Bridging the Gap: How DePIN can enable Blockchain’s Real-World Impact

Ceras Ventures
6 min readJul 16, 2023

With the growing adoption of blockchain technology, there has been an increasing focus on utilizing decentralized systems to enhance and optimize physical infrastructure. This report explores the potential applications, benefits and future prospects of decentralized physical infrastructure in various sectors including applications of our Ceras portfolio.

Introduction

DePIN, an abbreviation for Decentralized Physical Infrastructure, ncompasses infrastructure projects that leverage tokenization to coordinate and incentivize their initial development phase. The fundamental concept behind DePIN is a departure from the traditional approach, where corporations, particularly in sectors like telecommunications or energy, invest significant resources in constructing and upkeeping infrastructure. In contrast, Web3 companies aim to shift this burden by engaging a decentralized workforce of volunteers who contribute to infrastructure expansion and maintenance, receiving token incentives as rewards for their contributions.

This model entails a reversal of the conventional paradigm, as Web3 entities endeavor to outsource the establishment and management of infrastructure to a community of incentivized individuals, with the intention of monetizing the venture once a substantial coverage rate is achieved. This liquidity incentive principle aligns with strategies seen in other Web3 sectors, such as DeFi’s yield farming, play-to-earn gaming models, and move-to-earn initiatives. By embracing this approach, DePIN projects harness the power of tokenization to attract participation, build a self-sustaining ecosystem, and leverage collective efforts for accelerated infrastructure development and subsequent monetization.

What are the advantages of DePIN?

By embracing the concept of crowdsourcing physical infrastructure, Decentralized Physical Infrastructure Networks (DePINs) have the ability to scale rapidly and cost-effectively compared to traditional projects. In DePINs, the hardware and maintenance of the network are distributed among the participants, aligning their interests and encouraging adoption and growth. This stands in stark contrast to the traditional model, where a centralized entity dictates the terms and conditions, primarily driven by quarterly reports.

One of the key advantages of DePINs is their openness and accessibility. Unlike traditional projects that impose restrictions on participation and activities, DePINs are open, democratic, and permissionless. Additionally, they are resistant to censorship, as there is no centralized gatekeeper with arbitrary power to deny access to any party.

Source: Messari

While these aspects of DePINs are important in fostering innovation, it is crucial for long-term success to have clear business advantages. Fortunately, DePINs possess several competitive edges compared to the traditional model:

  1. Cost Efficiency: By crowdsourcing the hardware and its maintenance, DePINs operate at a fraction of the capital and operational expenditures of traditional companies. This eliminates the need for massive infrastructure investments and large employee teams, allowing DePINs to profit while incentivizing network members to take care of expenses.
  2. Secure Peer-to-Peer Payments: Leveraging blockchain technology, DePINs offer secure peer-to-peer payments without the reliance on payment processors that often charge fees.
  3. Access to Web3 Tools and DeFi Services: As Web3 natives, DePINs provide network participants with direct access to various Web3 tools and Decentralized Finance (DeFi) services. This includes opportunities for financing new hardware and unlocking additional revenue streams
  4. Increased Competition and Innovation: By reducing barriers to entry and upfront capital requirements, DePINs introduce new competition into industries that have been stagnant. This incentivizes innovation across the board.

Furthermore, DePINs offer remarkable versatility when it comes to entering traditionally underserved areas. Take internet access in developing regions, for instance. Legacy telecoms are often unwilling to bear the high upfront costs of infrastructure needed to connect remote communities. In contrast, DePINs empower communities to take charge by covering the upfront costs and labor themselves. This results in more accessible community-owned infrastructure, bringing connectivity to where it is needed most.

The impact of improved internet access is significant as it acts as a catalyst for more DePIN projects across various sectors such as telecommunications, energy, and IoT. The growth of DePINs reinforces the positive feedback loop, enabling further expansion and innovation in these areas.

In conclusion, DePINs offer numerous advantages over the traditional model, including cost efficiency, secure payments, access to Web3 tools and DeFi services, increased competition, and the ability to address underserved areas. The proliferation of DePINs has the potential to reshape industries and create opportunities for connectivity, collaboration, and innovation in diverse communities around the world.

