The Silent Revolution of DePIN: Can Decentralized Infrastructure Democratize Services in Crypto?

The world of crypto continues to search for the next big trend. After speculative fads with meme tokens and staking, all venture capitalists’ focus is now on a new category: decentralized physical infrastructure networks, better known as DePIN. Unlike other passing phenomena in crypto, this time investors are not just talking about theoretical possibilities but have already committed billions of dollars to projects promising to connect the blockchain world with tangible real-world services.

The problem? Despite these massive capital outlays, the industry faces the oldest challenge in crypto: the lack of real users demanding these services. DePIN projects, although with a combined market capitalization of tens of billions of dollars, generate only about $15 million in annual revenue. This gap raises questions about whether this time will be different.

How does decentralized infrastructure work in DePIN?

DePIN represents a radical alternative to how we understand infrastructure. While traditional wireless networks—managed by giants like AT&T, Deutsche Telekom, or China Mobile—operate in a fully centralized manner, where users simply pay a fee without having a say in how the network functions, DePIN projects propose a different model.

These protocols are built on blockchain and use token-based reward systems to incentivize ordinary people to contribute real physical infrastructure. The sector covers a broad spectrum: wireless connectivity (like Helium), data storage (Filecoin), distributed computing, and even decentralized mapping (Hivemapper). Instead of a corporation controlling the network, it is the community that collaborates and shares the profits.

Take Helium as a flagship example. For years, it operated its own blockchain, allowing users to set up wireless access points and receive HNT tokens as rewards. Recently, at a current price of $1.41, Helium underwent a significant transformation when it decided to migrate to Solana, recognizing the need for a more robust blockchain infrastructure. This move underscores how critical the choice of underlying chain is for the success of DePIN projects.

The strategic role of Solana in the DePIN ecosystem

If there is a clear winner in the rise of DePIN, that is Solana. While blockchains like Ethereum excel in decentralization theory, they suffer from practical issues: transactions are costly and slow. Ethereum requires Layer 2 solutions to scale, fragmenting user experience and complicating interoperability.

In contrast, Solana offers what DePIN truly needs: enough bandwidth to process massive volumes of transactions at minimal costs. This is no small detail. Projects like Nosana, io.net, and Hivemapper have chosen Solana precisely for this reason: low fees, ease of development, and a native DeFi ecosystem where tokens can be used immediately without complex bridges.

According to the Solana Foundation, there are around 20 DePIN projects on its chain. Sean Farrell, a strategist at FundStrat, explains: “Many of these DePIN projects would have faced the tough choice between building on a high-performance chain with low adoption or creating their own. With Solana established as a legitimate, high-performance platform, that infrastructure hurdle simply disappeared.”

The SOL token, currently at $88.47, reflects market confidence in this infrastructure. Meanwhile, projects like Render (RNDR), which specializes in computational power for rendering, benefit from this optimized architecture.

Why are venture capital funds betting so heavily on DePIN?

The numbers are enticing. Borderless Capital, focused on DePIN, has made over 30 investments in the sector and is raising funds for its third $100 million fund dedicated solely to this space. VanEck, through its portfolio manager Pranav Kanade, has also been bullish: “We believe DePIN can host applications with a billion users, using public blockchains without these users realizing they are interacting with crypto.”

What attracts VCs is that DePIN seems more “real” than other crypto projects. While the market is distracted by Bitcoin price volatility (currently at $68,600 after a 4.75% rise in 24 hours) and altcoin mania, institutional investors see DePIN as an area where utility is connected to tangible physical infrastructure.

David García, managing partner at Borderless Capital, clearly articulated this vision: “We see potential at the intersection of crypto + AI, mobility, mapping, wireless networks, and computing. DePIN has a competitive advantage in terms of efficiency, translating into better and more affordable services for the end consumer.”

However, Rob Hadick of Dragonfly injects some realism: while VC enthusiasm for DePIN will likely persist, there is a fundamental problem to solve. “The most promising DePIN projects seem tangible, which makes it easier to generate excitement. But currently, they generate very little revenue,” warns Hadick. “Most protocols are not limited by supply but by demand.”

Critical challenges facing the DePIN industry in crypto

The reality is that most DePIN projects operate under a “build it and they will come” model: they build the infrastructure first, hoping users will arrive later. But this has proven to be speculative and risky. Without clear demand from the outset, token supply inflates massively, creating questionable sustainability.

Strahinja Savic of FRNT notes that DePIN presents risks higher than more established investments: “Encouraging the development of physical infrastructure is a different level of commitment. Using tokens with questionable long-term value to fund expensive physical infrastructure is a risky strategy.” Added to this is volatility risk: if the token price drops, rewards for contributors become unattractive, discouraging ongoing participation.

Brian Rudick of GSR adds another layer of complexity: even if decentralized infrastructure costs were lower than centralized ones in theory, in practice, DePIN services could be inferior to solutions optimized over decades by centralized competitors. “Cost advantage does not always translate into market advantage if the product is inferior,” Rudick warns.

The native token’s price volatility presents another structural risk. Most rewards in DePIN are paid in the platform’s token, meaning price fluctuations directly affect contributors’ income. Extreme volatility can break long-term participation incentives.

DePIN projects with real potential

Not everything is bleak. Pranav Kanade of VanEck has identified a crucial distinction between two types of DePIN projects. Those that deserve skepticism are those betting on the “build first, users later” model, speculating that demand will appear. These tend to be highly speculative.

The truly promising projects are those where demand for the underlying service already exists, meaning the customers are already there. The ultimate goal is for users to utilize public blockchains without realizing they are interacting with a crypto product. “This approach would allow the DePIN project to build a competitive advantage over traditional centralized competitors. These projects have higher chances of success because they can balance token supply and demand much earlier in their lifecycle,” explains Pranav.

Anand Iyer, founder of Canonical Crypto, highlights an important catalyst: “We see how the real utility of decentralized hardware comes to life as computational needs for AI increase. Projects like Akash Network and Ritual are leading the way, and we expect more players to leverage decentralized networks for use cases entirely outside crypto.”

The most notable DePIN projects to watch include Render (specialized in computational power for rendering), decentralized cloud platforms like Akash, and projects that embrace the intersection of decentralized computing and artificial intelligence. These have the advantage of solving real problems that exist independently of the crypto ecosystem.

The adoption factor: the ultimate test

In the end, DePIN in crypto will face the same test as any revolutionary technology: can it generate mass adoption by non-crypto users? Christopher Newhouse of Cumberland Labs suggests that the retail market has not yet awakened to DePIN, distracted by Bitcoin failing to break $70,000 and meme coins experiencing speculative peaks. However, this could be an advantage for informed investors: “This is a good opportunity to get involved in DePIN tokens while no one is paying attention,” Newhouse states.

Venture capitalists definitely see the potential of DePIN in crypto. But the sector needs to prove it can move from speculative theory to a reality of paying users utilizing these services. Until then, DePIN will remain the favorite of institutional funds but has yet to fulfill the expectation of being truly revolutionary.