Many people aren’t familiar with the Decentralized Physical Infrastructure network narrative, which has been around since the last crypto run. On this page, we help you understand what it exactly means.
In order to understand, we must understand that in today’s connected world, having, for example, constant access to the internet is a necessity, and for some even a need to exist. Whether for work, leisure, or staying in touch with loved ones, we all need data, need to be connected, and we all need it now.
What if there was a way to turn your data access into an opportunity to earn passive income? What if you could contribute your data to a network and get paid proportionally to your contribution level? Well, this is a prime example of a decentralized physical network…
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What is decentralized physical infrastructure - DePIN?
Decentralized Physical Infrastructure Network(DePin) in crypto refers to using blockchain tech and cryptocurrencies to create and control decentralized networks for physical infrastructure projects in a distributed way.
A system where infrastructure and control is spread among multiple nodes or participants rather than being centralized in one place.
DePin is about making tangible value through decentralized networks. It uses token incentives to motivate individuals to contribute real goods and services. These contributions are done through devices, robots, and machines, and lets participants earn real rewards by integrating into a decentralized service network.
Some important features of this narrative include:
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- Supply chain management: Where blockchain is used to create transparent and immutable records of supply chain transactions to ensure integrity of materials and processes in projects.
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- Asset tracking: Where tokens can represent physical assets, such as construction equipment or building materials, that allows for more efficient tracking and management.
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- Funding and investment: The tokenization of infrastructure projects that enable fractional ownership and investment in these opens up new funding opportunities and increasing access to capital worldwide.
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- Incentivization: Most importantly, the crypto-economic incentives that can be found almost everywhere are designed to encourage desired behaviors and outcomes in infrastructure projects, such as timely completion or sustainability.
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You can see a system that allows more than enough storage providers and existing companies to compete, and maybe drive down the prices significantly, than the centralized solutions we all need today. Think of the same revolutionary features Uber had for the taxi industry or Airbnb for the hotel business.
What Makes Decentralized Networks So Capital Efficient?
Decentralized networks introduce a model where infrastructure is built and maintained through the collective effort of individual contributors rather than centralized organizations. This method drastically reduces the financial burden typically associated with large-scale deployments.
For instance, a blockchain project has installed over 9,000 satellite mining stations at a fraction of the traditional cost, achieving what would usually amount to a billion dollars in capital expenditure with only $7 million in venture capital.
How Are Contributors Rewarded in Decentralized Networks?
In DePins, contributors who set up infrastructure are rewarded, providing them a direct financial incentive to participate. This reward system fuels the growth of the network but also ensures that the contributors receive a share of the economic benefits their efforts help to generate.
Also the decentralization of asset ownership through tokenization means that profits from these assets can be shared more broadly. Instead of profits accruing only to large corporate entities, they can be distributed among a global network of token holders.
Connection to AI and GPU Shortages Solution
Historically, businesses that relied heavily on GPUs faced significant challenges due to GPU shortages. Around 2015 and 2016, the demand for data center GPUs surged and companies were often forced to purchase GPUs at on-demand prices from providers like AWS, which were substantially higher than spot instance pricing.
So the shift towards using consumer GPUs for running AI applications came by no surprise and with an annual growth rate of 16% in internet usage, the demand for cloud computing infrastructure is soaring.
The solution is the “Internet of GPUs.” A concept that envisions a global network where every GPU, whether in large data centers or smaller, private setups, functions as part of a collective “hive mind.” Learn more about the AI narrative here.
What Makes the DePin Narrative Interesting?
The current state of smartphone technology is ripe for DePin applications. Compared to just a few years ago, today’s smartphones are more powerful and come equipped with advanced sensors such as microphones, cameras, gyroscopes, and GPS. These features make it possible to efficiently collect and label data, crucial for applications that rely on real-time, geolocated information.
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