Outlook on Decentralized Wireless Network: Helium Network
Disclaimer: Information is valid as of 3rd Jan 2023 and none of this information should be considered financial advice
Background
Before understanding the Helium Network, I think it is important to recognize the category that it belongs to, Decentralized Infrastructure, and the important role that Decentralized Infrastructure plays in driving mainstream adoption of web3 projects. Decentralized Infrastructure started gaining traction as people started to demand more control over personal information and for a more open internet. I believe that crypto infrastructure will grow exponentially where governments have a tight grip over freedom of speech. According to Messari’s 2023 Outlook Report, legacy cloud infrastructure in web2 has a $5 trillion market cap relative to $3 billion market cap for crypto players. This presents a huge growth opportunity for the sector. Decentralized Infrastructure networks can be broken down into 3 main categories namely: Wireless Networks, Sensor Networks and Computer & Storage.
Wireless Network: Helium
Helium is a blockchain-powered network provider supported by its extensive network of hotspot providers. It has since grown in size to close to 981476 hotspots in 76,545 cities across 188 different countries. Helium has completed its most recent Series D funding at a post money valuation of $1.2B.
Current Problem
Many areas still do not have internet connectivity (Figure 1) especially rural and mountainous regions and developing it from scratch would require a high upfront capital. In other instances, Big Internet Service Providers dominate and consumers are subjected to the monopolist pricing power.
Solution — Helium
At its core, Helium is a network of Hotspots that are linked via a blockchain. Helium hotspots are able to provide internet that is 200 times further than WiFi and with as few as 50 hotspots in some instances, it is able to provide internet connection for the entire city. Being decentralized with a global presence also means that it is secure and also fully encrypted, ensuring information transferred is fully private. Hotspots providers are rewarded with the Helium native token, HNT. Periodically, providers will be randomly selected to verify their coverage provision status and which will also earn them HNT rewards.
Use Cases of Helium
● Sensgreen, an IoT provider, has partnered with Helium to provide cost efficient smart city solutions such as energy, air quality, door and occupancy monitoring for healthier, more energy efficient and sustainable buildings.
● Atom services has also developed its own Helium-compatible IoT devices such as Animal Movement Tracker that leverages on the Helium network to send early warning signals on animal theft or animal attacks.
● M3, an IoT agricultural drone solutions provider, partnered with Helium network for their digital services both internally and for their customers.
● T-Mobile has also entered into a 5-year agreement to provide 5G services to Helium mobile subscribers in the US.
Competitive Advantages
The table below shows how Helium competes against other network providers for market share and remains appealing to many users.
Potential challenges
As Helium uses a burn and mint token mechanism for its network usage, users need to first get their hands on the native token HNT before converting them into data credits that are used for accessing the network. This can prove to be a challenge especially in regions where there is a tight crackdown on crypto and a large population who are uneducated. To further scale, I believe that the use of stablecoins to access the Helium network would make it more accessible and appealing to the masses. It also has to address the problem of bad actors who engage in malicious activity to game Proof of Coverage rewards without providing any real value to network coverage.
Outlook
Inking a deal with T-Mobile would make Helium network services more affordable and appealing due to purchase at a wholesale rate. This is a landmark deal that would drive greater adoption of the Helium network in the US. With Latin America 5G subscriptions set to grow at a CAGR of 86.03% from 2022 to 2027(Figure 2), Helium with a presence there can also be expected to capture a large market share from incumbents given its strong cost advantage if it addresses the challenges stated above.
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