It’s one of the often-touted narratives of the upcoming bull market of 2024. Besides AI, gaming, and Real-World Assets, we often hear a slightly smaller sibling narrative: DePIN: Decentralized Physical Infrastructure Networks. Will Web3 finally shine in the real world through DePIN? Will it be the big new narrative? And what is the relation with the AI hype?
Let’s first look at the coins. Coins such as Akash and Render have pumped multiple times from their January 2023 lows – while still not having reached their previous all-time highs.
The newest project in the top 6 of DePIN coins as listed below on CoinGecko is Akash Network. It launched in 2021. (by the way, different dashboards use different category boundaries of what is a DePIN coin. Make sure to check out DePIN Ninja, for extensive dashboards.)
Most of these top projects are no spring chickens: measured in crypto years they’ve for sure reached adulthood already years ago! Filecoin launched in 2014, Helium in 2013. Arweave has been a household name since 2018 and it won’t go away anytime soon. At least, that’s what we hope for its users, as Arweave’s goal is to store data on-chain in perpetuity!
Arweave and Filecoin: Decentralized Storage
Let’s stick with Arweave for a second, to get an idea of what DePIN is. The Arweave protocol lets individuals with spare hard drive space store data in exchange for AR tokens.
What DePIN projects have in common is that the hardware that processes run on is decentralized across people’s devices. Everyone can join the network. The processes are in most cases related to data storage or data processing.
View it like this: if taxi service Uber had launched ten years later, it could have attached a utility token to its hardware (decentralized arsenal of cars) services. That’s what DePIN does to incentivize usage. Tokens in DePIN projects are used to reward participants who contribute hardware to the network.
Similar to what Arweave does, Filecoin is a peer-to-peer storage network. It creates a decentralized market for storage space. Users pay to store their files and providers receive Filecoin (FIL) for providing storage space.
A difference with Arweave is that Filecoin is more flexible in terms of data retrieval and duration of storage. It caters to a wider range of use cases. Another main difference is that miners in the Arweave network are incentivized to store data permanently through upfront endowment fees. Filecoin miners are incentivized through ongoing payments for storage and retrieval services.
Advantages of DePIN
Before we continue with other projects, let’s zoom out and ask ourselves: why would we even want to decentralize physical infrastructure?
In other words, what are the advantages of decentralizing PIN? These are the top 3:
- Better resilience: Distributed infrastructure is less vulnerable to attacks and failures: there is no single point of failure.
- Speed: By localizing resources and data processing, DePIN can reduce latency and improve the performance of digital services.
- Permissionless: Decentralized networks can provide services in remote or underserved areas, potentially bridging digital divides.
Different DePIN Sectors
According to a November 2023 Messari report, the biggest four DePIN sectors, all roughly the same…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
