The power of decentralization and its benefits are evident in various domains such as finance, technology, art, and beyond. However, the principles of Web3 extend beyond our digital sphere.
DePINs represent one of crypto's most thrilling areas, where blockchain technology and decentralized principles are used in physical infrastructure.
This partnership is already causing ripples in sectors like smart cities, energy, and supply chain management, with more expected as this innovative concept continues to develop in the coming years.
<aside> 🔒 KEY TAKEAWAY DePINs stands for Decentralized Physical Infrastructure Networks, which are operated by blockchain protocols. They build, operate, and maintain the physical hardware infrastructure in a secure, transparent, and decentralized manner.
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As a peer-to-peer network satisfying hardware demands through an open and decentralized marketplace, cryptocurrencies lie at the heart of the DePIN community. Token incentives are utilized to attract and reward physical infrastructure operators for joining these networks.
These P2P networks provide infrastructure for various industries such as data storage, wireless connectivity, computing, and more. Crypto investors are also intrigued by DePINs because they have the potential to impact additional sectors like AI, the Internet, energy, and others.
In essence, DePIN is a decentralized application that utilizes tokens to incentivize individuals to crowdsource and develop interconnected real-world physical infrastructure.
Three key elements empower DePINs to operate:
👉 Physical infrastructure refers to various tangible structures or equipment, such as routers, solar panels, or sensors.
👉 Middleware serves as the intermediary component, facilitating and overseeing the connection between the physical infrastructure, encompassing devices like routers and sensors, and the underlying blockchain technology.
👉 Blockchain system that functions as an administrator for received information. Through smart contracts, it ensures that all transactions and data transfers between physical infrastructure and the blockchain are transparent, secure, stored on-chain, and easily traceable. The protocol mechanism outlines the rules and essential features of the DePIN, including security measures, circulation of native crypto tokens, eligibility criteria for service providers, interaction between parties, and other aspects.
According to Messari, DePINs can be divided into 2 groups:
1️⃣ Physical resource networks (PRNs): DePIN protocol that incentivize service providers to deploy location-dependent hardware that supplies physical locations with energy, connectivity and geospatial data use cases.
2️⃣ Digital resource networks (DRNs): DePIN protocol that create location-independent backend fro the cloud and incentivize service providers to supply digital resources like computing, storage and bandwidth.
In the past, various initiatives aimed to decentralize infrastructure by leveraging blockchain technology, which was primarily known for digital currencies.
For instance, Helium, a project initiated in 2019, decentralized the wireless network, earning the title "The People’s Network." Helium enables both individuals and devices to connect to the Internet, rewarding service providers with HNT, its native token.