Introduction

DePIN is gradually achieving large-scale interaction between the physical world and Web3, progressively disrupting the traditional infrastructure operation model. By combining sensors, wireless networks, computing resources, and AI with blockchain technology, and leveraging crypto economic incentives to drive crowdsourced development, DePIN is advancing rapidly. Analyzing most DePIN projects reveals a significant feature of their business model: using hardware revenue as the first growth curve and layering data service monetization on top of it to form a second growth curve. This is one of the key factors enabling DePIN to lead the current cycle of growth. It also demonstrates how DePIN projects create enormous wealth effects while constructing decentralized infrastructure networks, ultimately forming a large-scale decentralized value network.

1. Building a Decentralized World of the Internet of Everything

Decentralized Physical Infrastructure Networks (DePIN) were defined in Messari’s 2023 report as “deploying physical infrastructure and hardware networks in the real world using crypto economic protocols.” This concept envisions an imaginative application scenario where common infrastructure around us, including communication base stations, electric vehicle charging stations, photovoltaic panels, billboards, and the data storage and computing devices behind the internet’s operation, will no longer be controlled by centralized entities and institutions. Instead, they will be divided into equally sized units, managed by individuals or groups of miners. Each type of physical infrastructure is highly standardized and scaled, forming a blanket-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. Moreover, from energy production to data processing, various facilities have the potential to transition to a decentralized model. The combined market scale of the industries involved in DePIN already exceeds $5 trillion. Hence, Messari predicts that the potential market size of the DePIN sector is estimated to be around $2.2 trillion, expected to reach $3.5 trillion by 2028.

Decentralized Internet of Everything renderings, reference: Messari

Illustration of the Decentralized Internet of Everything (Source: Statista)

1.1 DePIN Track Segmentation

The DePIN track encompasses six subfields: computing, AI, wireless communication, sensors, energy, and services. Analyzing DePIN from a supply chain perspective, it can be divided into:

• Upstream: Hardware manufacturers and supply-side users who act as “miners.”
• Midstream: Project platforms, blockchains responsible for data validation and token settlement, and on-chain Layer 2 protocols serving DePIN. It also includes modular service components for developing and managing DePIN networks (such as platform interfaces, data analytics, and standardized services), SDK toolkits for DePIN development, API interfaces, etc.
• Downstream: dApp applications and interfaces connecting to the demand side.

Apart from IoTeX and the former Helium (which has since migrated its mainnet to Solana), most DePIN projects rarely cover every aspect of the DePIN business. They typically choose Solana or IoTeX as the settlement layer for their token economies. AI and cloud computing projects within the subfields tend to focus more on on-chain settlements and the development and management of project platforms, with underlying hardware devices scheduling idle electronic devices through middleware, such as smartphones or computers equipped with high-performance consumer-grade GPUs.

1.2 DePIN Industry Development Overview

According to DePIN Ninja, the number of DePIN projects currently 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 Coingecko’s DePIN subcategory exceeds $25 billion.

In October of last year, this figure was only $5 billion, meaning it has quintupled in less than a year, demonstrating the rapid growth of the DePIN industry. This indicates increasing market demand and recognition for decentralized physical infrastructure networks. As more projects go live and application scenarios expand, the DePIN industry is poised to become an important field where blockchain technology intersects with real-world applications.

2. Insights from DePIN Business Logic

The prototype of DePIN can be traced back to the IoT + Blockchain concept from the previous cycle. Projects like Filecoin and Storj transformed centralized storage into decentralized operational models through crypto economic mechanisms and found practical applications in the Web3 ecosystem, such as on-chain NFT storage and backend resource storage for DApps.

While IoT + Blockchain only reflects the decentralized (“De”) nature, DePIN emphasizes the construction of physical infrastructure and a large-scale interconnected network. In DePIN, “PI” stands for Physical Infrastructure and “N” stands for Network, referring to the value network formed after DePIN hardware reaches a certain scale.

