1. The underlying logic of DePIN: putting the physical world on the blockchain

At the end of 2021, IOTEX called this track MachineFi, and at the end of 2022, Messari introduced the new concept of DePIN for the first time, stating that it is one of the most critical crypto investment tracks in the next decade. The core of the DePin concept is to use tokens to incentivize users to deploy hardware devices to provide real-world goods and services or digital resources.

Traditional physical infrastructure (such as power grids, communication networks, and data centers) is usually centrally controlled by a few large companies or government agencies, resulting in high barriers to entry, low efficiency, and limited innovation. DePIN breaks this pattern by:

● Resource crowdsourcing : Individuals and organizations can contribute idle physical resources (such as computing power, storage space, and network bandwidth) to become network nodes, thereby achieving decentralized sharing of resources.

● Blockchain coordination : Use smart contracts to automatically perform resource matching, quality verification, and reward distribution to ensure the fairness and efficiency of the system.

● Token incentives : Through the cryptocurrency reward mechanism, participants are encouraged to contribute resources and maintain network operations, forming a virtuous economic cycle.

This model not only improves resource utilization efficiency, but also reduces operating costs and enhances the resilience and security of the system.

2. Typical application scenarios of DePIN

The concept of DePIN has been put into practice and verified in many fields:

1. Power sector

In the traditional power system, the production and distribution of electricity are highly centralized, and users can only passively accept services. In the DePIN model, users can become producers and suppliers of electricity by installing equipment such as solar panels. For example, the decentralized power platform allows users to circulate idle electricity in the market in the form of "power on-chain", realize point-to-point power transactions, and improve energy utilization efficiency and users' economic benefits.

2. Network Communication

Traditional communication networks rely on large operators to build and maintain infrastructure, and their coverage and service quality are limited. The well-known Helium project encourages users to deploy wireless hotspot devices, and they can get token incentives by contributing hotspots. It has built a decentralized wireless network, and users can get token rewards while providing network coverage. This method reduces the cost of network construction and improves coverage.

3. Computing Resources

Cloud computing services are usually provided by a few large companies such as Amazon, Nvidia, and Google. They are expensive and have the risk of single point failure. Decentralized cloud computing is to build a decentralized cloud computing platform by aggregating idle computing resources around the world to provide efficient and low-cost computing services for applications such as artificial intelligence and machine learning. It provides high-performance, low-latency, and low-cost computing resources for small and medium-sized enterprises, individual developers, and gamers. For example, the domestic decentralized cloud computing platform PowerVerse has joined forces with China Mobile, China Unicom, and China Telecom to build a decentralized cloud computing ecosystem based on blockchain, cryptocurrency, DID and other applications. It currently provides high-performance, low-latency, and low-cost high-performance computing resources to e-sports Internet cafes and individual players.

3. Advantages and Challenges of DePIN

DePIN is gradually becoming one of the most realistic and imaginative directions in the application of blockchain technology.

According to the "2024 DePIN Status" report released by Messari, the current total market value of the DePIN market has reached US$50 billion, with more than 13 million devices involved in operations every day. It is expected that by 2028, the market size will grow to US$3.5 trillion.

The picture depicted by DePIN is not simply about uploading data to the chain, nor is it limited to the circulation of digital assets. Instead, it allows the physical infrastructure of the real world - such as shared computing power, network nodes, sensor networks, storage devices and even electric vehicle charging piles - to achieve collaboration and incentives through encryption protocols, thereby building a more flexible, fair and transparent infrastructure system.

The biggest advantage of DePIN is that it introduces the incentive mechanism of cryptoeconomics, which fundamentally changes the paradigm of "centralized capital + centralized construction" in the traditional physical network deployment method. Through token incentives and smart contract coordination, participants can spontaneously build, operate and maintain the network without a central controller. This "edge-first" architecture expands the coverage and deployment speed of infrastructure, and is particularly suitable for geographical areas that are difficult to cover with traditional models, such as remote villages, developing regions, or urban areas subject to monopoly constraints.

In addition, DePIN is naturally censorship-resistant and data transparent. The deployment of infrastructure and the recording of data are all completed on the chain, which is not easily manipulated by a single point. The shared use of key resources such as storage, bandwidth, and computing is also more trustworthy due to the encryption verification mechanism. This feature is especially valuable for building new technology applications such as distributed AI computing networks, privacy-preserving IoT applications, or global shared sensor networks.

However, DePIN's road has not been smooth sailing.

First, the transparency and credibility of the data source of physical infrastructure is a challenge, which determines the on-chain credibility, credibility and market bargaining power of the DePIN project. In addition, coordinating thousands of physical nodes at the practical operation level will be an engineering challenge, especially under realistic conditions such as device heterogeneity, high maintenance costs, and inconsistent network stability. Many projects face problems such as insufficient hardware supply, low operation and maintenance efficiency, and loss of participating nodes during implementation, which are directly related to the reliability and sustainability of DePIN.

Secondly, regulatory uncertainty has always been a key problem on the DePIN path. Although its architecture is decentralized, it often involves real-world physical assets, energy resources, and data collection. These areas are already highly compliant and prudent regulatory objects. Once deployed on a large scale, its network participants, data usage, energy access, etc. may trigger the constraints of the existing legal system.

Furthermore, the governance mechanism of the DePIN network is not yet mature. Although the token model provides a coordination and voting mechanism, in reality, there is often an unbalanced pattern of "miners as governors", that is, the big households who actually invest in deploying nodes become the dominant ones, rather than users or developers. This deviates from DePIN's concept of "fair sharing and collaborative construction" and may also exacerbate the unequal structure in the network.

Finally, the real widespread implementation of DePIN still requires deeper cross-border cooperation. It involves not only technical issues, but also the capital market's understanding of model sustainability, hardware manufacturers' attitude towards the open source ecosystem, and the government's tolerance for infrastructure privatization/crowdsourcing. DePIN is not a technical solution that can break through at a single point, but more like an experiment in institutional and value transformation.

IV. Conclusion

On the one hand, DePIN is promoting the decentralization and marketization of physical infrastructure through technological innovation and economic incentives, and building a more open, fair and efficient shared economic system. With the maturity of technology and the development of the ecosystem, DePIN is expected to achieve breakthroughs in more areas and become an important direction for future infrastructure construction.

On the other hand, DePIN is at a critical point of development with great potential but high complexity. It is not only an important channel for blockchain technology to influence the real world, but also an important rethinking of the governance model of human infrastructure. Its future evolution may not depend on the popularity of a certain project, but whether it can find a new balance between trust, efficiency, governance and regulations.