DePIN: Building a Decentralized Value Network with Dual Curve Overlay

DePIN is gradually realizing large-scale interaction between the physical world and Web3, disrupting traditional infrastructure operation models. By combining sensors, wireless networks, computing resources, and AI with blockchain technology, it uses cryptoeconomic incentives to drive crowdsourced development. Analyzing most DePIN projects reveals an important characteristic in their business models: hardware revenue serves as the primary growth curve, with monetization of data services layered on top, forming a secondary growth curve. This is one of the key factors enabling DePIN to lead growth in the current cycle and demonstrates how DePIN projects create significant wealth effects in the process of building decentralized infrastructure networks, ultimately forming a scalable decentralized value network.

1. Build a Decentralized Internet of Everything

Decentralization physical infrastructure network ( DePIN ) signifies an application scenario filled with imaginative space: the common infrastructure around us, including communication base stations, electric vehicle charging piles, photovoltaic panels, billboards, and the data storage and computing devices behind the operation of the Internet, will no longer be controlled by centralized entities. Instead, they will be divided into equal-sized units, held by individuals or large-scale miners. The same type of physical infrastructure is highly standardized and scalable, forming a carpet-like coverage.

Through decentralization, the layout and utilization of infrastructure can achieve higher efficiency and lower costs, while enhancing the overall system's security and resilience. From energy production to data processing, various facilities have the potential to transition to a decentralized model. The total existing market size of the industries related to DePIN has exceeded $50 trillion. Messari predicts that the potential market size in the DePIN field is approximately $2.2 trillion, expected to reach $3.5 trillion by 2028.

1.1 DePIN Track Division

The DePIN track covers six subfields: computing, AI, wireless communication, sensors, energy, and services. From the perspective of the supply chain, DePIN can be broken down into:

• Upstream: hardware manufacturers and supply-side users acting as "miners".

• Middleware: A blockchain project platform responsible for data validation and token settlement, and an on-chain layer two protocol serving DePIN; as well as modular service components ( used for developing and managing the DePIN network, such as platform interfaces, data analysis, and standardized services ), SDK toolkits developed for DePIN, API interfaces, etc.

• Downstream: Interface and applications of dApp that connect to the demand side.

Except for IoTeX and the former Helium(, the mainnet has migrated to Solana), and most DePIN projects rarely cover every aspect of the business. They usually choose Solana or IoTeX as the token economic settlement layer. AI and cloud computing projects focus more on on-chain settlement and project platform development management, with underlying hardware devices managing idle electronic equipment, such as smartphones or computers equipped with high-performance consumer-grade GPUs through middleware.

1.2 Overview of DePIN Industry Development

According to DePIN Ninja data, the number of DePIN projects that have been launched has reached 1,215, with a total market value of approximately $43 billion. Among them, the total market value of projects that have issued tokens and are listed in the Coingecko DePIN sub-section exceeds $25 billion.

Last October, this number was only 5 billion USD, and it has increased fivefold in less than a year, indicating the rapid growth of the industry. This shows that the market's demand for and recognition of decentralized physical infrastructure networks is continuously increasing. With more projects going live and the expansion of application scenarios, the DePIN industry is expected to become an important field for the integration of blockchain technology and real-world applications.

2. Insights from the DePIN Business Logic

The prototype of DePIN can be traced back to the IoT + Blockchain concept of the last cycle (. Projects like Filecoin and Storj have transformed centralized storage into a decentralized operation model through cryptoeconomic models, and have found practical applications in the Web3 ecosystem, such as on-chain NFT storage and front-end and back-end resource storage for DApps.

The Internet of Things + Blockchain only reflects the characteristics of Decentralization ) "De" (, while DePIN emphasizes the construction of physical infrastructure and the large-scale interconnected network. In DePIN, "PI" represents Physical Infrastructure ), and "N" represents Network (, which is the value network formed after the DePIN hardware reaches a certain coverage scale.

The most typical example is Helium. Established in 2013, Helium did not confirm the use of blockchain as an incentive for decentralized deployment of the Internet of Things until 2018. So far, Helium has almost met all the elements of DePIN: node economy, miner model, value network, crowdsourced incentives, and is a leading project in the field of DeWi) decentralized wireless communication(. In addition, at the end of last year, Helium Mobile launched a $20 communication package service in collaboration with T-Mobile, targeting traditional users. When users transmit data using the Helium network, they not only receive token rewards but also enjoy reliable communication services. At the same time, Helium also helps T-Mobile solve the signal coverage problem in remote areas of the United States, creating a win-win situation for all three parties. Its terminals, catering to a large number of traditional users, are likely to drive the DePIN breakout momentum and accelerate the widespread adoption of blockchain technology and the Web3 network.

Helium and Filecoin both belong to the DePIN category, but the difference between them is that Helium emphasizes hardware more, allowing it to support the growth of second curve data services through hardware income, building an independent ecosystem while reaping Alpha and Beta returns. Despite Helium facing issues such as false advertising last year and problems like the obscure programming language leading to development difficulties, a series of actions at the end of the year have once again opened up Helium's second curve growth; and as the first and most scaled DePIN project to emerge, it undoubtedly brings us some insights into the DePIN ecosystem.

