Introduction: DePIN – Current State and Outlook
The decentralized physical infrastructure network (DePIN) is reshaping the blockchain industry through innovative utilization of existing infrastructure and data-centric business models. DePIN stands out from traditional IoT frameworks with its decentralized efficiency and cost-effectiveness.
This report explores the rapidly developing DePIN sector, particularly within the Solana network, renowned for its robust infrastructure and innovative applications. DePIN prioritizes practical profitability over speculative finance and has played a crucial role in integrating technologies such as privacy enhancements, zero-knowledge proofs, and artificial intelligence. With its strategic compatibility with other ecosystems, DePIN aims to transform the economic system through data integrity and scalable solutions.
As the leading platform for DePIN, Solana integrates high-performance blockchain technology with physical networks, promising significant economic returns and pioneering the fusion of technology and practical applications. This article is written by the research team of HTX Ventures, the global investment department of Huobi HTX, which integrates investment, incubation, and research to identify the most outstanding and promising teams worldwide. Currently, HTX Ventures has supported over 200 projects across multiple blockchain tracks, with some high-quality projects already listed on Huobi HTX Exchange.
Conclusion
Although DePIN is referred to as a decentralized physical infrastructure network, its core business growth logic is not solely based on hardware but rather on how to effectively utilize data, whether it be data storage, transmission, sharing, or usage. DePIN does not need to compare itself to traditional IoT or categorize itself as Web2 or Web3. As long as it can efficiently utilize data and effectively allocate resources, it is considered a valuable asset.
The development of DePIN will combine blockchain technology to solve data trust issues and expand into a large-scale protocol for the Internet of Things, connecting people to people, people to machines, and machines to machines in an infinite network.
When examining DePIN projects, it is important to focus on their actual profitability rather than speculative or financial attributes, which are more applicable to areas like DeFi, meme coins, and Brc20 tokens. Evaluating DePIN should emphasize the project’s genuine profit potential.
In the short term, DePIN is worth considering for its strategic compatibility with other ecosystems, including DePIN x Privacy, DePIN x Gaming, DePIN x ZK, and DePIN x AI. In the long term, the future blueprint of DePIN includes the gig economy, sharing economy, and data trust.
Solana Network: A Preferred Platform for DePIN Deployment
Solana Network has become the preferred blockchain for deploying DePIN projects. Solana DePIN represents over $100 billion in fully diluted value and a market capitalization of $4 billion.
Solana has several advantages in the development of DePIN:
1. Performance advantage combined with technological upgrades
2. Strong token standards and ecosystem
3. Cost advantage
4. Concentrated liquidity, strong ecosystem composability, and unified community
5. Active developer community with continuous innovation and new concepts
What is DePIN?
In a research report titled “The DePIN Sector Map” released by Messari in early 2023, the concept of DePIN (Decentralized Physical Infrastructure Networks) was officially introduced, defining it as “deploying real-world physical infrastructure and hardware networks using cryptographic economic protocols.” In short, DePIN incentivizes participants to collectively build a physical infrastructure network through blockchain-based token rewards.
Although the term DePIN is relatively new, projects that deploy real-world physical infrastructure and hardware networks have existed for a long time. For example, the decentralized network Helium was established in 2013, and decentralized storage Storj was established in 2014. These teams have been exploring decentralized ways of building physical infrastructure networks in fields such as communication and storage. Subsequently, fields such as the Internet, artificial intelligence, energy, and data collection gradually joined in. Although there are differences in specific domains, the core logic remains the same, resulting in the flourishing DePIN sector we see today.
Overall Status of the DePIN Sector
Breakdown of DePIN Sectors
According to data from Messari and Depin.Ninjia, the DePIN ecosystem in 2023 has developed to include over 650 projects with a market value of $35 billion, covering six sub-industries: computing (250 projects), artificial intelligence (200 projects), wireless (100 projects), sensors (50 projects), energy (50 projects), and services (25 projects). Messari predicts that the total potential market size of the DePIN sector will reach approximately $22 trillion and may reach $35 trillion by 2028.
According to data from CMC, there are currently 60 listed DePIN projects with a total market value of $1.33 billion. The top 100 DePIN projects in terms of market capitalization include FIL, RNDR, HNT, THETA, BTT, AKT, and AR. Other notable projects in the sector include IOTX, ANKR, and AI-related projects such as TAO. From the top 10 DePIN projects in terms of market capitalization, most belong to the AI, storage, and computing domains. DePIN currently holds a small share of the overall crypto market, lower than sectors such as meme coins, DeFi, and NFTs. In comparison, the traditional IoT industry has 21 projects with a market capitalization of over $100 million, and only four projects have a market capitalization of over $1 billion.
