DePINs: Harnessing the Power of Connectivity to Build Real-World Applications

Crypto is the first thing that comes to mind when discussing blockchain. But as we know, this technology has countless other uses; they’re just not as tangible as digital money. However, a new trend is emerging — and becoming the talk of the town among venture capitalists: DePINs, short for Decentralized Physical Infrastructures.

In simple terms, DePINs are where blockchain meets the real world by harnessing this technology’s power to help create and enhance physical commodities such as solar panels, routers for wireless networks, and GPS, but also digital ones linked to AI, computing, data storage, or bandwidth. They seem to be the obvious next step when it comes to blockchain-based solutions. Blockchain, just like the Internet, is evolving into something that harnesses the power of connected people across borders.

A report from February 2024 estimates that VCs have been heavily investing in this area, “with top projects raising a combined total of over US$1 billion in funding”. Once one understands what DePINS are, it’s easy to see why it’s becoming so hyped. They take connectivity and the power of community to another level. Blockchain projects are leveraging the power of cross-border connectivity to bring forth innovative solutions in several industries such as technology, health, and data.

But how? The structure starts just like any other blockchain app: lines of blockchain-based code that generate a specific product or service. Enter the community: DePINs are decentralized structures that rely on users to keep the wheels turning — but so do most blockchain projects that aren’t related to DePINs. So what’s the difference? A practical example would be a company providing wireless access to mobile devices that incentivizes users to connect to its blockchain-based wifi network and earn crypto tokens in return. There are many other examples in areas spanning from locational services to health and energy to computing.

Physical & Digital Resources Networks

There are two major categories of DePINs: physical and digital. The physical networks focus on the development of decentralized hardware structures that are usually non-fungible, such as routers for wireless connectivity, location services designed for shared ride companies, or solar panels that generate shared energy. Digital resources relate to fungible services such as computing cloud data storage, and bandwidth.

Key characteristics of DePIN

Community-driven: users are the main contributors, chipping in assets, time, and work to build the project in exchange for tokens. There are plenty of companies kickstarting new DePIN projects, and all of them have connectivity in common: they harness the power of people (in this case, users) to produce results, be it data, usage volume, or raw data.

Decentralized: Its decentralized nature brings more resiliency, thus reducing points of failure, and making it more secure as it’s harder to hack into.

Fosters innovation and advancement: because it’s permissionless, open, and global, it’s easier to reach a wider number of users across borders — the expression “two heads are better than one” gains a new meaning.

Shared economy: Sure, DePIN companies have to pitch in the initial money to kickstart the project, but one of the benefits of this new narrative is the fact that users can power it — the fees generated by end-users generate more liquidity, which in turn is used to pay for the project’s expenses and reward the users making the wheel turn.

How does it work?

Simply speaking, DePINs leverage decentralized technologies such as blockchain and peer-to-peer networks to establish communication and data transfer pathways. Each node within the DePIN network acts as both a sender and receiver of information, contributing to the distribution and processing of data.

Just like any other blockchain-based application, DePINs rely on specific consensus mechanisms, where nodes collaborate to validate and authenticate transactions or data transfers. Decentralization ensures the integrity and security of the network — no single entity has control over the entire system — and more resistance against power outages caused by natural disasters, cyberattacks, or infrastructure failures.

DePINs take the phrase “the more the merrier” to the next level: these applications are powered by the people who use them, and the more users, the more traffic is generated, thus enhancing the app. A practical example would be Helium, a company providing wireless connections via hotspots. How do users fit in here? The company incentivizes them to set up hotspots and rewards them with tokens. The increasing number of users enhances security and scalability.

Moreover, DePINs prioritize privacy and data security by encrypting communications and employing cryptographic techniques to authenticate users and verify data integrity. This ensures that sensitive information remains confidential and protected from unauthorized access.

DePINs are a new area in blockchain exploration. Companies building such applications and projects allow users to have an active role in their growth and feel included. Also, this kind of “crowdsourcing” is more affordable than actually hiring people to execute the same tasks.

Decentralized Physical Infrastructures stand poised to play a significant role in shaping the future of connectivity and communication.

DePIN Projects on Polkadot

Some projects on Polkadot are also investing in DePIN.

Crust specializes in bringing forth solutions related to software storage — the goal is to build a decentralized cloud ecosystem that values data privacy and ownership.

Peaq Network is a solution for companies and developers who wish to build DePIN apps for real-world solutions within the mobility, connectivity, and energy sectors. Applications for vehicle (bus, car, bicycle, etc) sharing, wind, and solar energy trading, crowdfunded and community-owned 3D printers, traffic and air-quality monitoring, and so much more.

Acurast is harnessing the benefits of blockchain to build a DePIN solution, in this case, serverless clouds. Their online storage can be managed from a mobile device, and it has all the benefits of being built on blockchain: it’s trustless, permissionless, and decentralized. They even prompt people to be part of the project: as an Android mobile phone owner, you can become a Processor by contributing with computation power.

Nodle is deploying DePIN solutions related to geopositioning such as tools to find lost mobile devices and authenticating social media content through location. They also have builder tools for developers to build their own apps. Everyone with a smartphone can participate in the Nodle network and the work they’ve been developing.

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