DePin Development

DePIN represents a decentralized application that harnesses tokens as a means to motivate individuals in contributing to crowdsourcing efforts and establishing interconnected physical infrastructures in the real world.

These decentralized applications, operating within blockchain networks, leverage tokens (digital tokens and/or cryptocurrencies) to incentivize participation in crowdsourcing initiatives and the formation of networks involving tangible, interconnected entities such as machines, devices, vehicles, or robots. These networks serve to provide goods and services to both humans and machines within the physical realm.

Let’s present an illustrative scenario: NATIX Network is constructing a DePIN network by utilizing smartphones that operate as AI-powered cameras, gathering valuable data related to mobility, such as traffic intensity and road conditions in specific regions. To facilitate this, the company has created a dashboard camera application that can be downloaded for free and maintained in an active state while driving. This application processes the camera data from the smartphones and converts it into anonymized information, incentivizing users with tokens for sharing this data. In this context, the smartphones serve as the physical infrastructure of the network, while the underlying blockchain mechanism powers the network and distributes rewards.

By the way, due to the fact that individuals do not reach consensus as smoothly as blockchain nodes, you may have already come across this trend with various names like EdgeFi, Proof of Physical Work (PoPw), or Token Incentivized Physical Networks (TIPIN). In essence, DePIN is not a novel trend but rather something that dates back to the early days of the blockchain era. However, given its evolution and growing significance, it necessitates a unified name that governs the entire concept.

DePIN can be categorized into two groups based on the equipment, resources, and the goods and services offered by the network.

Physical Resource Networks (PRNs) motivate individuals to direct or deploy location-dependent equipment to provide tangible goods and services that are not intended for sale. Examples of such offerings include mobility, energy, or connectivity.

Digital Resource Networks (DRNs) serve as incentives for individuals to direct or deploy equipment, enabling the provision of interchangeable digital resources. These networks encompass areas such as data storage, bandwidth, and computational networks.

The DePIN Flywheel exemplifies how DePIN stimulates individuals to establish physical infrastructure networks accessible to both humans and machines, without necessitating substantial upfront investments as seen in traditional business models. Tokens act as a magnet for individuals to deploy equipment that offers services to others. Those operating on the supply side earn rewards by providing new or existing equipment to individuals in search of the goods or services that the equipment offers. With the absence of intermediaries, goods and services often become more cost-effective and expeditious.

DePIN presents numerous competitive advantages over the traditional model:

• Utilizing equipment and maintenance crowdsourcing, DePIN operates with reduced capital and operational expenses compared to traditional companies. While telecommunications companies are required to invest billions in infrastructure and real estate for its deployment, along with maintaining large workforces to support it, DePIN incentivizes network participants to take responsibility for these aspects, benefiting everyone involved.
• By employing blockchain technology, DePINs offer secure peer-to-peer payments without the need for intermediaries involved in payment processing.
• As an integral part of Web3, DePINs also grant network participants direct access to various Web3 tools and DeFi services, such as financing for new equipment, opening up additional income sources for them.
• By lowering market entry barriers through minimized initial capital expenditures, DePIN introduces fresh competition to various industries that have long remained stagnant, thereby stimulating innovation in all sectors.

Example: Web3-Style Noise Pollution Measurement

Noise pollution is a widespread issue in both large and small urban areas, causing a range of health problems, from sleep disturbances to headaches and hearing loss. These problems result in real and tangible losses for entire economies and create stress among the population, making it a practically universal concern.

One might assume that decision-makers would be eager to address this problem, but it’s easier said than done, especially when there is often a lack of data. After all, how do you measure it? Would you be satisfied if a private company installed microphones throughout the city? Just imagine the cost of such an endeavor. And how far does its reach extend? Would it be able to open stores only in specific districts? Can it expand to an international level? How quickly can it scale?

These are challenging questions that require innovative solutions. In the style of Web3, we can explore decentralized approaches to noise pollution measurement. By leveraging interconnected networks of sensors and leveraging blockchain technology, communities can collaboratively measure and analyze noise pollution levels. This distributed approach can provide comprehensive data without relying solely on a single entity or incurring exorbitant costs.

With this Web3-style approach, the measurement of noise pollution becomes more accessible, scalable, and cost-effective. It empowers communities to actively participate in addressing this problem, leading to more informed decision-making and targeted mitigation efforts. By embracing the principles of decentralization and collaboration, we can create a more sustainable and harmonious urban environment.

