July 31, 2024
The Key to Decentralized Everything
Dear Subscriber,
A wave of innovation is upon us. It’s set to disrupt traditional industries and give the sharing economy a powerful boost.
And, like decentralized finance, it promises to do this in a way that’s transparent, innovative and accessible to the masses.
I’m talking about Decentralized Physical Infrastructure Network projects.
DePIN offers the ability to decentralize everything from data storage to energy distribution …
It aims to revolutionize how we interact with technology and each other …
And it has the potential to become the foundation of the next generation of sharing economy.
What Is DePIN?
DePIN represents a category of projects within the crypto space that leverage blockchain technology and tokens to achieve decentralization.
By integrating physical devices such as miners, sensors, nodes, and smartphones, these projects create decentralized networks that benefit users, providers and creators alike.
Essentially, DePIN merges the physical world with blockchain technology.
The result is a network that harnesses the strengths of both realms.
According to a Messari report, the DePIN narrative encompasses over 650 projects with a current market cap exceeding $22 billion.
These projects are categorized into several sectors: AI and computing, sensors, wireless, energy and services.
If you go to Messari.io and go to Assets > Sectors > DePIN, you can see the top DePIN tokens by market cap.
DePIN builds on the early successes of pioneers like IOTA (IOTA, an open-source distributed ledger for the Internet of Things) and Filecoin (FIL, a decentralized digital storage network).
You’ll see IOTA is currently at No. 11 and Filecoin is at No. 2.
But a prime example within the DePIN space is Render (RNDR, “B”), at No. 3.
Render has been one of my most successful seed investments, made alongside 315 visionary investors in May 2018.
Since its inception, it has grown by an impressive +5,000%, reaching $13, highlighting its immense value and market potential.
Render has become the go-to rendering platform for major movie companies like 21st Century Fox, Netflix and renowned filmmakers like J.J. Abrams.
The impressive graphics at the Las Vegas Sphere, rendered on the RNDR system, further showcase the platform's capabilities.
By leveraging blockchain to decentralize GPU computing power, Render has solidified its position as a significant player in the DePIN ecosystem.
Examples of DePIN Projects
Let’s explore some prominent DePIN projects within the various categories mentioned:
GPU Projects: These facilitate the buying and selling of unused GPU computing power.
Examples: Render, io.net, Akash.
Wireless Projects: These utilize devices to extend wireless networks.
Examples: Helium, WiFi Map.
Storage Projects: These offer decentralized data storage services.
Examples: Filecoin, Crust, Arweave.
Green Energy Projects: These employ digital and physical devices to enhance environmental sustainability.
Examples: Energy Web, Rowan Energy.
Internet of Things Projects: These leverage blockchain’s payment capabilities to advance IoT technology.
Examples: IOTA, Minima.
Layer 1 Projects: These serve as DePIN infrastructure for decentralized applications (dApps).
Examples: Peaq, IoTex.
Benefits of DePIN
You might wonder, “Why do we need DePIN when we already have functional wireless networks, data centers and energy companies?”
Here are just four reasons why DePIN stands out:
Scalability: DePIN networks can scale horizontally and accommodate more participants seamlessly.
Pricing and Cost-efficiency: Transparency in pricing and streamlined processes through blockchain technology reduces user costs.
Decentralized and Permissionless: DePIN networks allow global participation without permission barriers in line with blockchain principles.
Incentivization: Token-based incentives foster ecosystem growth and sustain user engagement.
The Future of DePIN
I can name a half-dozen applications already.
Growth Potential: DePIN is set for significant growth. Projections suggest it could expand up to 120x its current size by 2028. This explosive growth potential is attracting attention from major investors and tech innovators.
Emerging Solutions: New decentralized applications and projects that offer innovative solutions launch regularly. These projects are expected to introduce efficiencies across various sectors.
Investment Opportunities: Investors can engage by purchasing DePIN tokens and participating in the network through ownership of wireless devices, sensors or mining equipment. Providing unused GPU power for profit is another viable option. This presents a new revenue stream for tech enthusiasts and investors.
GPU Project Demand: With the increasing AI integration, the demand for GPU power is surging. Projects like io.net and Aethir are well-positioned to meet this need, making GPU power a highly valuable resource. This category of projects is poised to attract significant investment and user participation, driven by the continuous advancements in AI technology.
Green Energy Projects: DePIN facilitates the free and decentralized trading of energy and carbon credits, enhancing system efficiency and reducing environmental impact. Rowan Energy, for example, uses token incentives to onboard users and enable the sale or storage of solar energy. Such projects contribute to environmental sustainability and offer financial incentives for participants.
Infrastructure Needs: DePIN projects will require robust infrastructure supported by scalable and secure blockchains. This will likely lead to the emergence of Layer-1 projects focused on DePIN dApps, such as Peaq and IoTeX. These projects are crucial for providing the support and scalability required for the expansive growth of DePIN applications.
In Summary
DePIN projects mark a significant milestone in the evolution of blockchain technology and its integration with the physical world.
It’s easy to see why DePIN is poised to become a transformative force in the crypto space. There’s substantial growth potential, diverse applications, and financial and other benefits.
Investors and participants have countless opportunities to engage with and benefit from this innovative narrative. This makes DePIN a critical area to watch in the coming years.
Best,
Mark Gough
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