Hotcoin Research: The road to digital transformation of infrastructure, a panoramic analysis of the DePIN track

2 months ago
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With the rapid development of technology, blockchain technology has expanded from its initial financial applications to various fields. As an emerging track, DePIN uses blockchain technology and token economics principles to redefine the construction and operation model of infrastructure, achieving the optimal allocation of resources and greatly improving the efficiency of use. Many investment research institutions believe that 2024 will be a big year for the DePIN track, which has huge development potential.

With the rapid development of technology, blockchain technology has expanded from its initial financial applications to various fields. As an emerging track, DePIN uses blockchain technology and token economics principles to redefine the construction and operation model of infrastructure, achieving the optimal allocation of resources and greatly improving the efficiency of use. Many investment research institutions believe that 2024 will be a big year for the DePIN track, which has huge development potential.

1. Overview of DePIN

Definition of DePIN

The concept of DePIN (Decentralized Physical Infrastructure Networks) or decentralized physical infrastructure networks was first proposed by the analysis agency Messari, which aims to optimize the deployment and management of physical infrastructure through blockchain technology. According to Messaris classification, DePIN is mainly divided into two categories: physical resource networks (PRN) and digital resource networks (DRN). Physical resource networks emphasize the use of geographically related hardware devices to provide real-world goods and services, such as WIFI, VPN, energy information sharing, etc.; while digital resource networks focus on using hardware facilities to support the storage and computing of digital resources, such as broadband networks and data centers.

The DePIN project manages and allocates physical resources such as energy, storage space, bandwidth, etc. through decentralized nodes and decentralized decision-making processes. In the DePIN network, each participant is not only a user of resources, but also a provider of resources. Through smart contracts and encryption technology, the transparency and security of resource transactions are ensured.

Features of DePIN

1. Decentralized management: The most notable feature of DePIN is decentralization, which reduces dependence on centralized management agencies, reduces management costs, and increases the systems ability to resist attacks.

2. Optimized resource allocation: Through automatic execution of smart contracts, DePIN can more efficiently match resource demand and supply and optimize resource allocation.

3. Highly transparent and trustworthy: The application of blockchain technology makes all transaction records open, transparent and traceable, greatly enhancing the trust of the network.

4. Incentive mechanism: DePIN provides economic incentives for resource providers and consumers through a token economics model, encouraging more participants to join and maintain the network.

5. Enhanced security: The decentralized nature makes the network less susceptible to single point failures, enhancing the security of the entire system.

The DePIN project will not only improve the operational efficiency and transparency of traditional infrastructure, but also reduce costs and provide space for new business models and innovations.

2. DePIN project classification and principles

Projects in the DePIN track can be classified according to the type of physical infrastructure resources provided, mainly covering multiple fields such as computing resources, storage resources, bandwidth resources and Internet of Things (IoT) applications. Each type of project not only differs in technical principles, but also targets specific market needs and application scenarios.

1. Computing resources

Computing resources usually refer to distributed computing capabilities, including the allocation and utilization of computing resources such as CPUs and GPUs. Blockchain technology enables these resources to be securely shared and traded in a decentralized network. The main technologies include:

  • Node distributed processing: Each node in the network can provide computing resources and automatically match demanders and suppliers through smart contracts.

  • Consensus mechanism: ensures the correctness and transparency of computing tasks and resource allocation in the network.

  • Encryption technology: ensures the security and privacy of data during transmission and processing.

Representative projects: is a decentralized computing network that is building the worlds largest AI computing cloud, supporting the development, execution, and expansion of ML applications on the Solana blockchain, combining 1 million GPUs to form the worlds largest GPU cluster. Recently, announced the token economic model of its token IO, which will be launched as early as the end of April.

Render Network: A decentralized GPU-based rendering solution provider that aims to connect users who want to perform rendering jobs with people who have idle GPUs to handle the rendering.

Akash Network: A decentralized cloud computing platform that aims to establish an open and transparent market by providing a peer-to-peer market that integrates underutilized computing resources around the world.

