DePIN: Redefining Infrastructure with a New Paradigm — From Concept to Practice

Decentralized Physical Infrastructure Networks (DePIN) are becoming one of the most imaginative directions in the crypto ecosystem. The concept sounds complex, but the underlying logic is straightforward—using blockchain and Token incentives to enable ordinary people to participate in the construction and operation of infrastructure and earn rewards from it.

From Centralization to Decentralization: The Core Logic of DePIN

Traditional infrastructure operation models are usually monopolized by large companies. For example, platforms like Uber rely on drivers contributing vehicles and services, but the platform controls all pricing and revenue sharing, giving drivers very little say. DePIN aims to change this pattern.

The core of DePIN is a simple value exchange: providers contribute physical resources (such as sensors, computing power, energy devices), and receive transparent rewards via blockchain networks. When users need these services, they purchase directly from the network. No middlemen skimming profits, no single company holding all the control.

This model covers multiple fields including transportation, energy, communication, storage, and computing. The key point is that DePIN creates a “permissionless” ecosystem—anyone with relevant resources can join without approval from any centralized authority.

Two Main Forms of DePIN: Physical Resources vs Digital Resources

Based on resource attributes, DePIN can be divided into two categories:

Physical Resource Networks (PRN) mainly handle location-related hardware, such as wireless signal base stations, solar panels, sensors, etc. These resources are fixed geographically, with limited service ranges. Signal coverage in a region requires local hardware support and cannot be remotely replaced.

Digital Resource Networks (DRN) involve interchangeable computing, storage, bandwidth, and other resources. These are not geographically constrained; providers can participate from anywhere globally. For example, renting out idle hard drive space, computing capacity, or network bandwidth.

Both network types have their application scenarios, but they share the common point of incentivizing dispersed individuals with Tokens to become “infrastructure operators.”

The Operational Chain of DePIN: Three Interdependent Links

To understand how DePIN delivers end-to-end services, it’s essential to see three core links:

Layer 1: Physical Infrastructure. Providers deploy hardware, which may be newly purchased or previously idle assets. For example, Helium network owners of 5G hotspots, or Hivemapper users with dashcams.

Layer 2: Middleware. This acts as a hub connecting the physical world and blockchain. Middleware continuously collects data from hardware operation (such as signal strength, coverage, transaction counts), then packages and uploads this data on-chain. Similar to decentralized oracles (DON).

Layer 3: Blockchain. Smart contracts on the chain receive data from middleware, automatically calculate each provider’s deserved rewards, and distribute them in Tokens. They also manage user demands and pricing—users pay fees, and smart contracts automatically allocate to the optimal providers.

These three layers are interdependent; missing any one prevents the formation of a closed loop.

Why Can DePIN Kickstart a Growth Flywheel?

DePIN is promising because of its inherent positive feedback mechanism—known as the “DePIN Flywheel.”

Starting point is incentives. Providers see Token rewards and are willing to contribute devices. Some idle resources are thus activated and join the network.

Next is supply expansion. As more devices join, network coverage broadens, capacity increases, and service quality improves. This attracts more users willing to pay for services.

Then comes value growth. User payments generate revenue for the network, which in turn funds provider rewards. Additionally, as user numbers and service demand grow, the local Token value rises, incentivizing providers to earn higher actual returns.

Finally, a cycle forms. High returns attract more providers and investors, further expanding the network, improving user experience, lowering service prices, and increasing user numbers… Once this cycle starts, it can theoretically reinforce itself.

However, in reality, this flywheel is fragile in early stages and can be easily disrupted.

Where Are the Real Advantages of DePIN?

Not all rewrites succeed. Compared to traditional centralized systems, DePIN has several structural advantages worth noting:

Flexibility in horizontal expansion. Traditional infrastructure scaling requires large capital investments and long construction cycles. DePIN only needs to incentivize more providers to join, dynamically increasing network capacity. Idle resources can be activated during high demand, and costs can be reduced during low demand—this elasticity significantly improves resource allocation efficiency.

Changes in cost structure. Centralized operators bear all costs for infrastructure purchase, maintenance, and labor. In DePIN, these costs are distributed to providers themselves. The platform (or DAO)’s costs are greatly reduced, and savings can be used to incentivize participants or lower user prices. In theory, end users get cheaper services.