3. The Explosive Growth of DePIN is Based on the Dual Curve Theory

The "Second Curve" is a concept in management and innovation theory, originally proposed by management scholar Charles Handy). It refers to the need for an organization, product, or business to introduce new innovations or changes when it reaches the peak of its traditional growth curve, in order to initiate a new growth curve and avoid stagnation or decline.

From the previous successful experience of DePIN projects, it can be seen that the business logic of DePIN naturally points to hardware sales as the first curve of project development, with the monetization of the data value network layered on top of the first curve, serving as the guiding ideology for the second curve of development.

Product research and development, as well as operational capabilities, are key to ensuring the growth of the first curve; to initiate the growth of the second curve, two capabilities are required: first, the organizational capability of a decentralized system, and second, the service capability on the demand side.

In the context of the DePIN ecosystem, it is necessary for the project team to first ensure the smooth operation of the data value network on the premise of having the ability to organize and undertake a large-scale data transmission hardware network. Only then can the demand side successfully connect, ultimately providing high-quality, standardized data services. This will ultimately achieve a dual exponential business growth, forming a positive cycle within the project ecosystem.

( 3.1 The value of hardware is the first curve of value creation

In the first growth curve, the business will experience rapid growth in the early stage, followed by a gradual peak. The growth momentum of the first curve of the DePIN project comes from the revenue and profits generated by hardware sales.

Traditional infrastructure, especially in areas such as data storage and communication services, has a centralized service provider or entity with a linear business logic: in the early stages of business, investment is needed to build infrastructure, and after the facilities are improved, services are provided to end users )C端(. Therefore, developing such businesses often requires the participation of giant enterprises to bear the high initial costs of operations, including hardware purchases, land leasing, deployment, and hiring maintenance personnel at various stages. According to BCG's deconstruction of the data value network, its traditional IoT operating model has created the data value chain shown in the left diagram, where data is transmitted as a factor of production in an independent and linear manner, and each ecosystem is completely independent.

The DePIN project decentralizes the supply side and adopts a crowdsourcing model to establish the hardware network.

![DePIN: Superimposing Dual Curves to Build a Decentralized Value Network])https://img-cdn.gateio.im/webp-social/moments-ab591e4e1854b2c86397b64218855281.webp###

Therefore, the first step in dismantling centralized infrastructure is the key to achieving the first curve of growth for the DePIN project.

The DePIN project party must first strive to promote itself, spread its narrative, and attract participation from supply-side users through a series of operational means, including pre-selling "mining machines", purchasing for airdrops, etc.; transferring the enormous infrastructure costs to supply-side users to achieve a low-cost lightweight launch. Supply-side users also become "shareholders" of the project party by holding hardware, while helping the project party deploy the hardware network with the expectation of making money from mining in the future.

Moreover, unlike traditional centralized device providers, the updates and maintenance of DePIN devices are carried out jointly by the project party and miners, meaning that device providers are only responsible for the research and development and sale of the devices, while updates and maintenance are completed by supply-side users. In the process of collaboratively maintaining and building the hardware network, the interaction with the project party and middleware has strengthened the community identity of miners ( and supply-side users ), as well as their recognition of the DePIN project.

If a DePIN project team can smoothly execute narrative marketing, mining machine sales, and community operations; then the essential elements of the project's own first growth curve will have been gathered, ultimately forming the first curve of increasing network coverage scale ------ increasing token incentives ------ attracting more miners to join.

The following is the current data on the number of active nodes. Hivemapper, Helium, and Natix are in the top three, having deployed more than 100,000 nodes worldwide.

Among them, the node deployments of Hivemapper, Helium, Natix, and Nodle have all exceeded 100,000, with Helium and Hivemapper showing outstanding business performance:

Helium

• Helium is a Decentralization wireless network, its main services include Helium Hotspot, providing low-power wide-area network (LoRaWAN) coverage; Helium Mobile, a mobile communication service launched in partnership with T-Mobile and TEF.

• The $20 communication package service launched in collaboration with T-Mobile on January 25 increased the global subscriptions from 0 to 93,000 in 5 months.

• Collaborating with one of Mexico's telecom service giants, Telefónica (TEF), to enter the Mexican market with a population of 126.7 million further enhances Helium's revenue sources and market influence.

Hivemapper

• Hivemapper is a decentralized mapping platform aimed at creating a global, real-time updated mapping ecosystem through blockchain technology and crypto-economic incentives. Hivemapper's main business includes the HiveMapper Dashcam------a driving recorder that allows users to collect geographic data while driving by installing this device.

• This device is priced at $549. Based on the current number of node deployments, it can be roughly estimated that Hivemapper's revenue from hardware sales alone has already exceeded $60 million.

• As of now, the map data collection network established by Hivemapper has covered most regions of Europe and America. Hivemapper's data service revenue has also seen significant growth.

• In terms of hardware revenue, there are also other projects that have achieved good growth by taking different approaches. For example, Jambo has achieved excellent sales performance in the African market by leveraging mobile phones as a selling point. OORT has a technological barrier in cloud computing and edge computing, achieving significant hardware sales revenue through its innovative model. Ordz Game, as a project in the GameFi sector, cleverly integrates DePIN elements to generate a wave of popularity. These projects have successfully broken through hardware revenue through their respective innovative models and technological advantages, exploring new ways to integrate DePIN across various industries.

**Jambo