What Is A Decentralized Physical Infrastructure Network?
DePIN is any blockchain protocol or decentralized application (dApp) incentivizing communities to crowdsource and build real-world infrastructures in a bottom-up approach. The physical infrastructures can range from wireless and sensor networks to energy networks and cloud storage.
Deploying and managing physical infrastructures, such as power grids and mobility networks, often demands substantial capital. The high capital requirement and complex logistics have left this area predominantly undertaken by major corporations. The lack of competitiveness has led to complete monopoly over end-user services and pricing. Blockchain technology and pervasive network connectivity have made it possible to implement physical infrastructures in an open and decentralized way.
Decentralized Physical Infrastructure Network comprises physical resource networks (PRNs) and digital resource networks (DRNs).
- PRN: encourages contributors to implement or allocate site-based hardware that will facilitate the provision of non-fungible goods and services– such as connectivity, mobility, and energy– in the real world.
- DRN: incentivizes individuals to allocate or deploy hardware to enable the provision of versatile, fungible virtual resources, such as storage, memory, computation, and bandwidth.
DePIN is just one of the many terms used to define such infrastructure networks. Some refer to them as Proof of Physical Work (PoPw), EdgeFi, or Token Incentivized Physical Networks (TIPIN).
How Does DePIN Work?
In particular, these networks are open source, meaning that both individual contributors and companies can participate in their development. The contributors receive token incentives as compensation, in the form of token rewards, a stake in the network, and a share of the goods and services the network provides. The token rewards are allotted based on geography, network progress, contributor quality, and contributor productivity.
Technically, high productivity and quality contributions attract better rewards than others. Some locations are also perceived as more valuable, hence more rewards. Consequently, a more beneficial network typically generates more incentive for the contributors.
Some examples of DePIN crypto projects include:
- Storj: Storj provides decentralized cloud storage solutions to users in a decentralized way, allowing users to transfer large data volumes over a network at a lower fee compared to conventional cloud service providers.
- React Protocol: React protocol is an energy network that rewards users for contributing to building a decentralized and environment-friendly power grid system. It aims to create a stable energy by incentivizing users to connect their batteries and share surplus energy.