Silencio, a company with over 35,000 noise pollution sensors deployed in more than 170 countries worldwide, operates in a unique way. These sensors are not owned by Silencio; in fact, they are microphones on people’s phones who have installed the Silencio application. However, rest assured that the application does not transmit any signals from the microphones anywhere, as its focus is on privacy. It measures the overall noise level near you, and this properly anonymized data is then sent from the phone.

The value of noise pollution data extends beyond decision-makers and researchers; it also benefits a range of businesses. Real estate developers utilize the data to offer buyers properties in quieter neighborhoods, as this feature adds value to the price. Brokers also rely on this data for similar purposes. Restaurants and hotels would like to substantiate their claims of being located in quiet areas with real data. This is where liquidity comes into play within the Silencio ecosystem. As valuable data is provided by device owners, Silencio rewards them with tokens. In this way, the company incentivizes network expansion at a pace unimaginable for traditional companies. All of this is achieved with lower costs compared to a conventional enterprise, while fully adhering to principles of privacy and social responsibility.

Understanding How DePIN Works

Like any other network, DePIN revolves around two fundamental components: physical infrastructure and the digital foundation on which it operates. The physical infrastructure can consist of various solar panels connected to the network through a controller, such as the Raspberry Pi mini-computer. The digital foundation, on the other hand, comprises a multitude of smart contracts that govern different aspects of the project. These smart contracts operate within a blockchain network, ideally public and permissionless.

The blockchain serves as the network’s ledger, recording transactions and other value exchanges between network participants. For instance, it can document the purchase of broadband access from an individual renting out their router. The network rewards its participants with tokens for specific beneficial actions, such as selling energy generated by solar panels or leasing out routers.

DePIN tokens function as a stimulating mechanism designed to incentivize providers—owners of solar panels, communication service providers, owners of sensor arrays, and more – to expand the network’s capabilities to a degree where it can compete with established players dominating the market.

In turn, the growing demand motivates new market participants to join the offering, creating a self-sustaining loop of long-term growth. To shield end-users from market fluctuations, DePINs typically also incorporate a fiat token, which can be acquired by burning their publicly tradable tokens.

Why DePIN Is the Future

For entrepreneurs and founders, this business model opens up a new path to enter a market that would otherwise be nearly impossible to penetrate. Let’s say Alice and Bob want to launch a new telecommunications service. If they were to follow the traditional route, they would have to first gather hundreds of millions of dollars for infrastructure procurement and deployment, which would primarily benefit one of the household centralized companies dominating the market (oh, how we all love them!).

Furthermore, they would need to invest in physical space to house this infrastructure, either through expensive leases or property acquisitions. Lastly, maintaining the network would require them to maintain a small army of employees, creating a rigid and centralized corporate structure that caters to the existing market.

However, with DePIN, Alice and Bob can bypass these challenges. They can leverage a decentralized and crowdsourced approach, tapping into existing networks of participants who are willing to contribute their resources. Instead of significant upfront capital expenditures, they can rely on the shared resources of network participants, reducing costs and barriers to entry.

By utilizing blockchain technology, DePINs enable secure peer-to-peer transactions and eliminate the need for intermediaries in payment processing. This further reduces operational expenses and streamlines financial transactions within the network.

Additionally, being part of the Web3 ecosystem, DePINs grant network participants direct access to a wide range of Web3 tools and decentralized finance (DeFi) services. This opens up new avenues for financing and income generation, fostering innovation and entrepreneurship.

DePINs challenge the status quo and introduce healthy competition to industries that have long been dominated by a few established players. By embracing decentralization, cost-efficiency, and a collaborative approach, DePINs pave the way for a more inclusive and innovative future.
If our dear friends choose the path of DePIN, they won’t have to worry about most of the aforementioned problems. They can efficiently develop their network by simply allowing anyone interested to participate and creating a digital infrastructure for it.

Providers, whether enterprises or individuals, can install and manage their own equipment for deployment and maintenance. The result is not a corporate structure but a community that provides its own services, possesses ownership rights and sovereignty, and easily adapts to areas where there is demand.

What else can Alice and Bob set in motion with DePIN? In a recent report on this matter, Messari highlighted four distinct subsectors: server-based (decentralized data storage, computing, VPN, etc.), wireless (community-based network access), sensor-based (weather and other data), and energy-related (distributed power grids). This alone indicates the presence of at least four sizable markets ready for disruption, and the momentum should not stop there.

Various teams are already creating DePINs that advance this concept further into areas such as mobility and digital twins. With the competitive advantage provided by all of the above and the spirit of community, they will make significant waves across industries, displacing established names.