A quintessential example is Helium. Founded in 2013, Helium only decided to use blockchain as an incentive for decentralized IoT deployment in 2018. To date, Helium has almost all the elements of DePIN: node economy, miner model, value network, crowdsourced incentives, and is a leading project in the DeWi (decentralized wireless communication) field. Additionally, Helium Mobile launched a $20 communication package service with T-Mobile at the end of last year, targeting traditional users. When users transmit data through the Helium network, they not only receive token rewards but also enjoy reliable communication services. Meanwhile, Helium helps T-Mobile address signal coverage issues in remote areas of the United States, creating a win-win situation for all three parties. The significant uptake of traditional users has the potential to drive DePIN’s mainstream adoption, accelerating the large-scale adoption of blockchain technology and Web3 networks.

While both Helium and Filecoin fall under the DePIN category, Helium emphasizes hardware, allowing it to support the second curve of data service growth through hardware revenue, building an independent ecosystem while capturing both alpha and beta returns. Despite facing issues like false advertising and development challenges due to the use of a niche programming language last year, Helium’s series of moves at the end of the year have reignited the growth of its second curve. As the most scaled DePIN project to emerge, Helium provides valuable insights into the DePIN ecosystem.

3. DePIN’s Explosive Growth Based on Dual Curve Theory

The “second curve” is a concept in management and innovation theory initially proposed by management scholar Charles Handy. It suggests that when an organization, product, or business reaches the peak of its traditional growth curve, it needs to introduce new innovations or changes to start a new growth curve, thus avoiding stagnation or decline.

DePIN‘s Double Curve (Source: The Second Curve: Thoughts on Reinventing Society)

From the experience of previous successful DePIN projects, it is evident that the business logic of DePIN naturally points to selling hardware as the first growth curve of project development, with the monetization of the data value network superimposed on top as the guiding principle for the second growth curve.

Product development and operational capabilities are key to ensuring the growth of the first curve. To initiate the growth of the second curve, two abilities are required: the organizational capacity of decentralized systems and the ability to provide services to the demand side.

In the context of the DePIN ecosystem, project teams need to have the capability to organize hardware networks that can handle large-scale data transmission. Initially, they must ensure the smooth operation of the data value network so that the demand side can connect seamlessly, ultimately providing high-quality, standardized data services. This will complete the dual growth of the business curves, creating a positive cycle within the project’s ecosystem.

3.1 Hardware Value as the First Growth Curve

On the first growth curve, the business will experience rapid initial growth before gradually reaching its peak. The growth momentum of the first curve in DePIN projects stems from the revenue and profits generated by hardware sales.

In traditional infrastructure, especially in fields like data storage and communication services, the business logic of centralized service providers or entities is linear: early-stage investment is needed to build infrastructure, and once it is established, services are provided to end-users (C-side). Therefore, developing such businesses often requires the participation of giant enterprises to bear the high initial costs, including hardware purchases, land leases, deployment, and the hiring of maintenance personnel.

Referring to BCG’s deconstruction of the data value network, the traditional IoT operation model creates a data value chain as shown in the left image below. In this model, data is transmitted as a production factor in an independent and linear manner, with each ecosystem operating completely independently.

Traditional Data Infrastructure Value Chain (Source: BCG, “Data Value Network”)

The DePIN project splits the centralized supply side and uses crowdsourcing to complete the construction of the hardware network.

DePIN Hardware Network Business Model Decomposition (Source: BCG, “Data Value Network”)

Therefore, the first step in deconstructing centralized infrastructure is crucial for achieving the first growth curve of DePIN projects.

DePIN project teams must first promote themselves and propagate their narrative. Through a series of operational measures, including pre-selling “mining machines” and offering airdrop incentives, they attract supply-side users to participate. This shifts the significant infrastructure costs to supply-side users, enabling a low-cost, lightweight startup. Supply-side users, while holding the hardware and acting as “shareholders” of the project, help the project team deploy the hardware network with the expectation of future mining profits.

Moreover, unlike traditional centralized equipment providers, the updates and maintenance of DePIN equipment are jointly completed by the project team and the miners. The equipment provider is only responsible for the development and sale of updated equipment, while the supply-side users handle updates and maintenance. During the collaborative maintenance and construction of the hardware network, the interaction with the project team and middleware strengthens the miners’ (supply-side users’) sense of community and their recognition of the DePIN project.