Decentralized governance. Who owns the network? In DePIN, the answer is “all participants.” Providers, users, and Token holders can all influence the network’s development direction. In contrast, centralized platforms’ ownership and decision-making power are concentrated in the company, with users in a passive position.

Permissionless participation. As long as you have equipment, you can become a provider. No approval from intermediaries is needed. This lowers participation barriers and allows the network to absorb a broader range of resources.

Current Challenges Facing DePIN

While the ideals are appealing, DePIN faces a series of practical obstacles:

Cold start problem. The flywheel requires enough providers and users to start spinning simultaneously. Early on, both sides are scarce. Users don’t come because the network isn’t mature enough; providers don’t join because rewards aren’t attractive enough—this is a classic “chicken-and-egg” dilemma.

Profitability sustainability. To attract providers, DePIN must pay sufficiently high rewards. But these rewards are ultimately supported by user service fees. Early on, with few users, income is limited, making it hard to sustain high rewards—this can depress Token value and create negative feedback.

Technical complexity. For ordinary people, understanding DePIN requires some crypto knowledge. Participation involves understanding Token economics, smart contracts, wallets, etc. This raises entry barriers and increases risks of scams or operational errors.

Operational costs. In some DePIN projects, provider equipment maintenance costs are high—for example, energy infrastructure upkeep or device depreciation. If Token rewards can’t cover these costs, providers may exit.

Regulatory uncertainties. DePIN involves real infrastructure and cross-domain services, and regulatory attitudes are still unclear. Some regions may impose legal restrictions on decentralized energy, communication, or transportation systems.

Application Landscape of DePIN: From Theory to Practice

Despite the difficulties, some DePIN projects are already experimenting in specific fields:

Wireless communication. Helium is the most well-known case. It built a decentralized LoRaWAN network, where users buy Helium hotspots to place at home and participate in coverage. Revenue from network services is distributed via HNT Tokens to providers. Helium later launched a 5G project, incentivizing 5G hotspot owners to participate in mobile network deployment.

Mapping and geographic data. Hivemapper enables users to collect street view data with dashcams or smartphones, building crowdsourced map databases. Participants earn HONEY Tokens for their contributions. This model disperses the cost of image annotation across the entire network.

Computing resource markets. Nunet aggregates idle computing devices using AI technology, creating a computing resource marketplace. Individuals and small businesses with computing capacity can rent out resources for NTX Tokens, while users needing computing power purchase directly from the network.

Storage networks. Filecoin is one of the most mature DePIN projects. Providers contribute hard drive space to store user data, earning FIL Tokens based on storage volume and reliability. Users rent storage on demand.

Energy and green certification. Arkreen incentivizes renewable energy facility owners (like solar panels) to report energy output data. These data are used for green certification, carbon credits, and other purposes, with value fed back to providers via Tokens.

Bandwidth sharing. Theta Network’s edge network allows users to share home internet bandwidth, with participants earning THETA Tokens for bandwidth contribution. Video platforms and content distributors can leverage these distributed nodes to reduce CDN costs.

Health data. Apps like Healthblocks reward users for sharing fitness and medical data. Medical research institutions and insurers pay for this data, with rewards distributed via HEALTH Tokens.

Long-term Vision and Cautions for DePIN

From a technological and economic perspective, DePIN represents an intriguing new direction. It demonstrates the potential of combining blockchain, Token incentives, and crowdsourcing. It has theoretical advantages in combating monopolistic giants, improving resource utilization, and establishing more equitable participation mechanisms.

Practically, the feasibility of DePIN depends on whether several key factors can be simultaneously satisfied:

• Whether the services provided are genuinely efficient and market-accepted
• Whether Token economic design is reasonable and sustainable
• Whether participant interests are aligned or inherently conflicted
• Whether regulatory and legal frameworks permit such models to exist and develop

Currently, DePIN remains in early experimental stages. Some projects show promise, but risks exist—including technical, economic, regulatory, and malicious participant risks. Anyone considering involvement should conduct thorough research and risk assessment.

The future of DePIN hinges on its ability to find a viable balance between ideals and reality.