2. Storage resources

The storage resources in DePIN refer to the space on decentralized storage devices, which can be personal computers, data centers, or even mobile phones. The technical principles mainly include:

  • File sharding: Large files are divided into multiple small fragments before storage and stored on multiple nodes to enhance data tamper resistance and availability.

  • Redundant storage: Data is stored in multiple copies to ensure that the data can still be recovered and accessed when some nodes fail.

  • Encryption technology: Data is encrypted before storage to ensure data security and privacy.

Representative projects:

Filecoin: A decentralized storage network, a P2P network where anyone can store and retrieve data on the Internet, with built-in economic incentives to ensure reliable and continuous storage and retrieval of files within the time specified by the user.

Arweave: A decentralized data storage protocol that enables data to be stored permanently and on its permaweb, a secondary network that makes data accessible through, for example, web browsers.

3. Bandwidth resources

The bandwidth resources in the DePIN track refer to the sharing of data transmission capabilities. Such projects usually use the following technical principles:

  • Traffic encryption: ensures the security of data during transmission.

  • Dynamic routing algorithm: automatically selects the optimal path to ensure efficient and low-cost data transmission.

  • Bandwidth Tokens: Digital tokens issued through blockchain to control bandwidth usage and allocation.

Representative projects:

Helium: Provides decentralized wireless network services. Users can contribute bandwidth resources and earn tokens by deploying Hotspot.

World Mobile: is a mobile network that uses hybrid spectrum, renewable energy and blockchain technology, using unlicensed spectrum such as free-space optical communications and other radio transmitters, which translates into cheaper internet access.

4. Internet of Things (IoT) Applications

The application of IoT in DePIN involves managing and operating a large number of IoT devices and the data generated through blockchain technology. The key technical principles include:

  • Device Authentication: Each device has a unique identity through blockchain technology.

  • Data on-chain: Data generated by devices can be encrypted and stored on the blockchain, ensuring that the data cannot be tampered with and is easy to trace.

  • Smart contracts: Automatically execute specific tasks or transactions based on data, such as automatic payments, data sharing authorization, etc.

Representative projects:

IoTeX: Leveraging blockchain technology to provide secure IoT device connection services, focusing on enabling privacy protection and data security in smart devices, and providing better value to end users by creating a trusted IoT platform.

IOTA: Provides efficient micro-transaction and data transfer solutions for IoT environments through its non-blockchain Tangle technology.

3. Current Development Status of DePIN Track

With the maturity of technology and the increase in application cases, the DePIN project has entered the stage of practical application and commercialization from the initial proof-of-concept stage. By providing more economical and efficient infrastructure services, it has gradually gained market recognition and user trust. DePINscan shows that as of April 25, there are more than 232 DePIN projects in operation or development worldwide, of which 31 are AI concept projects. There are 841,861 active DePIN devices, covering more than 175 countries and regions, with a total market value of more than US$11.8 billion.

The DePIN project has attracted a lot of venture capital and investor attention. According to RootData statistics, from 2022 to the end of 2023, DePIN-related projects received a total investment of more than US$3 billion. As of April 25, the DePin track announced a financing amount of US$97.7 million in 2024, and the financing funds were mainly used for technology development, market promotion and ecological construction. According to CoinGecko data, as of April 25, the market value of tokens related to the DePin track has exceeded US$26 billion, showing its rapid growth potential.

During the Hong Kong Web3 Carnival in April, UWEB and JDI Global jointly released the 2024 DePIN Development Report, which predicts that the market size will reach 3.5 trillion US dollars by 2028 and will play an increasingly important role in the development of the global infrastructure network.

Hotcoin Research: The road to digital transformation of infrastructure, a panoramic analysis of the DePIN track

4. Investment opportunities and risks in the DePIN track

The DePIN track is gradually becoming a hot spot for investors, as it not only provides innovative technical solutions but also brings unique business opportunities. However, the DePIN track also has both opportunities and risks.

Investment Opportunities

1. Technological innovation and application expansion: The technological innovation involved in the DePIN project, especially in the fields of Internet of Things (IoT), 5G communication, cloud computing, AI computing power, etc., optimizes the allocation of data storage, computing power and bandwidth resources, improves the utilization efficiency and security of these resources, brings disruptive changes to traditional industries, and creates new market demands.