If a DePIN project team can smoothly execute narrative marketing, mining machine sales, and community operations, it will have gathered all the elements of its first growth curve. This results in an increase in network coverage scale, which leads to increased token incentives, attracting more miners to join the first growth curve.

Below is the data on the number of active nodes to date. Hivemapper, Helium, and Natix rank among the top three, each having deployed over 100,000 nodes worldwide.

Source: DePIN Ninja

Among them, the node deployments of Hivemapper, Helium, Natix and Nodle have exceeded 100,000, and the business performance of Helium and Hivemapper is very impressive:

Helium

• Helium is a decentralized wireless network with major services including Helium Hotspot, providing low-power wide-area network (LoRaWAN) coverage, and Helium Mobile, a mobile communication service launched in collaboration with T-Mobile and Telefónica (TEF).
• On January 25th, Helium launched a $20 communication package with T-Mobile, gaining 93,000 subscribers in just five months.
• Helium partnered with Telefónica (TEF), one of Mexico’s telecom giants, to enter the Mexican market, home to 126.7 million people, further enhancing Helium’s revenue streams and market influence.

Hivemapper

• Hivemapper is a decentralized mapping platform that aims to create a global, real-time updated map ecosystem using blockchain technology and crypto-economic incentives. Hivemapper’s primary product is the HiveMapper Dashcam, a dashboard camera that collects geographic data while users drive.
• The device is priced at $549. Based on the current number of deployed nodes, Hivemapper’s revenue from hardware sales alone has exceeded $60 million.
• To date, Hivemapper’s map data collection network covers most regions in Europe and North America, and its data service revenue has seen significant growth.
• Other projects have also found innovative ways to achieve impressive growth in hardware revenue. For example, Jambo has made outstanding sales by focusing on mobile phones in the African market. OORT, with its technical barriers in cloud and edge computing, has achieved significant hardware sales through its innovative model. Ordz Game, a project in the GameFi sector, cleverly integrated DePIN elements to gain popularity. These projects have successfully achieved breakthroughs in hardware revenue and explored new ways to integrate DePIN across various industries through their innovative models and technical advantages.

Jambo

• Web3 wallets serve as the entry point for all crypto users, and Jambo aims to achieve large-scale adoption of Web3 in the African market by integrating DePIN with its wallet. By selling affordable Jambo phones with Web3 features, they attract a large number of traditional Web2 users. The pre-installed Web3 wallet application allows users to play games or watch ads and earn native JAMBO tokens as rewards. Jambo collaborates with major data service providers in Africa, selling the generated data to these providers to create a business loop.
• In the future, Jambo phones will also launch various incentive activities such as on-chain data mining. Additionally, with pre-installed dApps, users can manage their DePIN phones using Jambo phones. Currently, Jambo phones are available in over 120 countries and regions, primarily in Africa. Priced at $99, Jambo phones are very affordable and have sold over 400,000 units, activating 1.23 million non-custodial wallet addresses.

OORT

• OORT is a decentralized verifiable cloud computing platform designed specifically for AI applications. It leverages resources globally, from data centers to local edge devices, and uses a blockchain-based proprietary verification layer to ensure the security of transactions and computations throughout the process, from data crowdsourcing and labeling to model training and local inference.
• OORT offers the Deimos DePIN device as its decentralized edge node, priced at $379. Currently, over 5,500 edge nodes have been deployed worldwide, covering most countries and regions in the Americas, Europe, and Asia. These nodes together build a robust decentralized edge computing network, providing reliable data processing and computational capabilities for AI applications.

Ordz Game

• As the first gaming platform in the Bitcoin ecosystem, Ordz Game utilizes the Ordinals protocol to mint each level of retro games as NFTs. Players can earn points by playing games, and top-ranking players receive Games tokens (originally brc20 tokens named ORDG) as rewards. This “Play to Earn” model attracts player participation.
• Currently, Ordz Game has entered its 5th phase of testing, having completed 4 quarters of public testing with over 260,000 wallet addresses logged in. In the future, it will launch the handheld version BitBoy, priced at 0.01 BTC per unit. The initial 1,000 pre-sale units, which included NFTs, sold out within the first few hours of launch, and over 2,000 units of the regular version have been sold. As the “mining machine” of the Ordz Game platform, BitBoy empowers the platform-issued Games tokens, creating a flywheel effect of gaming mining, token incentives, attracting more players, and increasing token value.

