As Web3 searches for better ways to provide value to users, many projects have honed in on a relatively specific operating model known as the DePIN or decentralized physical infrastructure network.
After introducing the DePIN concept, this post will cover the various sectors where these networks are offering improved services which reward users through tokenomics.
What Are DePINs?
DePINs can be defined as those projects which leverage token incentives in order to mobilize individuals to invest in the deployment of infrastructure for which there’s existing real-world demand. For instance, DePINs are now providing infrastructure for wireless networking, energy markets, and computing services, to name a few.
DePINs decentralize infrastructure-based services by executing the data flows involved in these services decentrally on blockchain nodes, which generate tokens.
Smart contracts rather than any centralized administrative entities govern the computations and transactions executed by nodes, making DePINs’ operation trustless, decentralized, and fully automated.
The deployment of DePINs are also decentralized, since their nodes are operated by private individuals who want to earn tokens. These tokens issued by DePIN nodes can be exchanged for other tokens or fiat currency on DeFi platforms, creating a cash incentive for contributors.
Because token-incentives for contributors motivate node deployments, DePINs are also known as TiPINs, or token-incentivized physical infrastructure networks.
What Counts as a Node?
DePIN nodes can be any device with the computing power, connectivity, and/or hardware needed to support a given infrastructure-based service.
Besides crowdsourcing the deployment of new hardware via token incentives, DePINs can also bootstrap existing infrastructure in order to deploy a given service-network. Many personal computers, for instance, can devote processing power to blockchain node work.
DePIN Tokenomics
The values of tokens issued by DePIN nodes reflect the overall value of the given network and its services, and thus its size and popularity. As these networks grow, this correspondence between token and network value helps incentivize further investment in new nodes.
In other words, as token values go up, more people invest in and improve the network, which in turn causes token values to rise again. This cyclic feedback between increased token value and network growth is represented in the flywheel below.
DePINs vs. Traditional Blockchain Networks
The biggest factor separating DePINs from other Web3 applications is that while DePINs, as mentioned, decentralize existing services, traditional blockchain networks typically generate their own demand from scratch by creating decentralized financial systems and digital currencies.
While both types of networks share the goal of decentralization, they are distinct in their use-cases and in their focus on providing either crypto-based, Web3 native services, or those which decentralize existing real-world services through blockchain technology.
Benefits of DePINs
Compared to centralized networks, DePINs offer various benefits for both users and businesses.
Collective Ownership
Token incentives return the value produced by DePINs to users themselves, allowing for a more equitable distribution of profits.
Open Participation
Anyone with the right hardware can become a DePIN node-operator and access network profits.
Democratically Controlled
Entire communities of node-operators govern DePINs’ operating procedures, so no single authority can make unilateral changes. Proposed protocol updates are put to votes involving every node.
Self-Sustaining
DePIN operations are fully automated because their data management processes are governed exclusively by blockchain smart contracts.
Since DePIN nodes are automatic and privately owned by many individuals, DePIN networks can still operate regardless of the status of individual nodes, and even if the network’s founding organization fails.
Cost Effective
The DePIN network model reduces capital expenditures for businesses, as crowdsourcing and bootstrapping network hardware significantly lowers infrastructure costs (which are instead absorbed by individual nodes).
High Interoperability
Since they all operate on blockchains, DePINs can communicate and integrate with each other to provide new services and use-cases. For instance, MetaBlox’s decentralized WiFi infrastructure network can also support logins to apps and websites as well as the internet.
DePIN Examples
As shown in the industry map below, DePINs provide various services including computation and wireless network support, data storage, and access to energy marketplaces. Expect DePINs to expand into other service sectors as Web3 infrastructure technologies evolve.
Below are industry-specific overviews describing how the DePIN model is implemented in various infrastructure-based sectors, with examples for each.
Wireless Networks
Infrastructure that provides wireless networking services through WiFi, 5G, bluetooth, and LoRa protocols can all operate under the DePIN model. The nodes on these DePINs provide network infrastructure that allow wireless devices to communicate with each other and access the internet. Node contributors earn tokens as this infrastructure provides such services to users.
MetaBlox Network
MetaBlox is building a global, decentralized WiFi OpenRoaming network that uses web credentials that are verified by nodes on a blockchain.
The network’s nodes include MetaBlox routers — known officially as MetaBlox miners — which connect devices to WiFi by verifying special Decentralized Identifier (or DID) web credentials.
These verifications are carried out in a mining process, and MetaBlox miners issue mPoints that will become convertible to MetaBlox tokens after the project’s token launch in 2024.
You can access Metablox’s decentralized WiFi network from millions of locations worldwide by downloading a DID on the MetaBlox app. There you can access a hotspot map showing OpenRoaming locations near you.
Moreover, anyone can earn ongoing MetaBlox points (token credits) by hosting a MetaBlox miner, which is much more energy-efficient than conventional crypto miners. These special WiFi-oriented blockchain nodes produce points in proportion to the amount of DID verifications they carry out. At the same time, anyone can also earn mPoints by adding their existing WiFi network to MetaBlox.
As indicated in the flywheel below, MetaBlox’s DePIN model relies on network usage for profits, which encourages further investment in the network and therefore improved services, which facilitates another increase in usage, which starts this cycle over again.
At the same time, this inner incentive cycle is sustained by the outer cycle in the flywheel, which shows how new users are initially attracted to the network by WiFi services and Web3 community engagement.
