DePINs allow machines and devices to operate autonomously, and earn and manage payments without humans overseeing every transaction. It acts as a coordination layer combining physical hardware with crypto rails.
Think of a drone that charges itself and pays for the power it uses on its own.
Think of IoT devices sending the data they collect to a network, and using the insights generated to deliver more efficient operations.
Think of a bunch of EV chargers co-owned by locals, and used independently by vehicle owners who are part of the network.
That’s DePIN at work. And it is redefining how businesses have been operating globally.
From centralised, closed business models where one entity produces and multiple participants consume, DEPIN’s decentralised and reward-based tokenised infrastructure shifts the onus of production and management onto the community.
Let’s discuss how DePIN technology is setting up the foundation for the ‘Machine Economy’ in the real world.
DePINs are decentralised networks that combine blockchain technology and physical infrastructure to create incentivised business models. Moving infrastructure management on-chain enables individuals to directly contribute, build, and manage real-world infrastructure, earning rewards in return. These rewards are in the form of tokens.
DePIN projects are proving to be the most significant real-world applications of blockchain. DePINs include decentralised infrastructure networks, such as wireless networks, energy grids, and storage networks. Once ‘DePIN’ned, these networks operate without any central control or intermediaries. And unlike traditional models like AWS and telecom networks, which are heavy on monopolisation, siloes, and privatisation.
DePINs are open networks living on collective effort with no watertight demarcation between providers and buyers. For instance, a DePIN with an IoT blockchain integration, such as Helium, would allow you to contribute to the wireless network or use the wireless services as a consumer.
Some of the hottest DePIN projects grabbing eyeballs include Helium, Filecoin, Peaq Network, Render, Dfinity, Akash Network, and others.
Top DePIN Projects by Social Activity
Why Does It Work?
DePIN projects have a tokenomics-driven incentive structure. These token incentives help reward the community, while the network becomes user-owned.
The tokenomics of a project refer to how a token is distributed, managed, and used
within an ecosystem. In DePINs, tokenomics determines:
How participation is incentivised
The quantum of rewards
Distribution and allocation of tokens
Stages in token allocation
Platform and gas fees
Use cases of the native token
Long-term vision of the project
A fair and equitable distribution of tokens ensures that early adopters trickle in, active participation occurs, and users grow into a loyal community. The major stages in token allocation for any project include private sale, public sale, airdrops, and rewards.
The token allocation schedule facilitates ongoing development efforts, innovation, and partnerships with other ecosystem players.
Incentivisation also gives the users control over the quality they get. That’s because the more dense and better quality pictures are, the better the relocalisation and the training capability of this data will be.
In the case of DePIN, since protocols would be buying data from the people who collect it, they can demand a minimum quality. There’s consistency in the quality of data that is very difficult to achieve if you don’t have a DePIN incentivisation system, so this is very, very powerful which is difficult to achieve in Web3.
The ‘flywheel effect’ helps run the circular DePIN economy. In the traditional business model, a handful invest and seek profits. However, in a DePIN, the network becomes a self-reinforcing ecosystem, led by its participants, where growth and improvement occur from within. Here’s how the flywheel effect presents itself in a Web3 infrastructure like Helium:
→ The users who contribute to the network by installing hotspot devices and expanding connectivity earn rewards
→ This incentivisation encourages users to connect more hotspot devices, thereby increasing the network reach and expansion
→ When participants earn predictable rewards in the form of Helium tokens, they gain a sense of ownership and collective control
→ Network participation gets directly connected to earning rewards, which acts on the biological level.
→ Unexpected bonuses and rewards hit the dopamine centre of the brain, which pushes the flywheel effect further
→ Since the network becomes a collective effort, growth happens, which in turn
That’s how a DePIN network becomes decentralised, scalable with demand, and utilises capital efficiently.
Helium Mobile 2.0
Helium Mobile 2.0 is a project within the Helium Network, one of the earliest decentralised mobile networks, which offered distributed connectivity.
Helium Mobile is a decentralised wireless infrastructure made up of 5G hotspots that offload additional traffic from traditional mobile networks. Helium Mobile offers a hybrid network that utilises traditional mobile networks, such as T-Mobile, and a community-owned mobile network.
Users who contribute to the decentralised 5G network coverage earn rewards through Cloud Points. Subscribers from traditional carriers can access the network at any time. These Cloud Points can be used to offset costs on phone plans.
People who want low-cost mobile plans and earn rewards for phone usage can contribute to the network by setting up Helium hotspots.
Recently, Helium and Movistar, a decentralised Telecom network, conducted a pilot test, offloading network load onto the Helium Network with real customers in Mexico and Oaxaca. Soon, the service would be rolled out to 2 million customers.