These examples clearly demonstrate that hardware sales play a crucial role in the early revenue of DePIN projects. It not only affects the initial cash flow of the project but also determines the speed of scalable hardware network deployment. Only with a stable development of the hardware network can DePIN projects smoothly transition to the second stage of the data value network, initiating the second growth curve.

Besides specific scenarios requiring specialized data collection (such as Hivemapper dashcams collecting traffic data), most consumer-end data can actually be mined through personal consumer-grade devices like smartphones and smartwatches. The supply chain for these types of projects is already very mature, allowing project teams to scale up promotion and reach a broader consumer market without significant R&D investment. Due to the high profit margins of these devices, project teams can achieve significant initial revenue growth.

Moreover, large-scale DePIN hardware (such as photovoltaic panel arrays) may be linked on-chain as RWA (Real World Assets) in the future. Combining with already mature DeFi second-layer protocols on the blockchain, this could unlock more innovative products and financial services, enhancing the liquidity of hardware networks and the vibrancy of the hardware trading market.

3.2 Monetizing Data Value and Network Value as DePIN’s Second Growth Curve

As mentioned earlier regarding the value chain, traditional business models tend to be linear and closed. Once growth peaks, the only options are to find ways to increase user retention and implement increasingly competitive user acquisition activities. Additionally, traditional infrastructure providers need to bear the costs of updating and maintaining facilities themselves. Therefore, after reaching the growth ceiling, they are likely to face significant decline.

In contrast, DePIN projects, after accumulating revenue from hardware sales in the initial phase, can initiate a second growth curve before the first curve of equipment sales reaches its peak. The core of this second growth curve is based on the establishment of a data value network, built upon the already mature and scaled hardware network.

DePIN projects aggregate a series of value chains, decentralize the supply side, and use public blockchains to integrate multiple demand sides, ultimately forming a data value network under the DePIN model.

DePIN’s Final Version of the Data Value Network

While the DePIN project emphasizes its physical nature, its core business logic revolves around extracting value from data. Data, validated and rights-confirmed through blockchain storage layers, becomes a highly liquid asset traded within the data value network. These data flow not only between different ecological projects but also exchange directly or indirectly between the supply and demand sides.

Once the data value network can maintain a cycle of positive incentives—typically determined by token economics, node count, and a well-matched supply and demand—the entire ecosystem will generate substantial wealth effects around data creation.

Token Economics as the Economic Foundation of the Value Network

Token economics serves as the economic foundation of the data value network and is crucial for the sustainable operation of the DePIN project. Currently, the two mainstream models are Burn and Mint Equilibrium (BME) and Stake for Access (SFA).

BME (Burn and Mint Equilibrium) involves token-burning mechanisms, where tokens are burned when users on the demand side purchase services, thus deflating the supply. The degree of deflation depends on demand; hence, the more vigorous the demand, the higher the token’s value.

SFA (Stake for Access) requires users on the supply side to stake tokens to qualify as miners. The supply determines the extent of deflation; therefore, the more service-providing miners there are, the higher the token’s value.

The choice between these models depends on whether DePIN products rely more on the demand side or the supply side. Typically, middleware or platform-type DePIN projects lean towards using the SFA model, where the scale and quality of the supply side determine the project’s upper limit. Examples include OORT and Helium, both requiring supply-side users to stake tokens as nodes. Demand-side applications, such as consumer-oriented DePIN projects, are more suited to maintaining operations using the BME model, as seen in projects like Render Network.

BME and SFA form the fundamental core framework of DePIN projects, while token empowerment enhances token economics. For instance, using points as a pre-mining commitment to miners, issuing tokens at a certain ratio post-launch, or adopting a points + token economic model. Granting governance functions to tokens allows holders to participate in major network decisions, such as upgrades, fee structures, or reallocation of treasury funds.

