This article analyzes the success factors and potential risks of the Helium Mobile project within the DePIN track.

With the resurgence of the #Solana ecosystem and the popularity of the #DePIN track, $Mobile, as a leading project, experienced a tenfold price surge at the end of 2023, reaching a peak of $0.008. However, with the recent pullback of #Solana ecosystem tokens, the price of #Mobile has fallen to $0.0027 at the time of writing, a maximum pullback of 68%. As the token price declines, doubts about blockchain scams are increasing. So, what is the fundamental situation of the Helium Mobile project?

Conclusion First, we believe that the most brilliant aspect of Helium Mobile is its “dual flywheel model for price increase,” matching “33 leverage points to ignite the flywheel.” The main risks are related to policy risks in 5G network construction, geographical restrictions to the United States, potential instability of signals from virtual mobile operators, etc. Moreover, the token distribution of #Mobile is highly concentrated, and it has not been listed on mainstream CEXes, resulting in significant price volatility. Additionally, Helium’s previous IoT project #hnt was not successful, with many miners suffering heavy losses and facing issues such as being delisted by Binance. This has also affected people’s confidence in Helium to make a comeback.

1. What is Helium Mobile?

Helium Mobile is a decentralized 5G operator that uses the token $Mobile to incentivize network participants to deploy and operate 5G mobile network hardware, thus forming a decentralized wireless network (DeWi). $Mobile serves as a governance token for Helium subDAO, aimed at achieving governance decentralization.

The major cost of 5G network construction is the establishment of base stations. Helium Mobile cleverly utilizes token economics to encourage individuals to purchase hotspot devices similar to routers and deploy them in various indoor and outdoor environments. Simply put, it mobilizes the masses to replace large base stations with numerous small hotspots, achieving lower construction costs, broader network coverage, and cheaper telecommunication plans.

2. The Dual Flywheel Model of Coin Price Spiral Increase

Firstly, Helium Mobile is a POW (Proof of Work) mining coin, similar to #btc (Bitcoin) and #fil (Filecoin), where traditional POW mining coins exhibit a “mining rig-coin price” flywheel effect (see Figure 1).

• The money from selling mining rigs can be used for market capitalization management, effectively pumping the price.
• Then, as the price increases, the profitability of mining improves, attracting more people to deploy mining rigs. Consequently, further sales of mining rigs generate more market-making funds to continue pumping the market. Moreover, once the mining coin flywheel starts spinning—massive sales of mining rigs and a significant increase in coin price—it draws more retail investors from the secondary market to support the coin price. After the flywheel is activated, it can self-propel in a spiraling ascent.

Historically, mining coins, whether it’s #btc, #fil, or #hnt, have all been boosted in this manner. In 2021, #fil experienced a tenfold increase in one quarter, and #hnt saw a hundredfold increase over the year. However, the mining coin flywheel alone could merely be an idling bubble. For instance, #fil’s decentralized storage ended up with mining rigs spinning without any real users. #hnt, notably, had a significant number of ineffective hotspots deployed in China that couldn’t be utilized.

Unlike #fil and #hnt, #BTC is in a completely different category because it has real-world use cases: payment and value storage. Many people and institutions use it for settlements and hold it as digital gold.

The unique aspect of Helium Mobile, as opposed to traditional #fil and #hnt, is that it doesn’t only have a mining coin flywheel; it also has a “mining rig/hotspot—user” flywheel (see Figure 2).

• The more hotspots deployed, the better the user experience and the higher the number of users.
• Simultaneously, as the user base grows, the demand for mining rigs/hotspots increases, creating a virtuous cycle.
• This forms the “Dual Flywheel Model of Coin Price Spiral Increase.”

To avoid the issue of idle mining rigs seen with #fil and #hnt, Helium Mobile innovatively introduced a principle where mining rewards are determined by usage. Only when real users connect to a hotspot (Hostpot) and generate data transmission can $Mobile rewards be earned. Merely owning a large number of inactive hotspots will not yield any rewards.

Furthermore, to guide the deployment of mining rigs more scientifically and reasonably, Helium Mobile cleverly encourages mobile plan subscribers to share their location information (Mapping) in exchange for $Mobile rewards. This transparency ensures that the distribution of users and mining rigs is clear (see Figure 4).

Project developers can use different token reward coefficients to guide the deployment of mining rigs. Areas with more hotspots than people receive lower rewards, while areas with fewer hotspots than people have their reward coefficients increased. This method not only completely solves the problem of idle mining rigs but also scientifically and rhythmically guides the deployment of hotspots. It is undeniable that Helium has accumulated a great deal of experience based on its operations with hnt in the past.

