DePIN is making waves in the crypto world, hailed by many as the next inevitable global movement reshaping traditional infrastructure. While skeptics question its necessity, its growing traction and transformative potential can’t be ignored. But what exactly is DePIN, and why is it poised to disrupt entire industries? Let’s break it down.
DePIN, while originally standing for Decentralized Physical Infrastructure Network, has evolved into an umbrella term. It now refers to any decentralized protocol that uses tokens to create two-sided marketplaces for real-world infrastructure applications. But does this mean Bitcoin is a DePIN? Not exactly, since Bitcoin miners aren’t providing a service directly to the network's end users.
DePIN can cover a vast array of use cases, from traditional physical infrastructure projects like Hivemapper—which incentivizes dash cam installations to provide mapping services—to projects like Grass, which reallocates unused bandwidth through a browser extension to enhance online services for businesses.
Traditional infrastructure networks often suffer from centralization, leading to inefficiencies, high costs, and limited access—especially in underserved regions. Monopolies can stifle innovation and keep prices artificially high, all while leaving potential users out in the cold.
Innovation can challenge the status quo and we’ve seen many such cases in the past. Enterprise software was once dominated by billion-dollar giants like Siebel and Oracle, whose on-premise solutions locked companies into massive investments and limited flexibility. For example, a CRM deployment for just 200 users could cost a company over $1.8 million in its first year, accounting for software, hardware, training, and support. These hefty price tags were also long-term commitments, leaving companies tied to systems that often failed to meet actual user needs. These traditional solutions were usually managed by IT departments and weren’t built for team-specific workflows, which led to significant underuse—up to 65% of some companies’ Siebel licenses went untouched.
Salesforce disrupted the traditional model by introducing a fully cloud-based CRM, free of in-house servers. It was a groundbreaking move that democratized access to enterprise-grade software, and for the first time, software became an OpEx—a manageable monthly subscription—instead of a massive CapEx commitment.
Similarly, with DePIN, infrastructure doesn’t have to be a costly, centrally-managed asset. It can be a shared resource, constantly evolving, distributing the burden for CapEx and improving as more contributors join. Let’s take the example of the telecom industry to highlight the problem with some of the centralized models.
Today, Mobile Network Operators (MNOs) like AT&T and Verizon, along with Mobile Virtual Network Operators (MVNOs), are facing unprecedented demand for data, paired with skyrocketing operational costs. Despite the increasing demand, they are slowing down CapEx expenditure because they are heavily indebted.
In crowded urban centers, this is particularly problematic, as network congestion can lead to slow, frustrating user experiences. The rollout of 5G only raises the stakes. Compared to 4G, 5G infrastructure is much more complex and costly, and for good reason:
More Base Stations: 5G requires far more base stations than 4G. To deliver those lightning-fast speeds we all want, coverage has to be nearly seamless, which means more towers and equipment.
Higher Frequency Antennas: Each base station needs multiple antennas to support 5G’s higher frequencies and bandwidths.
Cutting-Edge Technology: 5G relies on advanced technologies like millimeter waves and beamforming, which, while impressive, demand a lot of energy and resources to work effectively.
If this sounds like an old-school system ripe for disruption, there are industries where it’s already happened. Take the outdated NYC taxi medallion system, where operators once held exclusive rights to the market. At their height in 2014, yellow cab medallions were selling for $1 million.
The value of medallions soared due to the city’s artificial restriction of medallions issued being limited to ~13,500. But since the proliferation of Uber, Lyft, and other rideshare apps, the medallion value plummeted as the number of vehicles for hire in NYC increased to over 120,000. With the rise of the gig economy and apps like Uber, anyone could become a driver, breaking down the monopolies that once controlled transportation.
This is exactly what Decentralized Physical Infrastructure Networks (DePIN) promise for infrastructure at large—a new gig economy where individuals and small entities can contribute resources, creating a decentralized network that brings flexibility, affordability, and local access.
Here’s why DePIN is like the next wave of the gig economy:
Enhanced Incentives and Network Effects:
Tokens give participants a direct stake in the success of a network. As the network expands and the value of the token rises, everyone involved stands to benefit financially, creating a shared interest in the platform’s growth. This sense of ownership fosters ongoing contributions and engagement, leading to strong network effects. In contrast, traditional fiat payments are merely transactional, offering little incentive for continued participation once the deal is done.
But it doesn’t stop there. Tokens can be programmed through smart contracts to reward specific actions—whether it’s completing tasks, referring new users, delivering high-quality services, or even maintaining good behavior. This automation not only streamlines the process but also enhances transparency, making it clear how participants are rewarded. Plus, tokens often come with governance rights, allowing users to vote on crucial decisions and shape the future of the network. Unlike fiat systems, which would require cumbersome external mechanisms to achieve similar results, token systems empower participants with real ownership and a voice.