The staking mechanism incentivizes users to lock tokens, maintaining price stability. Project operators can also use a portion of revenue to purchase tokens and pair them with other major cryptocurrencies or stablecoins in liquidity pools, ensuring tokens have sufficient liquidity for users to trade without significantly affecting prices. These mechanisms help ensure the long-term alignment of user interests on both supply and demand sides with the project’s interests, thereby achieving long-term success.

DePIN value network will promote the improvement and growth of the AI ​​industry

After the large-scale data network has achieved good operation and the supply side can provide stable services, a large part of the final value of the DePIN network will flow to the AI ​​industry.

AI has become an important driving force for global economic transformation and industrial upgrading, and its development and application are inseparable from the support of large amounts of data and computing power. Since 2012, people’s demand for computing power has increased by more than 300,000 times, far exceeding Moore’s Law’s 12-fold increase. There is no doubt that the explosive growth of AI has greatly boosted the demand for computing power.

Theoretically, decentralized computing networks such as io.net and Render Network can schedule distributed idle computing resources to fill the huge market demand for computing resources, and track and store data through blockchain technology to ensure the security of AI training and use cryptocurrency Conduct incentive distribution. Although this set of business processes is very convincing, the actual needs still need to be further verified. In the consumer (C-side) market, these decentralized computing power networks will directly face fierce competition from traditional enterprises such as AWS, Azure and GCP; while in the business (B-side) market, these networks can only reach those who cannot build their computing power networks. In the consumer (C) market, these decentralized computing power networks will directly compete with traditional enterprises such as AWS, Azure, and GCP. However, in the business (B) market, these networks can only reach small and medium-sized enterprises that cannot build their own computing power networks, while large enterprises prefer to use mature and stable centralized cloud service providers.

On the other hand, the shortage of data for training AI has already been declared. According to Epoch AI’s research predictions, if current data consumption and productivity remain unchanged, humanity will deplete low-quality language data between 2030 and 2050, high-quality language data by 2026, and visual data between 2030 and 2060.

AI requires large amounts of raw and trustworthy data to support its training processes, making DePIN particularly important in this regard. The extensive deployment of devices by DePIN allows for the acquisition of large amounts of raw data at extremely low costs. Its decentralized distribution enhances the value and uniqueness of the data collected by sensors in the DePIN subdomains. Therefore, data collected by sensors in the DePIN subdomains are naturally advantageous for training AI models.

In summary, based on AI’s strong demand for computing power and data, decentralized cloud computing and sensors providing data for AI training are the two DePIN subdomains most likely to pioneer the data value network.

3.3 Middleware infrastructure will play a crucial role in bridging the two growth curves for DePIN.

The article begins by analyzing the deconstruction of DePIN from a supply chain perspective, where middleware acts as the critical channel bridging the physical world to the digital world.

If the first growth curve is driven by hardware and the second by data, successfully transitioning from the first to the second curve requires a key role that connects devices with miners and users on both the supply and demand sides. This role is fulfilled by middleware, which provides standardized interfaces and toolkits for token transactions and settlements on public or layer-two chains, enhancing liquidity through layer-two protocols.

Firstly, blockchain serves as the settlement layer for DePIN project tokens, primarily handling token settlements and data validation:

Solana

• Currently, Solana is the preferred platform for most DePIN projects due to its low latency and high performance, ideal for deployments like Helium and HiveMapper. However, mainstream public chains initially designed for transactions and SDKs optimized for DePIN projects may not fully meet their requirements.
• DePIN projects require specialized public chains that offer features such as data validation and accessibility for AI. For instance, Near emphasizes its narrative around AI, while IoTeX has tailored its public chain for IoT devices. These customized public chains better meet the specific needs of DePIN projects, ensuring efficient operation in data processing and device connectivity. IoTeX also provides a range of standardized interfaces and plug-and-play tools, facilitating rapid deployment of DePIN applications on the IoTeX chain.

