DePIN (Decentralized Physical Infrastructure Networks) is a product of the combination of blockchain technology and the Internet of Things (IoT). It aims to transform traditional physical infrastructure (such as energy networks, communication base stations, transportation systems, etc.) that are controlled by centralized institutions into decentralized networks built and shared by communities.

In simple terms, DePIN is an ecosystem of physical infrastructure networks owned and monetized by users, device owners, and enterprises, allowing everyone to become a participant in the infrastructure rather than just a passive user. For example, in a traditional energy system, electricity generation and distribution are monopolized by large companies, while DePIN allows homeowners with solar panels to sell excess electricity directly to their neighbors, creating a peer-to-peer energy trading market.

The concept of DePIN emerged in 2022 when Messari (a blockchain data research organization) conducted a survey to solicit a formal name for “Web3 physical infrastructure.” Among the candidates were terms like Proof of Physical Work (PoPw), Token Incentivized Physical Networks (TIPIN), EdgeFi, and Decentralized Physical Infrastructure Networks (DePIN). Ultimately, DePIN won the vote and began to attract attention.

How DePIN Works

DePIN’s operation primarily relies on the combination of blockchain technology and IoT. Blockchain, as a decentralized ledger technology, can securely and transparently record all transactions and data exchanges within the network. Each transaction is encrypted and stored in a distributed database, ensuring data immutability and transparency.

In a DePIN system, IoT devices interact with the blockchain by collecting and exchanging data in real-time. These devices can include sensors, smart meters, traffic monitoring devices, etc., which communicate with each other over the network, forming an intelligent infrastructure network.
The core architecture of DePIN projects generally consists of three layers:

1. Physical Device Layer: IoT devices (such as sensors, servers, energy devices) collect and transmit real-time data.
2. Blockchain Layer: Smart contracts automatically execute rules and record data such as device status and resource transactions, ensuring transparency and traceability.
3. Incentive Layer: Participants who contribute resources can earn token rewards, creating a sustainable economic model.

For example, in the decentralized wireless network Helium, users purchase hardware “hotspots” to provide network coverage for IoT devices. The blockchain records their service duration and data volume, issuing HNT tokens as rewards. Other users pay HNT to use the network, forming a closed-loop supply and demand system.

Classification of DePIN

DePIN can be classified based on the different types of device resources:

Energy Networks

By connecting distributed energy devices (such as solar panels, wind turbines, and home energy storage batteries) into an on-chain network through blockchain technology, a decentralized market for energy production, storage, and trading is established, enabling peer-to-peer (P2P) energy trading. Prices can be automatically adjusted based on supply and demand (e.g., excess solar energy on sunny days, increased demand on cloudy days) to enhance energy and economic efficiency. According to the International Energy Agency (IEA), DePIN energy networks can reduce regional grid construction costs by 60% and decrease transmission losses by 30%.

• Example: Energy Web: Developed an open-source blockchain operating system in collaboration with companies like Shell and Siemens, connecting over 500,000 distributed energy devices and helping the German state of Baden-Württemberg increase renewable energy utilization from 34% to 61%.

Communication Networks

DePIN disrupts the monopolistic communication infrastructure model of telecom operators by building distributed networks through crowdsourced hardware nodes (such as Wi-Fi hotspots and 5G base stations). It utilizes small base stations, Wi-Fi hotspots, or satellite terminals deployed by users to create low-cost, flexible decentralized communication networks. According to an Ericsson report, DePIN communication networks can be deployed eight times faster than traditional telecom infrastructure, with unit coverage costs only one-third of traditional 4G base stations.

• Example: Helium (HNT): Over 1.2 million hotspots deployed globally in 2023, providing connectivity services for Lime electric scooters, Agulus agricultural sensors, etc., at only one-tenth the cost of similar traditional services.

Data Storage and Computing Networks

These projects aggregate idle storage space and GPU computing power from individuals and enterprises to form scalable distributed cloud computing platforms, offering lower-cost and higher-security solutions than centralized cloud services. Gartner predicts that by 2027, 35% of enterprise computing loads will be carried by DePIN networks, with a market size exceeding $120 billion.

• Example: Filecoin aggregates dispersed hard drive space into a “storage market,” where data is encrypted and stored in fragments across multiple nodes, enhancing censorship resistance by 90% and offering prices 70% lower than AWS S3.

Transportation and Logistics Networks

DePIN projects optimize traffic efficiency and create data value through real-time data sharing from vehicles and road sensors. According to McKinsey research, the assetization of transportation data is expected to create $340 billion in value by 2030, with DePIN models accounting for over 45% of that.

• Example: The DIMO platform allows car owners to share data on speed, battery health, and road conditions, earning token rewards of $50 to $300 per month, while car manufacturers pay tokens to access data to improve autonomous driving algorithms.

Advantages of DePIN

Efficiency

Traditional infrastructure often suffers from inefficiencies due to centralized control and limited resource utilization. DePIN, with its distributed nature, can fully leverage underutilized resources to optimize the use of existing infrastructure. This helps minimize waste and maximize efficiency, creating a more sustainable and cost-effective system.

Ownership

DePIN decentralizes control over physical infrastructure, empowering individuals and communities. Anyone can become an active participant and potentially earn rewards for their contributions, without relying on large companies or governments to provide infrastructure. This shift toward democratized ownership promotes fairer resource distribution within the network and creates new opportunities for entrepreneurship and innovation.

Security

Centralized systems are prone to single points of failure, such as outages or network attacks. DePIN eliminates centralized single points of failure, making it inherently more resilient due to its well-distributed resources. Even if nodes or participants go offline, the network can continue to operate. This distribution makes DePIN less susceptible to censorship or control by any single entity, enhancing its security and privacy.

Environmental Friendliness

Thanks to improved efficiency, DePIN can be more environmentally friendly, and the precise matching of supply and demand through project algorithms can reduce waste.

Conclusion

DePIN is reshaping how people interact with the physical world. It not only embodies the fusion and advancement of technology but also represents a progression in production relations: individuals transition from passive consumers to value creators. Despite facing challenges such as regulatory ambiguity and hardware standardization, DePIN has demonstrated the potential to cover trillion-dollar markets in energy, communication, transportation, and more, which may be a key driving force for innovation in the future of the crypto market.