Consider the world of open-source projects. For years, dedicated volunteers and hobbyists have poured their time and energy into projects like OpenStreetMap and Flightradar24, often with little to no incentives. This usually leads to a decline in data quality and contributions over time. Projects like Wingbits are harnessing this potential, rewarding volunteers with tokens for their contributions to the flight data network. This approach not only addresses the challenges of sustainability and engagement in open-source projects but also revitalizes the community by giving participants a tangible reason to contribute.
Speculative Upside and Reduced Upfront Costs:
Tokens provide liquidity and the potential for value appreciation, offering early participants significant upside potential that fiat payments cannot match. This speculative component makes tokens especially attractive to early adopters who are taking risks on a nascent network. While tokens may not hold high value initially, their value can increase as the network matures, making this a viable bootstrapping strategy.
Democratizing Access and Driving innovation: By lowering barriers to entry, DePIN allows individuals and small entities to participate in infrastructure projects previously dominated by large corporations. This democratization encourages innovation through diverse contributions.
Enhancing Efficiency: Reducing overhead costs by eliminating intermediaries and leveraging idle resources.
Debt Reduction through Direct Settlement in Gig Economy: In a token-based gig economy, direct settlement allows contributors and the platform to automatically offset what they owe each other. For instance, if a driver owes service fees but is also owed earnings, these amounts can be directly settled against each other. This removes the need for middlemen, speeds up payments, and reduces costs.
The DePIN ecosystem is at a crucial juncture, showing early signs of adoption. Projects like Helium, Geodnet and Glow demonstrate the potential of DePIN Networks. These projects have started generating real life demand and the outlook looks better going forward, as shown by their ARR numbers below:
Helium, a DePIN network for wireless connectivity, has found substantial success with its Wi-Fi offloading services. Through a network of Wi-Fi hotspots using PASSpoint technology, devices from partnered carriers and aggregators seamlessly offload data traffic onto Helium's network. This is currently benefiting Helium Mobile’s 120,000+ users and other carriers like T-Mobile and AT&T, with a total of 308 TB of data offloaded to date. Since Wi-Fi is far more affordable than 5G and can be scaled rapidly by converting existing infrastructure, Helium’s recent partnership with Ameriband to add 100,000 hotspots further strengthens its network coverage and capacity.
Glow incentivizes builders to construct new solar farms as alternatives to non-renewable energy sources. Its incentive mechanism, called a "recursive subsidy," requires that all electricity savings and revenue be reinvested into additional solar projects. Builders are rewarded through two channels: GLW token rewards proportional to the farm’s electricity revenue and a USDC pool funded by electricity revenue, distributed based on carbon impact. Since its launch early this year, Glow is on track to reach $6.4 million in ARR, with $1.6 million coming from just one solar farm.
GEODNET offers location accuracy within half an inch, far surpassing traditional satellite-based systems that provide accuracy within 10-20 feet. With real-time updates every second at a fraction of the cost, it enables automation and efficiency in industries like agriculture, construction, and transportation, while also enhancing AR/VR applications. It is seeing a 15% month-over-month revenue growth, with nearly 10,000 miners deployed worldwide. The company has also partnered with the U.S. Department of Agriculture to offer affordable RTK services to small farmers across the U.S., enhancing agricultural precision and accessibility.
There are some other notable use cases that we are looking forward to see how they pan out:
Virtual Power Plants (Starpower): Starpower aggregates small-scale, distributed energy resources (DERs) like home solar panels, controllable loads and batteries into virtual power plants. By connecting these resources to local markets and incentivizing households to adopt renewable energy, Starpower dynamically balances energy loads, enhances grid flexibility, and lowers overall energy costs.
Content Delivery Networks (Pipe Network): Pipe Network decentralizes content delivery using a distributed network of permissionless nodes. These nodes are run by operators around the world, creating a robust and scalable system that adapts to traffic demands in real-time. This setup not only lowers costs but also improves resilience and distribution efficiency across a global network.
As blockchain scalability and user experience continue to improve, DePIN will unlock more use cases, boosting both operational efficiency and reach. Success stories in mainstream adoption will attract more capital and build awareness among entrepreneurs, positioning DePIN as a viable model for scaling all kinds of infrastructure projects.
DePIN stands ready to redefine infrastructure conception, management, and operation, sparking a more inclusive, resilient, and dynamic global economy.
Pivot Global