Filecoin storage solution is a decentralised cloud storage network that allows users to rent storage space from its decentralised cloud network. Conversely, those having additional storage space can become Filecoin miners and earn token incentives as rewards for contributing storage space. It provides an alternative solution to traditional cloud storage providers like AWS and Google Cloud.
Its network architecture includes storage providers or Filecoin miners earning FIL tokens for running validator nodes and providing storage space to users. The mines earn FIL tokens for providing their services while the users pay in FIL tokens for using the storage services.
Filecoin is connected to the Inter-Planetary File System (IPFS), a decentralised system designed for storing data. It uses multiple algorithms for consensus–Expected Consensus (EC), Proof of Storage (PoSt), and Proof of Replication (PoRep). It has integrated with Avalanche and other protocols, making it more accessible and interoperable, readying it for enterprise use cases.
Messari’s latest report projects the DePIN market forecast at $3.5 trillion by 2028. As per the report, 13 million devices are now a part of various DePIN networks active in the decentralised compute space, energy grids, cloud storage, IoT, wireless networks, and other decentralised services.
Blockchains such as Solana and Peaq lead in blockchain-powered infra, while Base focuses on consumer applications and marketplaces. DePIN projects received total funding of $350 million across Pre-seed, Seed, and Series A rounds.
Helium, Akash, Render, Filecoin, and XNET remain the most promising projects and deserve a mention in the upcoming unicorns list.
Q1 2025 DePIN Sector Highlights. Source: Messari
Projects launched in the last 12 months have an average fully diluted valuation of $760 million, 2x the FDV of older projects. As of June 2024, DePIN projects collectively generated $400,000 weekly in on-chain revenue. Decentralised computing remains the highest revenue generator in the DePIN sector. XNET, Hivemapper, and Aethir are notable projects that leverage lessons from past projects in terms of incentives and sustainability.
Recently, the US published a Whitehouse Digital Assets Report which said, "The SEC should consider... token distributions, including as rewards for participation in decentralised physical infrastructure (DePIN) providers…”
DePINs are now a part of the Federal policy talks, and as decentralised physical networks, they can power community infrastructure and data monetisation in blockchain and real-world use cases.
Source: IoTeX
Challenges
Regulatory hurdles are the biggest challenge decentralised infrastructure projects face, given the criticality of their role. These projects involve significant infrastructure and operate across the border. For instance, projects operating in the energy sector manage energy grids, IoT devices, and telecommunication networks.
Any kind of security breach or smart contract vulnerability can trigger geopolitical tensions and data privacy risks. Greay areas due to cross-border interaction slow down adoption and investment. Regulatory frameworks need to consider the unique nature of decentralised infrastructure and opt for global consensus on a universal set of regulations.
Blockchains are still learning to scale and improve speed, which can create mobile UX and app performance issues. Increased transaction load and limited interoperability also act as hurdles to mass adoption.
A flawed and unsustainable tokenomics model hampers the project's long-term sustainability, leads to hyperinflation issues, and dilutes ownership, thereby impacting trust in the project. And lastly, DePINs have to face competition from established traditional players, who are not only faster but also more user-friendly and simple to use.
Where DePIN Is Going
DePIN is probably the only tech in Web3 that’s solving real-world use cases. While decentralised energy grids, solar power, wireless networks, edge computing, and cloud storage have been time-tested use cases for which DePIN is known, some far more advanced uses of the technology are emerging.
Among the many, some of the most interesting use cases include smart cities, virtual reality and metaverse, healthcare, education, robotics, and EVs, among others. Spatial data collection via DePIN networks is more transparent, consistent and higher-quality.
Decentralised spatial data collection will play a key role in the development of AI and robotics, as these technologies will ultimately rely on the data collected from the sovereign infrastructure of DePINs.
AI, gaming, and edge computing are some other areas where DePIN is getting explored as a vertical for enterprise-grade use cases. The momentum is already there, and teams are building at the edge.
What remains to be seen is how long DePINs will take to move the world on-chain!
FAQs
What are the biggest challenges DePIN projects are dealing with?
DePIN networks are complex to set up and maintain, due to the integration and compatibility issues between physical devices and decentralised infrastructure. Besides, regulatory hurdles and the tech still in its nascency are other big challenges for the DePIN infrastructure.
How do people earn rewards by taking part in DePIN projects?
People can participate in a DePIN network by contributing resources, such as wireless hotspots, energy, storage, etc.. and earn rewards in return.
How is DePIN different from regular infrastructure systems?
DePIN decentralises the traditional business model by allowing the community to take over production and management. By incentivising participation via crypto incentives, it creates a flywheel effect where growth attracts more growth, users bring more users, and resources are collectively owned and consumed.