Overview of Decentralized Physical Infrastructure

Decentralized Physical Infrastructure (DePIN) encompasses four key categories that revolutionize traditional infrastructure models:

Source: Messari
  1. Cloud/Storage Networks: Cloud and storage networks provide scalable and secure data storage solutions. By leveraging decentralized infrastructure, DePIN projects offer decentralized file storage, relational database systems, Content Delivery Networks (CDNs), and Virtual Private Networks (VPNs). Example: The Filecoin network, based on blockchain technology, allows individuals and organizations to rent out their unused storage space and earn Filecoin tokens in return. As of 2021, Filecoin had over 2.5 exabytes of storage capacity distributed globally, demonstrating the power of decentralized storage networks in handling massive amounts of data.
  2. Wireless Networks: Wireless networks play a crucial role in enabling seamless connectivity and communication. DePIN projects focus on leveraging technologies like 5G and Low-Power Wide-Area Network (LoRaWAN) for Internet of Things (IoT) applications. Example: With the rapid deployment of 5G infrastructure worldwide, the potential for decentralized wireless networks is significant. According to Statista, the global number of 5G connections is projected to reach 3.6 billion by 2025, fueling the growth of decentralized applications and services that rely on fast and reliable wireless connectivity.
  3. Sensor Networks: Sensor networks consist of interconnected devices embedded with sensors that collect real-time data from the physical world. These networks enable monitoring, data analysis, and automation in various domains, including smart cities, environmental monitoring, and logistics. Example: In the context of decentralized infrastructure, sensor networks can be used to create decentralized mapping systems. For instance, OpenStreetMap, a community-driven mapping project, relies on crowdsourced data collection using sensor-equipped devices. This decentralized approach has led to a global map database that is constantly updated and maintained by contributors worldwide.
  4. Energy Networks: Energy networks focus on aggregating distributed energy sources to create a more resilient and efficient energy grid. Decentralized energy networks enable peer-to-peer energy trading, renewable energy integration, and demand response mechanisms. Example: The Brooklyn Microgrid project in New York is an example of a decentralized energy network. It allows participants to generate, consume, and trade energy within a localized community. Through blockchain-based smart contracts, participants can seamlessly transact and optimize energy usage, fostering energy independence and reducing reliance on traditional centralized energy providers.

peaq: The Ideal Home for DePINs in the Web3 Economy

peaq network, the Web3 network fueling the Economy of Things, is revolutionizing the landscape for DePIN projects. With a comprehensive range of features and benefits, peaq offers DePINs the perfect foundation to thrive. Let’s delve into the key highlights:

Source: peaq
  1. IoT-Focused Functions: peaq presents a suite of IoT-focused functionalities, such as self-sovereign identities for machines/Things (peaq ID), role-based access management (peaq access), and peer-to-peer payments (peaq pay). These features empower DePIN projects to leverage pre-existing capabilities without starting from scratch.
  2. Web3 Machine Control Center: Through peaq control, DePINs gain access to a centralized hub for onboarding various machines, devices, sensors, vehicles, or robots to the network. This comprehensive control center ensures seamless integration within any DePIN on peaq.\
  3. Tailored Tokenomics: peaq introduces a tokenomics model specifically tailored to meet the requirements of DePINs. This model includes network token incentives for dApps and all connected machines, devices, sensors, vehicles, or robots, acting as amplifiers for earnings. Additionally, subsidization pools are available to support the inclusion of new machines into the network.
  4. Interoperability and Integration: peaq boasts native interoperability with other layer-1 networks and DeFi services within the Polkadot and Kusama ecosystem. This compatibility facilitates smooth collaboration and integration with external platforms.

In addition to these features, future-focused enhancements for DePINs on peaq will encompass data verification tools, crucial when working with third-party edge devices, as well as geolocation oracles.

Conclusion

In conclusion, DePINs offer numerous advantages over the traditional model, including cost efficiency, secure payments, access to Web3 tools and DeFi services, increased competition, and the ability to address underserved areas. The proliferation of DePINs has the potential to reshape industries and create opportunities for connectivity, collaboration, and innovation in diverse communities around the world.

Read more about DePIN on peaq’s website here.

Written by : Sarah Abuagela
Additional Sources: peaq, Messari

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Ceras Ventures

Ceras Ventures is a leading global crypto and blockchain investment firm investing capital on behalf of traditional funds, institutions and individuals