DePIN #Crypto
The ability for individuals to generate passive income from the tokenization of the real-world data generated by their devices and apps presents an enormous opportunity.
By: Raullen Chai • 18 hours ago
As markets thaw and more institutional money pours into Web3, there is one facet of the industry that is particularly well-positioned to take center stage: Decentralized Physical Infrastructure Networks (DePIN).
DePIN captures the value of real-world data and resources generated from physical devices and verifies it for use. Demand for enterprise use of verified data is massive, but that's only one side of the DePIN equation (the demand side). The supply side includes both institutions, enterprises, and applications as well as individuals—retail users with apps and devices generating data and contributing physical resources every day, minute, and millisecond.
The ability for individuals to generate passive income from the tokenization of the real-world data generated by their devices and apps is an equally enormous opportunity. Combine the supply-side and demand-side of real-world data verified by blockchain, and you unlock a $2.2 trillion market that incorporates blockchain, AI, and real-world value in Web3.
DePIN, still a relatively unknown term, is poised to become bigger than DeFi for three main reasons:
Explosive growth of DePIN projects
Massive untapped potential for new applications
And a major influx of VC investment
Success of Existing DePIN projects
There are multiple categories of DePIN projects that have laid the groundwork for the sector's coming exponential growth. These include server networks, wireless networks, sensor networks, and energy networks. Server network projects like Filecoin and Arweave decentralize computer storage, enabling users with excess storage to monetize that resource and make it available to those who need it. Wireless network projects like Helium perform a similar service but for sharing 5G/Lorawan via hotspots.
Sensor networks like Hivemapper and DIMO reward drivers with attached devices for sharing collected data, which is then used to create maps or data applications, providing Uber and Lyft drivers with a novel form of passive income. Energy networks like React or Powerpod enable the sharing of surplus battery or renewable energy power, respectively.
Additionally, the rise of AI startups has created an enormous demand for computing power for data processing, which cannot be sufficiently met by centralized computing and cloud infrastructure providers. For example, DePINs allow node operators to monetize idle GPU compute power, and in return, individuals utilizing these resources no longer need to rely on cloud networks. These decentralized AI and compute platforms like Render, Theta and Bitensor offer publicly owned and community-incentivised networks with a clear differentiator from centralized providers.
As of Q4 2022, Amazon Web Services (AWS) serviced 32% of cloud infrastructure needs. Microsoft, Alibaba, Google Cloud, and IBM Cloud comprised the other major providers. These centralized providers have the ability to terminate service at any time and for any reason. Decentralized GPU and cloud providers do not have that drawback, increasing their attraction.
Additionally, the entire Bitcoin industry, which is leading the way into another bull cycle with the Halving and likely spot ETF approvals coming in 2024, is part of DePIN, given the need for physical hardware devices for Proof-of-Work mining. The Bitcoin network itself stands as the largest decentralized machine network for digital money, boasting the most powerful and publicly verifiable consensus mechanism.
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