3. The 33 Leverage Points to Ignite the Flywheel

Helium Mobile embodies a dual flywheel model where the price spirals upwards, but for the flywheel to spin, it needs leverage points to pry it into motion.

For the “miner/hotspot-users” flywheel, there are three leverage points to pry the user side: aggressive pricing, seamless integration, and token incentives.

For the “miner-coin price” flywheel, there are also three leverage points to pry the coin price side: the dual buff of #Solana and #Depin, token deflation, and ultimate MEME.

These six points are the 33 leverage points to ignite the flywheel.

(1) Aggressive Pricing

According to statistics from JDPower, in 2023, the average monthly expenditure for American users on telecom packages was $157.

Using Helium Mobile’s package, which offers unlimited calls, data, and texts, costs only $20 per month.

This is reminiscent of the aggressive subsidy strategy once used by ride-sharing services like Didi and Uber.

(2) Seamless Integration

What many in Asia may not know is that in North America, iPhones come standard with both a physical SIM card slot and an eSIM.

Changing telecom packages does not require a visit to a service center to change cards, unlike in Mainland China, where switching carriers can be obstructive.

With Helium Mobile’s app and setting up an eSIM on your phone, switching to Helium Mobile’s package is seamless.

An important question for users considering the switch is: What if the early hotspot coverage is sparse and the signal is poor?

Helium Mobile preemptively addressed this by signing a 5-year strategic partnership with one of the top four traditional mobile network operators in the U.S., T-Mobile.

Helium’s own 5G network combined with T-Mobile’s network ensures seamless coverage for Helium Mobile users in areas without decentralized wireless network (DeWi) coverage, making the switch genuinely seamless and hassle-free.

(3) Token Incentives

Helium Mobile, to strategically plan the layout of miners, encourages phone package subscribers to share their location information daily.

In return, subscribers are rewarded with $Mobile tokens.

At the peak of $Mobile’s price in late 2023, there was an outcry of “breaking even in 2 days, pure profit in 28 days!”

For a $20/month subscription, just share your location daily with a tap on your phone, and Helium rewards you with $Mobile tokens worth $10 each day.

In just 2 days, the subscription pays for itself.

Furthermore, the earned $Mobile tokens can be used to prepay up to 3 months of subscription fees.

This aspect is particularly appealing to Americans struggling financially.

If you’re not satisfied with earning $10 a day in $Mobile tokens and seek more rewards, you can purchase specialized miner/hotspot devices, with outdoor versions costing $499 each and often selling out quickly, while indoor versions are available at $249 each.

These are the three leverage points Helium Mobile uses to pry the “miner/hotspot-users” side of its flywheel: aggressive pricing, seamless integration, and token incentives.

Under the influence of these three points, the number of Helium Mobile’s package subscribers has already exceeded 50,000, with daily increases by the hundreds to thousands.

Considering the $20/month package was launched just over a month ago, coinciding with the Western holiday season, the cold start momentum is impressive.

Next, let’s interpret the three leverage points on the “miner-coin price” flywheel’s coin price side.

(4) Dual Buff of Solana Ecosystem and Depin Narrative

In 2023, we witnessed the phoenix-like resurgence of #Solana, a blockchain favored by Wall Street elites, on the eve of its ecosystem’s explosive growth. The SOL/ETH exchange rate rebounded fivefold from its bottom.

Helium, a top project within the #Solana ecosystem and also a key strategic focus for Solana in 2024, benefits from the dual buff.

CoinEx analysis highlighted that Solana’s ecosystem focus is mainly on DeFi, Memecoin, and DePIN.

The primary narrative for Solana is DePIN, determined by the founder’s background, thought process, and strategic planning, not just by chance.

Solana’s founder, Toly, has extensive experience in communications and hardware from his tenure at Qualcomm, including during Solana’s initial fundraising, where the aim was to focus on communications and hardware.

At the Solana Breakpoint conference in October 2023, Helium Mobile was prominently featured and repeatedly mentioned. Projects discussed at the conference, like the founders’ humorous attire, showed significant performance in November through price surges or airdrop announcements, essentially acting as official market calls.

Even setting aside Solana’s favoritism, Depin remains one of the main narratives of this bull market. OKX Chinese highlighted Helium Mobile as a prime example in their Depin explainer, “Why is Depin considered one of the most promising tracks in 2024?”