Based on this data, the potential profit expectations for entering the DePIN sector in the short to medium term are around 243 times, and the long-term profit expectations exceed 400 times.
Breakdown of DePIN Project Categories
Here, we refer to IOTEX’s breakdown of project categories, which can be divided into software and hardware components. The hardware part includes sensor and wireless network categories, while the software part includes computing, storage, network distribution, and artificial intelligence categories.
DePIN Projects: Leveraging Data for Value
Although DePIN is referred to as a decentralized physical infrastructure network, its core business logic revolves around extracting value from data. The sensor category is responsible for data collection, the wireless network and network distribution category are responsible for data transmission, the computing category is responsible for data computation, the storage category is responsible for data storage, and the artificial intelligence category is responsible for data application. Therefore, while DePIN projects start with hardware, their true development lies in how they effectively apply data, similar to the development model of traditional internet economies.
When evaluating the prospects of a DePIN project, one should think from a data perspective. The project that utilizes and controls data the most effectively is considered the best. It is important to focus on the practical value rather than speculative aspects in the crypto market.
DePIN Investors
As mentioned earlier, there have always been investment institutions and entrepreneurs involved in the DePIN sector. However, the market environment in early 2023 was not conducive to the launch of new DePIN projects, and the new paradigm of DePIN was still being explored. Therefore, few new DePIN projects were launched. By the end of 2023, due to the improved market environment and accumulated exploration by entrepreneurs, many projects gradually took shape and were released to the market. The subsequent actions were then captured by the market. During this time, DePIN quickly gained a significant position in a market with limited technological innovation.
For example, VC firms such as Multicoin, Borderless, A16Z, and HTX Ventures have made significant investments in the DePIN sector. The projects they invest in are highly applicable and have low speculative attributes. However, in comparison to their overall portfolios, DePIN projects only make up a small portion.
The following image depicts the funding status of top DePIN projects:
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Solana Network Research in the DePIN Ecosystem
Solana Network has become the preferred blockchain for deploying DePIN projects. Solana DePIN represents over $100 billion in fully diluted value and a market capitalization of $4 billion.
According to CMC, the top 500 Solana DePIN projects include Render Network (RNDR), Helium Network (HNT), Helium Mobile (MOBILE), and other DePIN projects such as Helium IOT (IOT) and Hivemapper (HONEY). Recently, Solana-related projects such as the HNT series (MOBILE and IOT), as well as the upcoming project getgrass, have gained significant attention.
DePIN and Solana Network have mutually chosen each other. Solana’s ability to support Mass Adoption, especially for DePIN and Web2 applications, has propelled Web3 into the spotlight. Solana’s cNFT provides more cost-effective authorization certificates for DePIN / PoPW nodes, which is a common practice.
The migration of projects like RNDR and Helium has empowered these projects with stronger capabilities. For example, the transition to Render has brought new capabilities such as real-time streaming, dynamic NFTs, and state compression, significantly improving network performance and scalability while opening up richer and more diverse application scenarios for users.
DePIN projects, unlike high-value DeFi applications, are more similar to traditional concepts like edge computing in the IoT field. They focus more on stability and low costs. Solana’s advantages in synchronization speed make it the only blockchain capable of accommodating the deployment of a large number of IoT devices, such as the over 300,000 Helium devices and over 3,000 5G devices.
DePIN brings high value to the Solana ecosystem. Projects like Helium have significantly increased the number of active wallets. For example, Helium reports over 60,000 active wallets participating in activities such as rewards, staking, delegation, or token burning every month. Additionally, over 30,000 wallets use other SPL programs, highlighting Helium’s impact on the Solana ecosystem.
From a regulatory perspective, DePIN demonstrates the practical application of Solana in the eyes of regulatory agencies and policymakers, enhancing its legitimacy and brand awareness.
Advantages of the Solana Network
1. Performance advantage combined with technological upgrades
2. Robust token standards and ecosystem
3. Cost advantage
4. Concentrated liquidity, strong ecosystem composability, and unified community
5. Active developer community with continuous innovation and new concepts.