Thanks to MetaBlox’s implementation of OpenRoaming, reconnections to the network are automatic after initial connection via passpoint screen. This means users never have to enter login data when switching nodes, enabling continuous connectivity.
MetaBlox’s WiFi network is also integrated with the Wireless Broadband Alliance’s own OpenRoaming network of over a million nodes, all of which users have (decentralized) access to through the MetaBlox app.
Despite WiFi logins being conducted on the blockchain, MetaBlox’s authentication protocol protects users’ privacy by anonymizing their on-chain identities. So even though MetaBlox’s web credential verifications are recorded on the blockchain, these transactions are not traceable to particular users.
Sensor Networks
Sensor networks collect various data from physical sources, and for various purposes including scientific research, product development, or simply to record for the public good. For instance, data on air quality, traffic, and weather conditions can be collected and uploaded by a network providing public service information.
The nodes on sensor DePINs can be any device which collects or processes helpful data from physical sources such as machinery.
Sensor networks are deployed by individuals who purchase or provide their own sensors or computers for collecting and/or processing on-chain data. In return for their investment in the network, node operators earn tokens in proportion with the amount of data they collect or process.
DIMO Network
DIMO is a decentralized physical infrastructure network consisting of nodes in vehicles, which aim to gather telemetry data.
DIMO uses decentralized identity and authentication protocols to secure and aggregate this data. Vehicles equipped with the necessary hardware and software can function as nodes in the DIMO network, and provide telemetry data such as vehicle speed, location, and fuel consumption to the network.
Auto manufacturers purchase this data, which they use for various applications including research into vehicle diagnostics, predictive maintenance techniques, and route optimization.
Vehicle owners who contribute their sensor data earn DIMO tokens.
Server Networks
In server DePINs, participants are incentivized with tokens to contribute computing resources, like storage or processing power, to the network, which thereby provides a decentralized marketplace for computing resources.
For instance, individuals can use these networks to store their data in a decentralized manner, with the data being held across multiple nodes in the network. This storage model provides a more secure solution compared to central servers, as hackers would need to infiltrate each node to steal data from a server DePIN.
Nodes in these networks can be personal computers as well as mobile devices with wireless network connectivity.
Deeper Network
Deeper Network provides decentralized, internet-based computing services such as content delivery and domain name resolution, which are available through the network’s ecosystem of dApps.The network uses a peer-to-peer blockchain architecture to aggregate these resources and provide decentralized data management services.
Deeper Network also implements a proof-of-reliability consensus mechanism in its mining protocol.This mechanism allows for token yields to be proportional to node speed and reliability, incentivizing contributors to provide high-quality computing resources.
Deeper nodes can be any device which contributes these resources to the network, such as storage and bandwidth. Many contributors use their personal computers as nodes in Deeper Network.
In order to function as a node, a personal computer needs to meet Deeper’s minimum hardware and software requirements, and must be running the network’s proprietary software.
Nodes which contribute their computing resources receive DPR tokens that can be exchanged for fiat or other cryptocurrencies on DeFi platforms.
Energy Networks
Energy DepINs incentivize individuals to contribute energy resources to the network. In these networks, participants can earn tokens by producing or consuming energy.In these networks, nodes, also known as ‘producers’, can earn tokens for producing energy and making it available to the network. Consumers can then access this energy and pay for it with the network’s tokens, which they can purchase on exchanges or earn by themselves contributing resources.
The network uses blockchain smart contracts to automate transaction processing so that no intermediary is involved in the sale of energy.This creates a decentralized energy market that allows producers and consumers to interact directly, bypassing traditional centralized energy companies and intermediaries.
The use of tokens in energy networks can also help create a more efficient and sustainable energy system by incentivizing participants (through extra tokens or other rewards) to produce or consume energy in a more efficient and environmentally friendly way. Through this strategy, energy DePIN networks can also encourage the integration of renewable energy sources into energy grids.
Arkreen Network
Arkreen is a decentralized energy trading network that creates a transparent and trustless energy market. The network allows participants to trade energy among themselves and incentivizes them with Arkreen tokens for producing or consuming energy. Participants can also purchase energy services with these tokens.
Arkreen’s decentralized architecture provides a more transparent energy trading solution than centralized networks, as all transactions are recorded on an auditable blockchain ledger.
DePINs and Location-Dependency
Some Web3 observers consider only infrastructure networks whose nodes are location-dependent to qualify as DePINs.
For instance, traditional blockchain networks used to support crypto transactions consist of nodes whose locations do not affect these services. Wireless network DePIN nodes, by contrast, must be geographically distributed to provide effective WiFi, bluetooth, LoRA, or 5G coverage.
This stricter definition of DePINs emphasizes the location-dependent nature of certain network services like mobile internet browsing. On the other hand, this criteria rules out decentralized server networks from being DePINs, even though nodes are token-incentivized and provide services with existing demand that are not limited to crypto transactions.
In Conclusion
DePINs offer a new technique for delivering essential services such as energy supplies, wireless network coverage, and computation. By providing these services using smart contracts and token incentives, DePINs aim to create more equitable infrastructure service networks that are less reliant on centralized intermediaries.
From energy networks such as Arkreen to sensor networks like DIMO, DePINs are demonstrating the potential of decentralized, blockchain-based technology to transform traditional physical infrastructure and computing services, bringing Web3 into the real world.
Explore Web3’s native WiFi network further on Metablox’s website and social media channels!
