How DePIN is Transforming Scalable Cloud Infrastructure
The blockchain industry is filled with countless buzzwords, from Web3 to DeFI, DAOs, and numerous other acronyms. Some of these catchphrases become the focal point of innovation, while others simply fade away.
One such term that emerged last year is DePIN, which refers to a distributed system relying on global collaboration to provide physical infrastructure for decentralized networks. Beyond being a mere buzzword, DePIN offers significant potential to address cloud challenges and unlock new scalability opportunities.
What Is DePIN?
Decentralized Physical Infrastructure Networks (DPINs) encompass initiatives that utilize blockchain technology, governance mechanisms, and a token-based incentive system to drive independent entities to deploy physical hardware and devices for creating infrastructural networks.
These networks disrupt services traditionally provided by centralized companies through a peer-to-peer supply mechanism supported by blockchain technology and economies of scale. While DePiN is a relatively new concept, its operational framework requires scrutiny. Projects like Filecoin have long advocated for a similar approach. Therefore, it’s crucial to understand how DePIN will directly impact the technology and business landscape of cloud computing.
Decentralized Market Places
While the global computing marketplace is projected to reach about 2,321.1 billion by 2032, only eight centralized providers dominate 80% of it. DePIN introduces an exciting alternative: decentralized marketplaces.
These marketplaces empower individuals, server farms, or institutions with surplus computing resources to offer them to other users. Unlike centralized providers, they bypass complex pricing models to provide compute resources to meet users’ dynamic needs without requiring long-term commitment.
For instance, Spheron Network enables providers and users to engage in its decentralized marketplace for computing power. Users can leverage the marketplace to specify computing requirements and find suitable providers that match their needs. Decentralized Marketplaces disrupt the traditional centralized providers and introduce flexibility to “compute-shopping.”
Reduced Price Monopoly
According to Radixweb, 80% of companies set aside more than $1.2 million annually to service cloud computing needs. With a few centralized tech behemoths controlling the majority of cloud infrastructure, the outcome often leads to a monopoly on pricing.
In the face of sudden price hikes, companies often find themselves with limited options and may suffer reduced profitability as escalating costs eat into their budgets, increasing their overhead. This can stifle growth and impede innovation, particularly for companies in the AI/ML sector where high-performance computing power is essential.
DePIN levels the playing field by dismantling price monopolies, enabling companies to tap into computing resources from various decentralized providers. This fosters competitive pricing and drives innovation.
What public cloud providers does most of the organization use?
Reduced Entry Barriers
The demands of establishing a cloud computing business are enormous, encompassing construction costs, hardware/software infrastructure requirements, employees’ salaries, and more, making it a highly capital-intensive endeavor. Typically, only a few large companies have the necessary capital and extensive resources to offer such services. The significant start-up and running costs create a formidable entry barrier, making it challenging for new players to enter and succeed in the cloud market.
Due to the fact that DePIN projects do not require the setup of these infrastructures, they can swiftly provide computing resources without incurring as much overhead costs. Consequently, DePIN reduces the entry barrier into the cloud computing business and allows decentralized providers to offer their services on a more affordable pricing model.
Anti-Cloud Lock-In
Cloud lock-in, also known as vendor lock-in, occurs when companies are unable to transition their data, storage, services, or computing needs to another vendor due to technical difficulties, legal restraints, or highly inflated fees.
When companies develop their products or services for a specific vendor platform, migrating to other platforms in the case of an unfavorable experience, such as downtimes, increased pricing, or better alternatives, can be a significant challenge. Some centralized vendors can also lock in companies by limiting the compatibility of their products and services with other vendors.
Cloud lock-in poses a significant challenge to adopting cloud computing solutions, with 47% of companies indicating it was their top cloud implementation problem. DePIN effectively addresses this issue by advocating for a multi-cloud or hybrid cloud strategy. Companies should scale their products using multiple decentralized cloud providers for all computing needs, rather than relying on a single centralized provider.
Cost-Effectiveness
The Flexera 2022 “State of the Cloud” report reveals a staggering statistic: companies are squandering more than 32% of their cloud budget. A significant 66% of companies attribute this wastage to idle or underused resources. However, there is a solution. The DePIN approach empowers decentralized providers to precisely estimate and match GPU supply and demand, effectively minimizing cloud waste and slashing companies’ cloud expenditures.
Conclusion
DePIN presents a groundbreaking solution model that addresses numerous challenges in the cloud industry. As it continues to mature and evolve, we anticipate a widespread implementation of the myriad opportunities it offers to the cloud computing sector. Could DePIN potentially overthrow centralized players to become the unrivaled leader of the cloud? Only time will tell. The blockchain revolution is poised for even greater advancements in the future.
Originally published at https://blog.spheron.network on May 18, 2024.
