Will 2024 be a big year for DePIN?

Written by: MIIX

If you ask what is the biggest surprise in the crypto world in 2023? The answer must be ETF, Inscription and DePIN. Among them, DePIN is a new bud on an old tree. Helium, which was established in 2021, has created the biggest surprise so far.

1. DePIN track is spreading rapidly

DePIN covers a wide range of fields, including server networks, wireless networks, sensor networks, and energy networks. According to the cryptographic research organization Messari, the overall industry scale of DePIN is currently about 2.2 trillion US dollars, and is expected to grow to 3.5 trillion US dollars by 2028.

As the topics of Mobile and Honey swept the entire network, the old projects of Fil and Storj also returned to the field of vision. The popularity of the DePIN track has a tendency to spread widely. In the DePIN growth ranking, MOBILE, IOT and HNT have always performed well. Streamer Network's DATA TokenIt also performed outstandingly, with the highest increase in 7 days exceeding 215%. This seems to tell us that DePIN has become the hottest track at the moment and will occupy an extremely important position in the new cycle.

2. Solana and DePIN are heading in both directions

The DePIN ecosystem on Solana is second only to Ethereum in market value, reaching $2.7 billion, just one step away from Ethereum’s $3 billion. In the past year, both Solana and DePIN have shown significant growth, allowing us to witness the success of Solana. BlockchainThe synergy created by combining with the DePIN protocol.

Helium Bundles Solana Narrative

In September 2022, Helium developer Nova Labs announced that it had signed a mobile virtual network operator (MVNO) agreement with telecom giant T-Mobile to launch commercial mobile smartphone services under the Helium Mobile brand in the first quarter of 2023.

In November 2022, Nova Labs announced that it would provide Solana Labs’ new Saga phone (Saga phone is Solana’s flagship Android device, similar to Solana BlockchainTightly integrated) users are provided with SIM cards and free trials.

In early 2023, Helium successfully completed its migration to Solana, proving the feasibility of building DePIN business on Solana and triggering growth of the entire DePIN sector.

Under the dual superposition of Solana empowerment and DePIN narrative, the price of $MOBILE has been rising all the way, and achieved a daily increase of 110% in December, leading the DePIN track-related generations in a single day, and comprehensively driving and contributing to the growth in popularity of the DePIN track.

Solana Ecosystem Promotes DePIN

The focus of the Solana ecosystem is mainly on DeFi, Memecoin and DePIN. Kuleen Nimkar, head of DePIN at the Solana Foundation, once pointed out in an interview with The Block: "DePIN projects on Solana (including Helium, Render, Hivemapper, etc.) demonstrate the potential of decentralized physical infrastructure networks to take the gig economy to a new level. At the same time, Helium Xiaobai NavigationAs the leading DePIN project in the Solana ecosystem, it is also one of Solana's core strategic focuses in 2024."

Kuleen believes that DePIN network contributors can earn substantial income by supporting the network early on.TokenIt will then appreciate as the network grows: "This never happened in the web2 gig economy, and early Uber drivers didn't see the huge benefits of supporting Uber before it became a giant."

可见，Solana 也希望能和 DePIN 进行更多合作，形成类似 DeFi 和以太坊，铭文和比特币一样的强绑定关系，构筑自身的独特生态系统。伴随着 Solana 系的 DePIN 赛道代币的普涨行情，恰好帮我们佐证了 Solana 对 DePIN 的重视，以及由此带来的正向市场效应。

3. Advantages and obstacles coexist for a long time

Resource sharing and efficient utilization

The most essential core of DePIN is resource integration, that is, using tokens to incentivize users to share resources so that resources can flow efficiently to the hands of the demanders. Therefore, the characteristics of DePIN are also clear at a glance:

• Crowdsourced hardware — more cost-effective

• Collective Ownership — Aligning interests with and rewarding users

• Democratized access — an open and unrestricted network

• Decentralized — Permissionless and Censorship Resistant

DePIN and traditional infrastructure are just like DeFi and CeFi. It weakens the role of middlemen to some extent, making resources flow more smoothly between suppliers and demanders.

The flywheel effect of the DePIN model

As a result of using the token, DePIN projects can benefit from a positive flywheel effect, where increased usage (demand) increases the token price through burns or buybacks, which then provides additional incentives for contributors to continue building the network as the dollar value of the tokens they earn increases.

As the network grows, investors become more interested and start supporting the project with funds. If a project is open source or provides contributor/user data to the public, developers can build dapps on top of the data, creating additional value in the ecosystem, thereby attracting more users and contributors. The figure below shows an example of how this flywheel works in today's market.

Technology and models are not mature enough

What DePIN wants to achieve is the democratization of infrastructure. By allowing individuals and small businesses to participate in the deployment and operation of infrastructure networks, DePIN can provide more equitable access to basic services and resources. Therefore, DePIN is an imaginative track that can both "put old wine in new bottles" and completely break through industry boundaries.

The core of DePIN is a complete infrastructure system built by the token incentive system, but it is currently more like a miner model similar to Filecoin, with too many rewards in the early stage and the inability to maintain the scale effect in the later stage. There is no token economic model that can support the growth and maturity of the DePIN ecosystem. In addition, most DePIN projects focus on how to motivate participants to purchase hardware, and only a few projects try to solve the financialization model that drives demand.

Whether from the technical level, cost, or optimization of financial models, DePIN still has a long way to go. The author believes that the maturity of the DePIN track requires at least 10 times of growth space to get rid of the short-term popularity and enter the path of long-term development.

4. Summary

The number of DePIN projects is increasing day by day, especially the recent hot market trend, which shows the market's recognition of this track. However, the DePIN track is relatively new, and the absolute growth value is not very high, resulting in web3 It is relatively niche in the market and needs more attention and resources, including more investors starting to pay attention to this direction, so that moreCommunityDevelopers are willing to join this track and develop in-depth applications together.

In 2024, with the rotation of a new round of market cycles, DePIN will inevitably participate in it, but whether it will be a big year for DePIN is still unknown. Once an excellent or even revolutionary financial model appears in the DePIN field, all of this will no longer be a problem, and the DePIN flywheel will spontaneously drive the solution of all technical and cost problems.

But in the long run, the increasing maturity of DePIN will inevitably require long-term investment and operational development from the market, institutions and developers before it can gradually penetrate into people's lives and applications, and go from complementing to parallel and then replacing the existing infrastructure.

The article comes from the Internet:Will 2024 be a big year for DePIN?

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