May 19, 2024


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Key Takeaways

  • High-Potential Early-Stage Investment: DePIN is a new concept – an “Airbnb for everything” – with a potentially massive market size (trillions of dollars) across various industries. This presents an opportunity for crypto investors to get in on the ground floor of a potentially disruptive technology.
  • Focus on Underlying Projects: DePIN covers numerous use cases, including data storage, GPU computing, archival storage, decentralized WiFi, and video streaming. Investors should research using our quantitative and qualitative guidelines to understand each company’s potential growth.
  • Consider the Risks: Despite the potential, DePIN tokens are still a cryptocurrency investment and inherently risky. The market is volatile, and regulations are still unclear. Don’t invest more in DePIN than you’re willing to lose.

The core narrative of technologies like crypto, DeFi, and NFTs is how they revolutionized digital communication, ownership, and investment. Now, blockchain technology is extending into the physical realm, thanks to decentralized infrastructure networks (DePIN).

DePIN is a novel concept that decentralizes physical infrastructure by enabling autonomous, real-time interactions through smart contracts, the Internet of Things (IoT), and other decentralized technologies.

Here’s a look at what DePIN offers and how the market is emerging. We’ll also examine the top DePIN projects for investors.

DePIN companies are bringing the physical world onto the blockchain. While DeFi revolutionized digital finance, DePIN brings DeFi concepts to physical assets.

Imagine renting out your unused disk storage space, or borrowing computing power from your neighbor’s computer – all securely managed through a blockchain network. That’s DePIN: It’s like Airbnb for everything.

Here’s the breakdown of DePIN for crypto investors:

  • Tokenized Incentives: DePINs use tokens to create a system where individuals and companies can contribute to a network of physical infrastructure, like charging stations for electric vehicles or telecom towers. These contributors are rewarded with tokens for their contributions.
  • Decentralized Ownership: DePINs are all about community ownership. Unlike traditional models, where a single company owns the infrastructure, DePINs allow shared ownership through a crowdsourced network, with each contributor rewarded in tokens. But anyone can invest in the tokens, which means that token owners can share in the growth and revenue of the project over time.
  • Real-World Applications: DePINs have the potential to disrupt various industries. Imagine a DePIN for electric vehicles that facilitates a peer-to-peer car-sharing service, or a DePIN for solar energy that creates a decentralized power grid.
  • Early Stage with High Potential: While DePIN is a new concept, the market size is estimated to be massive, potentially reaching trillions of dollars in the coming years. This presents an exciting opportunity for crypto investors looking to get in on the ground floor.

Essentially, DePINs are a way to leverage the power of blockchain to build and manage physical infrastructure in a more democratic, efficient, and community-driven way.

DePIN Tokens: A Look at the Emerging Sector

As of this writing, the total market cap for DePIN tokens hovers slightly above $30 billion.

This market cap is only projected to grow as several factors drive the DePIN market’s growth. For example, DePIN offers a transformative approach to Web3 infrastructure, as it helps solve some pain points that centralized infrastructures pose.

  • For example, traditional Web3 infrastructures sometimes experience bottlenecks and failures since they rely on centralized systems. However, with the decentralized model DePIN offers, workloads can be easily distributed across multiple points to help reduce pressure and enhance the overall adaptability and robustness of the infrastructure.
  • DePIN can also help make Web3 infrastructure more accessible globally in areas with limited or unavailable centralized infrastructure. By decentralizing resources, widespread adoption of innovative technologies can become possible in remote and underserved areas.
  • DePIN is also attracting institutional interest thanks to its many use cases. For example, DePIN can help promote the decentralization of power grids in the energy sector, making energy distribution more efficient and sustainable. DePIN can also help improve supply chain efficiency by leveraging AI logistics to reduce waste and improve delivery times.

As DePIN technology gains wide adoption, there is even more potential for market expansion.

Understanding the DePIN Ecosystem

DePIN can be used to manage the sharing and pooling of practically any resource that can be electronically linked.

DePIN resources can be broken down into two categories: physical and digital.

  • Physical resource networks (PRNs) are pooled together and network but still attached to a physical location. Examples include computer hardware, energy, and mobile bandwidth.
  • Digital resource networks (DRNs) are natively digital and include data storage and computing power.

Another critical aspect of the DePIN ecosystem is the concept of “providers” and “consumers.”  Providers refer to small businesses or individuals who own and manage the physical assets within a network, be it sensors, wireless hotspots, storage devices, or servers. DePIN uses a token economy model to incentivize providers to share resources. DePIN can increase in value over time and be traded or sold.

On the other hand, consumers refer to the end-users of DePIN services. They serve as the primary beneficiaries of the DePIN network and reap the benefits that DePIN offers, including improved resilience, increased efficiency and accessibility, and lower costs.