Peaq

• A chain designed specifically for DePIN, Peaq includes a suite of modular functionalities such as self-sovereign identity for machines/things (peaq ID), role-based access management (peaq access), peer-to-peer payments (peaq pay), and data validation (peaq verify). The Web3 machine control center (peaq control) offers a comprehensive way to onboard any machine, device, sensor, vehicle, or robot into the network, allowing projects to easily deploy DePIN applications on the Peaq chain using these modules. Peaq also enables seamless interoperability with multiple chains, making it easy to migrate data from other projects to the Peaq chain.
• Additionally, middleware connecting devices and the DePIN network plays a critical role by providing user-friendly one-stop services for developers unfamiliar with crypto economics. This is a deterministic requirement for the prosperity of the DePIN ecosystem. These projects include developer-friendly tools and one-stop services like DePHY and Swan, as well as specialized re-staking protocols like Parasail designed to enhance native token liquidity and value utilization within the DePIN network.

DePHY

• DePHY offers open-source hardware solutions, SDKs, and tools for DePIN projects, significantly reducing the manufacturing and network messaging costs of bridging hardware products to the blockchain with synchronized sub-second (500ms) off-chain network nodes.
• For example, Starpower developed Starplug based on DePHY, an intelligent socket that records user electricity usage and rewards tokens. DePHY has open-sourced various customizable hardware design solutions to help Starpower quickly complete the hardware design of Starplug and enter mass production. Additionally, DePHY shares its hardware production resources, providing Starpower with significant manufacturing convenience and cost efficiency. Starpower also utilizes DePHY’s open-source hardware solutions with a DID system and built-in TEE module to ensure data security and integrity.

Swan Chain

• Swan Chain (formerly known as FilSwan) is a full-stack AI smart chain based on OP Stack technology, dedicated to decentralized cloud computing networks tailored for AI. Through Swan Chain, enterprises, data centers, cloud providers, and cryptocurrency mining operators contribute idle GPU resources to the network. They earn stable income by monetizing computational assets through a UBI incentive model. Simultaneously, enterprises, developers, and AI enthusiasts can leverage Swan Chain’s global computational resource network to build and deploy decentralized AI models and applications, potentially saving up to 70% of computing costs.
• Developers often encounter complexity in managing tokens and using various SDKs, diverting attention from the core functionalities of their products. The lack of convenient Web3 application access tools hinders efficient creation of decentralized applications (dApps), slowing down development and limiting economic potential. Swan Chain addresses this by providing a suite of development tools that enable developers to access resources across multiple blockchains, simplify storage provider selection, and manage data. Introducing a cross-chain consensus layer provides a comprehensive infrastructure solution, enabling developers to seamlessly access Web3 resources on multiple blockchain networks using cross-chain tools. These tools include payment channels and Web3 infrastructure, streamlining the development process.
• Furthermore, Swan Chain supports the use of a single cryptocurrency to pay for Web3 services across different chains, reducing barriers to use and saving developers time and effort in integrating various Web3 services.
• Public data shows that during the testnet phase, Swan Chain has over 25 million active addresses on-chain, with over 2,000 computing providers offering more than 2,100 GPUs. Computing resources span 17 countries and over 30 regions globally, ensuring efficient execution of computing tasks and data security. As the only AI DePIN project in the fourth phase of the Binance Labs Incubation Program, Swan Chain has received investments from institutions such as Binance Labs, SNZ, Waterdrip Capital, Protocol Labs, and Chainlink.

Unibase

• Current data availability solutions like EigenDA, Celestia, and Avail are primarily designed for ledger transactions, facing issues in performance and capacity that cannot support the big data scenarios of AI and DePIN. They rely on DAC or DAS for off-chain data validation, lacking the security and legitimacy of Ethereum.
• AI training requires trustworthy data, which Unibase addresses with an AI data validation solution based on zero-knowledge proofs. This allows anyone to securely and economically deploy decentralized, verifiable, autonomous AI applications on Unibase. Unibase serves as a DA layer and storage layer, supporting millions of DePIN devices to contribute storage, computing power, and bandwidth for mining. It provides secure, highly available storage, verifiable data inference services, and supports DePIN with high-quality native data for AI training. Compared to Swan, Unibase focuses more closely on AI application scenarios.

Parasail

Parasail is a re-staking protocol specifically designed for DePIN services. DePIN projects have the potential to generate sustainable income through decentralized infrastructure and services, but widespread adoption and trust building are often difficult and costly. Parasail provides economic guarantees to DePIN services by activating idle assets (such as staked or re-staked tokens) within mature networks, helping DePIN projects attract more users and service providers.

