What is DePIN? Decentralized Physical Infrastructure Explained

5 min readMar 22, 2024

Decentralized Physical Infrastructure, also known as DePIN, is web3’s new favorite narrative. This technology aims to connect and digitize real world assets by using blockchain technology. A lot of this may sound foreign, don’t worry, I will boil this down in a way anyone can understand. **Nothing included here is financial advice and this is for educational purposes only**

What is DePIN?

DePIN projects aim to build systems of infrastructure that promote gathering data and contributing to the network in a decentralized nature. This meaning there is no single user or “node” that controls the entirety of data. These projects make use of blockchain technology to created distributed ledgers that are usually public. Each project has a unique approach to incorporating blockchain technology, some examples are tokenization of real world assets as NFTs, digital miners, or token rewards.

Why DePIN?

DePIN flips the traditional approach companies use on its head. DePIN allows projects to spring up quickly, expand, and build a dedicated and committed community with incentives. It is said projects that are decentralized are able to grow 10–100x faster. DePIN allows for companies to outsource the building of infrastructure to incentivized volunteers. These volunteers are incentivized and rewarded by tokens generated from the project. Each project usually has its own token for example, Hivemapper has $HONEY and Helium has $HNT. These volunteers/early adopters are rewarded in speculative tokens that may be worth quite a lot in the future.

DePIN projects are usually speculative in nature. Early adopters bear the risk of building said infrastructure. Early adopters may pay upfront for equipment to contribute data and earn tokens. For example, to earn Helium, users must purchase a hotspot to provide coverage to the network. Investing in DePIN early has shown to yield some tasty returns. However, their is always the chance that the project may not pan out to be anything.

Risks of DePIN

It is extremely important to understand the project you are entering. Most DePIN projects take a build hype and monetize later approach. Some projects incentivize users to mass refer people to rapidly build a massive following. An example is $GRASS this project aims to use spare bandwidth to train AI. These projects are able to spread like wild fires, referral systems can be dangerous because some users may not fully understand what they are getting themselves into. These projects are able to rapidly spring up quickly, but they may not pan out to be all that succesful.

It is important to understand the projects monetization strategy. Some projects are able to gather a lot of data, but there must be a buyer of that data for it to succeed. Silencio Network is a DePIN project that aims to tackle the issue of noise pollution, the question being who will be buying this data. All data is not always valuable data.

Should I participate in DePIN?

We are still in the early days for a lot of these DePIN projects. This is not a get rich quick route by any means. A lot of these projects’ tokens are extremely volatile in price. Some projects require a couple hundred dollars for hardware. If you are interested in partaking in DePIN, you should treat it as an extremely speculative investment. That being said do not invest money you are not comfortable losing.

There are also many projects that do not require anything to begin earning. DIMO is a project that collects data from your car. Natix Network turns your phone into a dash camera to map your city. I have done a deep dive on Natix Network and you can find it here. Silencio Networks is also completely free. These free applications may be something worth checking into to test the waters. If you enjoy your experience with these free DePIN projects, feel free to look into the more established and structured paid projects. You should always ask yourself “Can this project really compete with established web3 companies?” and “Can it earn revenue to sustain massive token valuations?”.

Conclusion

DePIN is by the people and for the people. A lot of these projects focus on security and privacy of the contributors and users of data. Democratization allows for users who contribute data to equitably participate in the Network’s success. However be weary because tokens are easily dilluted and can lose value extremely quickly. It is always important to do your own research (DYOR). Understanding the team and where the project is headed is crucial to picking a successful project. Try to always look past the hype and evaluate the project for what it is.