Better than Yesterday with BSCS #33: DePIN Explained

Decentralized Physical Infrastructure Networks (DePINs) represent a groundbreaking innovation in the rapidly evolving landscape of blockchain and decentralized technologies.

DePINs are reshaping the way we think about infrastructure by offering community-driven, cost-effective alternatives to traditional centralized models.

This article delves into the essence of DePINs, their functioning, and their burgeoning presence in the market, highlighting their potential to revolutionize various sectors.

What are DePINs?

DePINs are real-world infrastructures on-chain. In more depth, DePINs offer a community-driven, cost-effective means of scaling projects without relying on traditional, centralized models.

They are platforms where organizations and individuals can benefit from higher levels of control over their data and products through decentralized infrastructure.

The term 'DePIN' has gained significant prominence, particularly in 2023, and its mention continues to grow into 2024. Initially, Web3 was used to reference projects focused on networks (replicating Web2 internet networks, but decentralized) but has since expanded to include all crypto or blockchain work, necessitating the emergence of this specific terminology.

Messari, an independent crypto research firm, estimates DePIN’s Total Addressable Market to be a staggering $2.2 trillion, projected to grow to $3.5 trillion by 2028. However, the theoretical market size of DePINs is the entire non-digital economy, which, according to the World Bank, is nearly $90 trillion. This underscores the immense potential and magnitude of the opportunity DePINs present.

How does DePINs work?

On a fundamental level, DePINs function as bridges between physical facilities and the blockchain ecosystem.

They operate through three main components

Physical infrastructure controlled by a provider

Middleware connection to the blockchain

A public ledger

These connections are managed by record-keeping and offering remittances to both the provider and the user.

The physical infrastructure could be a smart agriculture system where farmers use IoT (Internet of Things) devices such as soil moisture sensors, weather stations, and crop health monitors to gather data about their fields.

The middleware would then relay this information to the blockchain. Then, based on the data provided by the middleware, the blockchain would distribute rewards to the provider and users in the form of tokens.

Additionally, for DePINs to operate effectively, four distinct parties must be involved in the network. This includes:

Hardware (PRNs & DRNs)

A physical component connecting networks to the real world

Hardware operators (Providers)

Contributors buying or lending their hardware to the given network

Token

A financial incentive paid out to hardware operators based on data provided by the middleware

Users

DePINs need users who are willing to use and pay for the service

The Current DePIN Landscape

DePIN projects operate in six core business niches:

Compute marketplaces

Wireless coverage

Wholesale data

Services marketplaces

Energy services

Vertical ad networks

Several existing projects are emerging in these six business models, including Filecoin, Helium, Hivemapper, Braintrust, Entheos, and Sweatcoin.

Out of these six sectors, compute marketplaces have the most potential, making up the majority of the market capitalization of DePIN crypto projects.

DePINs are at the forefront of a transformative shift in how we conceptualize and manage infrastructure. By leveraging decentralized technologies, they provide innovative solutions that could reshape numerous industries.

As the market for DePINs continues to grow, their potential impact on the global economy becomes increasingly evident.

Stay tuned for Part 2 of our DePIN series, where we will explore specific use cases, dive deeper into individual projects, and discuss the challenges and opportunities that lie ahead.

Don't miss out on the next installment to gain a comprehensive understanding of this revolutionary technology!

About BSCS

BSCS - The fully decentralized protocol for launching new ideas. An all-in-one Incubation Hub with a full-stack Defi platform across all main blockchain networks. We provide exclusive services including IDO/INO Launchpad, Yield farming, NFT Auction, Marketplace, and BSCSwap.

BSCS operates on top of all main blockchain networks and is designed to offer maximum value to consumers and institutions.

BSCS platform uses the Sharing Economy Model for the purpose of profit-sharing, helping users to access DeFi platforms in the easiest, safest, and most cost-effective way. BSCS is the most convenient bridge to connect users and application products on all main blockchain networks.

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