DePIN - Dual Curve Overlay to Build a Decentralized Value Network

DePIN is realizing large-scale interaction between the physical world and Web3, gradually disrupting traditional infrastructure operation models. By integrating sensors, wireless networks, computing resources, and AI with blockchain technology, it promotes crowdsourced development through crypto-economic incentives. Analyzing most DePIN projects, it can be found that their business model contains an important characteristic: hardware revenue serves as the first growth curve, and based on this, data service monetization overlaps to form a second growth curve. This is one of the key factors that allow DePIN to lead the current cycle of growth, while also demonstrating how DePIN-type 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 World

Decentralization physical infrastructure network ( DePIN ) is defined in the 2023 Messari report as "deploying real-world physical infrastructure and hardware networks using crypto-economic protocols." This concept heralds an imaginative application scenario: common infrastructures around us, including communication base stations, electric vehicle charging stations, photovoltaic panels, billboards, and the data storage and computing equipment behind the operation of the internet, will no longer be controlled by centralized entities and institutions. Instead, they will be divided into equally sized units, controlled by individuals or large-scale miners. Physical infrastructures of the same type are highly standardized and scalable, forming a carpet-like coverage.

By adopting a decentralized approach, the layout and utilization of infrastructure can achieve higher efficiency and lower costs, while enhancing the overall system's security and resilience. Moreover, various facilities, from energy production to data processing, have the potential to transition to a decentralized model. The combined market size of the industries related to DePIN has already surpassed $5 trillion. Therefore, Messari predicts that the potential market size in the DePIN field is estimated to be around $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 supply chain perspective, DePIN can be divided into:

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

• Middleware: A blockchain project platform responsible for data verification and token settlement, and a layer two protocol on-chain 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 ), the SDK toolkit for DePIN development, API interfaces, etc.

• Downstream: Connect with the demand-side dApp applications and interfaces.

Apart from IoTeX and the former Helium(, which has now migrated its mainnet to Solana), most DePIN projects struggle to cover every aspect of the DePIN business. They typically choose Solana or IoTeX as the settlement layer for their token economy. AI and cloud computing projects in the subfields focus more on on-chain settlement and the development and management of project platforms, while the underlying hardware devices schedule 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, 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 projects that have issued tokens and are listed in the DePIN sub-sector on Coingecko have a combined market value of over $25 billion.

In October of last year, this figure was only 5 billion USD, which means it has increased fivefold in less than a year, demonstrating the rapid growth of the DePIN industry. This indicates that the demand and recognition of the market for decentralized physical infrastructure networks are continuously rising. As more projects go live and application scenarios expand, the DePIN industry is expected to become an important field for the integration of blockchain technology and real-world applications.

2. Insights from DePIN Business Logic

The prototype of DePIN can be traced back to the previous cycle's IoT + Blockchain ( concept. Projects like Filecoin and Storj transform centralized storage into a decentralized operating model through cryptoeconomic models, and find 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 large-scale interconnected networks. 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, which was established in 2013 and 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(; moreover, at the end of last year, Helium Mobile launched a $20 communication package service in cooperation 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, forming a win-win situation for all three parties. The large number of traditional users it serves has the potential to promote the breaking of DePIN's boundaries and accelerate the large-scale adoption of blockchain technology and the Web3 network.

Helium and Filecoin both belong to the DePIN category, but the difference between the two is that Helium places more emphasis on hardware, allowing it to support the growth of data services on the second curve through hardware income, building an independent ecosystem while reaping Alpha and Beta returns. Although Helium was involved in false advertising last year and faced issues such as the obscurity of programming languages leading to development difficulties, a series of actions at the end of the year reopened the growth of Helium's second curve; and as one of the largest DePIN projects that emerged first, it undoubtedly provided us with some insights into the DePIN ecosystem.

3. The Explosive Growth of DePIN is Based on 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 to introduce new innovations or changes when an organization, product, or business reaches the peak of its traditional growth curve, in order to initiate a new growth curve and avoid stagnation or decline.

From the successful experience of previous DePIN projects, it is clear 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 principle 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 party to ensure that the data value network operates smoothly under the premise of having the hardware network capability to organize and undertake large-scale data transmission. Only then can the demand side be successfully connected, ultimately providing high-quality, standardized data services. This will lead to the completion of the double curve business dual 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 initial growth and then gradually reach its peak. The growth momentum of the DePIN project in the first curve comes from the revenue and profits generated by hardware sales.

Traditional infrastructure, especially in areas such as data storage and communication services, has a linear business logic for centralized service providers or entities: in the early stages of business, investment is needed to build infrastructure, and services are provided to end users )C-end ( only after the facilities are completed. Therefore, developing such businesses often requires the participation of giant enterprises to bear the high costs in the early operation of the business, including hardware purchases, land leasing, deployment, and hiring maintenance personnel. Referencing BCG's deconstruction of the data value network, its traditional IoT operating model creates the data value chain shown in the left diagram, where data is transmitted as a production factor 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 complete the establishment of the hardware network.

![DePIN: Constructing a Decentralized Value Network through the Superposition of Dual Curves])https://img-cdn.gateio.im/webp-social/moments-ffad4e02201f88d23a9627ae65a45f47.webp###

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

The DePIN project party must first strive to promote itself, convey its narrative, and attract supply-side users to participate through a series of operational measures, including the pre-sale of "mining machines" and airdrop incentives for purchases. This shifts the huge infrastructure costs to be borne by the supply-side users, achieving a low-cost lightweight launch. At the same time, supply-side users become "shareholders" of the project party in the form of holding hardware, helping the project party deploy the hardware network with the expectation of earning money from mining in the future.

Moreover, unlike traditional centralized device providers, the updates and maintenance of DePIN devices are jointly completed by project parties 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, interaction with project parties and middleware strengthens the community identity of miners ( and supply-side users ), as well as their recognition of the DePIN project.

If a DePIN project can smoothly run through 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 increased network coverage scale - increased token incentives - attracting more miners to join.

The following is the current data on the number of active nodes. Hivemapper, Helium, and Natix rank in the top three, each having deployed over 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 decentralized wireless network, its main services include Helium Hotspot, providing low-power wide area network ( LoRaWAN ) coverage; Helium Mobile, a mobile communication service launched in collaboration with T-Mobile and TEF.

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

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

Hivemapper

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

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

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

• In terms of hardware revenue, there are also other projects exploring alternative paths.