies are expanding beyond the virtual space. The concept of DePIN is responsible for bringing decentralized projects from online to the real world.
What is DePIN
DePIN stands for Decentralized Physical Infrastructure Networks. The term refers to a scheme for the applied integration of blockchain into objects with physical infrastructure.
Blockchain solutions are used to administer systems. The approach allows you to create an autonomous, fully transparent, and open database that is protected from falsification due to its decentralized nature.
Smart contracts typically automate such systems. This is a digital analogue of ordinary contracts, in which you can prescribe the conditions for its implementation.
It turns out that blockchain technology can play the role of a crystal-honest administrator who is able to automate the operation of the system, control every step, and instantly provide reporting with the entire evidentiary base. At the same time, it does not need to be paid. Ideas about creating such projects formed the basis of DePIN.
Examples of DePIN projects
- The Filecoin project team was the first to implement the DePIN concept. The developers offered users a decentralized file storage system. Here is the meaning of the project and how it was implemented:
- The Filecoin team found a way to monetize free memory of computing devices. To do this, the developers suggested that owners of unused space lease it out. For example, Vasya has 40 GB of free memory on his computer. He can rent it out to a user who needs storage space.
- Since the information that users want to put in storage is often sensitive, the developers suggested encrypting it. Thus, the owner of the physical storage device will not be able to spy on exactly what is in the tenant’s files.
- To pay for rental services, the developers launched the FIL cryptocurrency.
- The level of payment for services is determined by the owners of devices with free memory themselves. This approach has created competition that helps maintain fair prices.
- The entire system is administered by the Filecoin blockchain.
There are other examples of DePIN projects that show that blockchain systems can successfully manage physical infrastructure.
| Helium | Helium is a decentralized blockchain system that allows smart devices to access the internet by connecting them to a network of gadgets belonging to project participants. |
| Render | Render is a blockchain network where users can share computing power for rendering. |
| Nunet | Nunet is a universal decentralized network through which you can share the computing power of your devices. |
As of this writing, DePIN projects operate in various fields, from wireless networks to healthcare and geolocation services. At the end of 2023, over 650 such organizations were registered in the market, with a market capitalization exceeding $20 billion. Most are projects related to computer technology.
Messari sees prospects for further growth in the market for decentralized physical infrastructure networks.
DePIN Cryptocurrency
DePIN projects typically have their own cryptocurrency. Coins are needed to reward users and pay for their services.
Investors can view the cryptocurrency of DePIN projects as stocks, which can be earned on by purchasing if the project develops.
Advantages and Disadvantages of DePIN
| Advantages of DePIN | Disadvantages of DePIN |
| Information is protected from falsification | Risks of programming errors that could lead to fatal consequences for the system cannot be ruled out |
| Such systems are transparent and fair | High cryptocurrency market volatility can negatively impact the value of tokens in which a DePIN project participant receives rewards |
| Costs can be reduced through process automation | Connecting to a DePIN project can be difficult for beginners |
| Automation of calculations helps eliminate errors | Regulators may have questions about such projects |
| The decentralized nature of systems helps maintain a fair pricing process | |
| The payment system can be automated |
Does DePIN have a future?
DePIN projects democratize access to various services. The economic efficiency of such initiatives is reflected in the active growth of the segment, which analysts recorded in 2024.
There is every reason to believe that the market for decentralized physical infrastructure networks will continue to grow. You can capitalize on its positive dynamics by purchasing cryptocurrency from promising projects.
Frequently Asked Questions (FAQ)
- What is DePIN? DePIN stands for Decentralized Physical Infrastructure Networks. These networks utilize blockchain solutions to manage physical infrastructure.
- What DePIN projects are on the market? As of the end of 2024, over 650 projects in the decentralized physical infrastructure network segment have emerged on the market. There is reason to believe that the market will grow.
- How can you make money on DePIN projects? You can earn from DePIN projects through investments in their tokens.
- What are the risks associated with DePIN projects? Errors in the code, as well as regulatory pressure, can lead to the collapse of a project.
- Which DePIN project is the most well-known? The Filecoin team was the first to successfully apply the concept of physical infrastructure networks.
Source: https://coinpaper.com/7441/what-are-decentralized-physical-infrastructure-networks-de-pin