2. Environmental sustainability: With the increasing global attention to environmental protection and sustainable development, DePIN projects have shown great potential in improving energy efficiency and reducing carbon footprint. These projects reduce energy waste by optimizing resource allocation, which is in line with future development trends.

3. Ecosystem construction and network effects: From the Internet of Things to cloud computing, from content distribution to smart city construction, DePIN technology has broad application prospects. Investing in DePIN projects is not only an investment in a single technology or service, but also an investment in a rapidly developing ecosystem. As the network effect increases and the ecosystem matures, early investors may receive significant returns.

4. Global development characteristics: The DePIN project is inherently globalized. The projects services and products are not restricted by geographical location and can be quickly expanded to the global market. With the popularization of technologies such as 5G and AI, the practical application and market penetration of the DePIN project will be further accelerated.

5. Regulatory progress and market acceptance: Many countries and regions are gradually introducing policies to support blockchain technology and decentralized networks, which may provide DePIN projects with broader development space and higher market acceptance.

investment risk

1. Technical complexity and implementation difficulty: DePIN projects often involve complex technical challenges, including data security, network stability, and cross-platform compatibility. During project execution and operation, there may be technical obstacles, such as security vulnerabilities, performance issues, etc., which may affect the long-term stable operation of the project.

2. Uncertainty of the token economic model: Many DePIN projects rely on a specific token economic model to incentivize participants and maintain network operations. There is uncertainty about the sustainability and effectiveness of this model, which may affect the long-term stability and investment returns of the project.

3. Market competition and technology iteration: The DePIN track faces fierce market competition. At the same time, rapid technology iteration may cause some projects to become obsolete quickly. Investors need to pay attention to the competitiveness and continuous innovation capabilities of the projects they invest in.

4. Market acceptance and user growth: The success of the DePIN project depends largely on market acceptance and the growth of the user base. If the project fails to effectively attract users and partners, it may make its business model unsustainable.

5. Regulatory risks and policy changes: As an emerging technology field, DePIN projects may be affected by uncertain regulatory risks and policy changes. Uncertainty in government policies may lead to sudden changes in the investment environment, affecting investment decisions and project operations.

5. Prospects of DePIN Track

1. Continuous technological innovation: Technology is the core driving force behind the development of the DePIN track. With the continuous maturity and optimization of blockchain technology, the DePIN project will be more efficient and secure in the future and will be able to better serve complex infrastructure needs.

2. Stronger cross-chain capabilities: In order to achieve broader interoperability and resource sharing, the DePIN project needs to develop more powerful cross-chain technology to enable seamless connection between different blockchain networks and share data and resources.

3. Expand the scope of market application: The market application of the DePIN project will expand from some existing fields to a wider range of industries and scenarios. From energy management to smart city construction, from the Internet of Things to supply chain management, DePIN technology will be applied to more industries to improve the operating efficiency and cost-effectiveness of infrastructure.

4. Increase consumer-level applications: In the future, the DePIN project will pay more attention to consumer experience and develop more applications for ordinary consumers, such as home automation solutions provided through a decentralized network.

5. Continue to optimize the token economic model: By optimizing token distribution and incentive mechanisms, ensure that participants - both resource providers and service consumers - can obtain fair returns, and explore more ways to make tokens have practical application value, such as paying for the use of specific physical infrastructure through tokens.

6. Promote digital transformation of industries: DePIN technology will help traditional industries achieve digital transformation and improve the transparency and efficiency of industry operations. By optimizing resource allocation and utilization, the DePIN project will help the world achieve more sustainable development goals, such as improving energy efficiency and reducing environmental pollution.

As an innovative track that combines blockchain technology and physical infrastructure, DePIN carries huge potential and possibilities in its future sustainable development. With the continuous advancement of technology and the gradual expansion of market applications, DePIN is expected to become an important force in promoting the modernization and digital transformation of global infrastructure.

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