Currently, Parasail primarily offers re-staking services on the Filecoin chain and plans to expand to other chains like Iotex, Arbitrum, and Ethereum in the future. Using FIL as an example, here’s how Parasail works:

• Tokenizing staked FIL: Storage providers can stake FIL and mint pFIL tokens at a 1:1 ratio.
• pFIL open market: Storage providers can sell pFIL for liquidity, while token holders can purchase pFIL to receive FIL mining rewards.
• Risk recovery and reward distribution: When staked FIL is released or miners receive block rewards, the Repl protocol recovers FIL and repurchases pFIL through auctions, with excess earnings distributed as rewards.

Within the first two weeks of its launch, Parasail’s Total Value Locked (TVL) exceeded $10 million. According to Defillama data, Parasail’s TVL has now surpassed $60 million.

On the other hand, the integration of decentralized storage and AI training in decentralized computing, known as AI + Data integration, is also worth noting. At the recent Data+AI Summit, Databricks announced several new features and applications combining big data and AI. Founder Ali Ghodsi emphasized the team’s mission to “democratize DATA + AI” and underscored the importance of advancing AI + Data integration.

Databricks

Databricks is a general-purpose data analytics platform integrating data warehouses, data lakes, and ultra-fast big data query engines. The company has entered the AI field and introduced data analysis applications based on natural language input. In 2023, Databricks’ valuation exceeded $38 billion with revenues exceeding $1 billion and an annual growth rate of 70%. Therefore, there is significant potential for a general-purpose data analytics platform based on decentralized storage and decentralized cloud computing.

Kyve

Kyve is a Web3 project similar to Databricks, offering decentralized data analytics services such as data lakes and data pipelines. The Kyve network enables decentralized data validation, immutability, and retrieval through fast and simple tools. Uploaders collect data from sources, store it on decentralized providers (like Arweave), and submit it to data pools for validation by network participants (validators). Data consumers can access validated data to build decentralized applications without trusting Kyve or any intermediary institutions.

4. Reflections on DePIN Narrative, Limitations, and Challenges Beyond Growth Curves

The DePIN track encompasses a wide range of categories, including storage, computing, data collection and sharing, and communication technologies. Each sector presents varying degrees of competitive landscapes. During the bull market cycles from 2020 to 2022, decentralized storage and computing tracks have consistently been favourites in the crypto market. Leveraging this trend, Waterdrip Capital strategically positioned itself early on in many projects now classified under DePIN, actively engaging and driving development in this field. However, despite demonstrating significant potential, the development of DePIN also faces numerous limitations and challenges, alongside opportunities to mine valuable assets.

Waterdrip Capital’s Ecosystem Layout in the DePIN Track

DePIN projects with hardware supply chains and sales channels exhibit higher growth potential.

The concept of DePIN inherently emphasizes a form of crypto-economics based on physical hardware. Projects with robust hardware supply chain capabilities can achieve rapid business growth in the first curve through device sales and agent models. Scaling up networks with cost advantages (considering the relatively high selling price of DePIN devices relative to cost) can yield substantial profit. Furthermore, establishing scalable hardware infrastructure supports subsequent phases of business growth in terms of user acquisition, operations, and maintenance, ensuring robust cash flow.

Cross-chain interoperability maximizes data value

Currently, most DePIN projects are deployed on Ethereum, Solana, Peaq, and IoTeX. While cross-chain transactions have mature solutions, achieving interoperability among multiple chains can maximally unlock data value for DePIN projects. This not only represents a potential breakout point for the DePIN track but also directly benefits cross-chain protocols amid this growth wave.

Data credibility is crucial for AI development

Data used for training AI poses risks related to ethics, legality, and malicious tampering. Contamination or malicious alteration of data can impact AI outcomes. Blockchain’s traceability and verification mechanisms enhance data credibility by ensuring the integrity and transparency of data sources, guarding against tampering. Additionally, integrating crypto-economic models incentivizes the generation of high-quality data from the supply side, further fostering the maturity and widespread adoption of the AI industry. Companies like IBM and others are already exploring how blockchain technology can enhance the credibility and security of AI data.

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