The Top DePIN Projects in 2024

Filecoin (FIL)

Launched in 2014, Filecoin is a peer-to-peer network that offers a decentralized storage solution, protocol, and marketplace. Filecoin relies on a protocol for decentralized storage information known as the InterPlanetary File System (IFS). Users who meet specific quality standards can rent out spare storage in exchange for FIL tokens.

Consumers must pay for their storage using FIL, leading to long-term demand for the token. This token will likely grow due to increased adoption, as Filecoin offers many advantages over its main competitor, Google Cloud. The barrier to becoming a storage provider for Filecoin is much lower than that of Google Cloud, and prices remain low for consumers due to the decentralized nature of the network.

Render (RNDR)

Render is a decentralized computing network on Ethereum that aggregates GPU computing power for GPU-rendering services. (Computer rendering refers to creating 2D and 3D images, animation, and videos.)

Rendering is traditionally a highly resource-intensive process. However, Render democratizes access by providing a flexible platform for studios, designers, and artists to access GPU processing capacity on a decentralized network.

Render rewards providers who contribute GPU resources with Render tokens. As Render is the indisputable leader in its highly specialized niche, we can likely expect this token to grow.

Additionally, 3D graphics rendering is crucial for metaverse developments, and a widespread metaverse will require massive amounts of GPU power, therefore putting Render in a unique position to soar.

Arweave (AR)

Arweave market cap over one year period.

Arweave is a decentralized, blockchain-based storage solution that is a significant competitor to Filecoin. However, whereas Filecoin charges consumers ongoing fees for data storage, Arweave charges users a single upfront fee.

Arweave deposits fees into an endowment fund that gets invested to earn interest. Providers are then paid annual payments from the fund through AR tokens. Arweave aims to earn more interest than it pays out, so the endowment fund keeps growing.

Arweave stores files across numerous nodes in a fragmented manner so no individual provider will have your files on their computer. This makes it an excellent solution for storing historical crypto data. Avalanche, Cosmos, PolkaDot, and Solana all use Arweave.

The AR token has spiked over 100% over the past year, and we can expect to see even more growth in the future. The ecosystem offers a lot of diversity, spanning various sectors such as education, news, publishing, DeFI, and NFTs.

Helium (HNT)

Helium is a blockchain-based platform offering a globalized decentralized WiFi hotspot network, particularly for Internet of Things devices. Currently, it has over 350,000 active WiFi hotspots.

Anyone can join the Helium network to become a hotspot provider. You can use various devices to join (tablets, phones, laptops, etc.), and you just need to place the device in your home or office window. Helium then uses a proof-of-coverage consensus mechanism to validate the quality and authenticity of the network.

Hotspot providers are rewarded with HNT tokens (The more data transferred through a hotspot, the more tokens a provider earns.)

We expect to see growth in the Helium token shortly, as the data price increases yearly with traditional centralized telecommunications. On the other hand, Helium’s decentralized format can grow more access points at a cheaper rate.

Theta Network (THETA)

Theta is a decentralized video streaming network that aims to make high-quality videos available for users around the world with no lag time. Providers offer their idle bandwidth and storage in exchange for THETA tokens. You can think of Theta as a decentralized to traditional, centralized content delivery network such as Akamai and Amazon CloudFront.

One of the major selling points of the Theta network is that it offers a built-in digital rights management (DRM) solution that enables content creators to claim royalties when their videos are streamed. Providers can get paid to deliver content by offering bandwidth, creators can get paid for making content, and consumers can pay extremely low fees compared to other content streaming platforms.

These benefits have already led to growth in the Theta network, as the token is up 132% over the past year.

Risks of Investing in DePIN Tokens

While DePIN tokens are taking off, it’s important to remember the inherent risk associated with investing in any cryptocurrency. Crypto can be an extremely volatile asset, where prices can soar one day and nosedive the next.

Additionally, regulation is still a risk factor, as many governments and regulatory bodies are still trying to figure out which laws apply to crypto. There is the possibility that companies will be faced with lawsuits by the U.S. SEC and similar authorities.

And of course there’s the risk that adoption simply won’t happen, capping any growth potential for the project. These are still young and unproven markets. Never invest more in DePIN that you are willing to lose.

Investor Takeaway

DePIN tokens and the DePIN ecosystem hold potential. While DePIN is a newer concept, its market size is massive, and it may disrupt various industries, including healthcare, energy, telecommunications, data storage, and more.

Additionally, the way the DePIN ecosystem is set up allows providers to earn regular income – and consumers to reap the benefits of lower prices, higher efficiency, and better access to resources.

As always, our investing approach stays the same: look for projects with userbases that are large and growing (read more about our valuation metrics here), and do your research using tools like our Blockchain Investor Scorecard (which you can find here).


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