Binance Chinese discussed “How to View Solana Ecosystem & Depin New Narrative?” in a special Space, consistently focusing on Helium Mobile.

Unquestionably, Depin is a leading narrative of this bull market, with Helium Mobile firmly at the forefront. According to CoinGecko, Helium ranks third in the Depin track by market value, with three of the top five projects belonging to the Solana ecosystem (Render, Helium, and Helium Mobile).

(5) Token Deflation

For those familiar with GameFi and mining coins, inflation and selling pressure are perennial issues.

Thus, many instinctively question how Mobile will handle inflation as more users and miners join, and if there are any token burn mechanisms.

This shows a lack of understanding of Mobile’s token economic model.

Like BTC, Mobile has a fixed total supply of 250B, with no inflation.

Annual output is predetermined and unrelated to the number of mining devices, halving every two years.

With 50B pre-mined, followed by an annual increase of 66B, then 33B for the next two years, and 16.5B for the subsequent two, the production rate is stable, akin to BTC’s consistent block time. Regardless of mining equipment or the number of miners, the annual output is fixed.

More miners mean less output per device, with price increases primarily incentivizing miners.

Like BTC, Mobile doesn’t need a specific burn mechanism. The flywheel’s upward spiral depends solely on the market’s consensus around its narrative.

Moreover, Mobile adopts a deflationary model, requiring hotspot manufacturers and operators to stake $Mobile (500 million $Mobile for Hostpot Vendors and 50 million $Mobile for Hostpot Operators), further reducing supply.

(6) Ultimate MEME

Helium Mobile embodies all elements of an ultimate MEME:

Firstly, the $20/month plan, the cheapest mobile package in North America, is highly appealing.

It’s straightforward—cheaper telecom plans, mining with your phone, and the option to deploy hotspots for more earnings, offering vast imaginative potential.

The barrier to participation is zero, with 5G being an absolute necessity.

ICOs sparked interest because anyone could issue assets. DeFi Summer expanded the types of assets that could be issued. The popularity of GameFi is due to the threshold for publishing and acquiring assets being further reduced to the point where you only need to play games, and you don’t need to know professional blockchain technology or have any resources.

The reason why Stepn has become a phenomenal Gamefi project is because the threshold has been further lowered to the point where you can participate if you have legs and can walk.

Helium Mobile takes this game to unprecedented extremes:

The participation threshold is 0 and there is no technical threshold. It doesn’t take any time, mobile mining only requires sharing your location. Hotspot mining only requires plugging in a network cable.

Moreover, the 5G network itself is an absolute necessity for everyone.

4. Potential Risks

Although Helium Mobile is ingeniously designed in its project layout, and the team has strong capabilities in resource integration and operations, there are still significant risks in the early stages of the project.

First and foremost, the greatest risk stems from policy risks. The construction of 5G networks is a strategic infrastructure in any country, especially in the United States, where it involves complex regulations across multiple departments. Although Helium Mobile has wisely aligned itself with T-Mobile, which may mitigate issues in the early stages, as the project scales, this could potentially become a minefield.

Furthermore, due to the strategic importance of 5G infrastructure, no country is likely to easily allow a foreign company to undertake 5G construction. Therefore, Helium Mobile is likely to be limited to operating within the United States for a considerable period.

Additionally, Helium Mobile has signed a Mobile Virtual Network Operator (MVNO) agreement with T-Mobile. MVNOs had a few years of popularity in China but eventually faded due to various issues such as unstable signals and inadequate service. These past challenges may still represent significant hurdles for Helium Mobile to overcome in the future.

Lastly, Helium’s previous Internet of Things project, #hnt, was not successful, leading to significant losses for many miners and encountering issues such as being delisted by Binance. This has, to some extent, affected people’s confidence in Helium’s ability to restart successfully.

Also, the Fully Diluted Valuation (FDV) of $Mobile is already at 0.7B, but the token distribution is highly concentrated, and it has not been listed on mainstream Centralized Exchanges (CEX), resulting in poor liquidity.

The combination of a high market value, concentrated token structure, weak liquidity, and a background of previous failures indicates that the price volatility of $Mobile is likely to be significant for an extended period. Investors need to be cautious about their position sizes and entry timing.

Conclusion

Overall, Helium Mobile is a project of good quality, and its “Dual Flywheel Coin Price Spiral Model” plus “33 Leverage Points to Ignite the Flywheel” generate considerable anticipation for its performance in a bull market. However, due to policy and technical risks, it may ultimately be proven to be just another epic Ponzi scheme.

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