Also Read: Decentralized Finance (DeFi): Definition & How It Works
Types of DePIN
DePIN is divided into two types, namely:
- Physical Resource Network (PNR): Infrastructure has physical locations, such as IoT networks or renewable energy.
- Digital Resource Network (DNR): Infrastructure in the form of digital services, such as decentralized storage in the cloud.
Types of DePIN Projects
DePIN is an umbrella term that encompasses various projects where cryptocurrency meets physical technology. DePIN projects can be categorized into:
- Decentralized Wireless Networks: Networks for IoT devices, broadband, and mobile networks provided by the community.
- Decentralized Data Storage: Users can rent out their hard drives to store other people's data.
- Decentralized Computing: Computing resources such as CPUs or GPUs are crowdsourced, so that running applications and processing data are cheaper and more accessible.
- Mapping and Sensor Networks: DePIN projects build sensor and map data using community-owned cameras and sensors.
- Content Delivery: In the Content Delivery Network (CDN) model, the community runs nodes that store content, making it easier to deliver to users.
- Energy and Resource Sharing: Projects that enable the sharing of physical resources, such as electricity, are in development.
How DePIN Works
DePIN works by combining blockchain technology and decentralized governance mechanisms. In general, this is how DePIN works:
- Physical Contributions: Contributors share physical resources or assets, such as bandwidth, energy, or data storage space.
- Infrastructure:
- Blockchain: Ensures security and transparency, records data, verifies contributions, and manages token payments.
- Smart Contract: Automatically calculates contributions and distributes rewards
- Token Rewards: Contributors receive tokens for their contributions to the network.
Also Read: What is Blockchain and How Does It Work? A Complete Guide for Beginners
Examples of DePIN Projects
Here are examples of DePIN projects that are pushing the boundaries of decentralized infrastructure in various sectors.
Helium
Helium is a DePIN project in the form of a decentralized wireless network on the Solana blockchain. Helium provides long-range IoT connectivity, including 5G mobile signals.
Contributors install Helium hotspots that act like mini cell towers or IoT gateways. In return, hotspot owners receive Helium crypto tokens.
Pipe
A DePIN project that provides a decentralized content delivery network on the Solana blockchain. Anyone can run a point-of-presence node that captures and delivers content such as videos, software downloads, and more.
This content can be accessed by users in the node's area. This way, load times are faster because the content is sent from a nearby node, not a central server at a faraway location.
Node operators receive PIPE tokens in return for providing bandwidth and storage space for the network.
Decen Space
A Solana-based DePIN project that builds a network of ground stations for satellites. The core idea of this project is to connect satellite operators with ground antennas around the world.
Ground station owners can participate in the Decen Space network. They provide their antennas' downlink and uplink time for spacecraft operators, then receive token rewards.
Hivemapper
This DePIN project is building a decentralized global mapping network. Its contributors are everyday drivers who install Hivemapper dashboard cameras in their cars and take pictures of the road while driving.
The collected data is used to create a live, ever-updating map of the world. In return, contributors receive HONEY tokens.
Render Network
Render Network is a DePIN project that provides access to computing power. This project offers a cloud platform for designing applications.
Through this project, contributors can rent out their GPUs for graphics rendering. In return, they receive RNDR tokens.
Why is DePIN Popular?
Currently, DePIN's popularity is on the rise. Many believe that DePIN solutions will be the future of infrastructure on a global scale. Here are some reasons why:
- Symbol of Community-Driven Infrastructure: DePIN differs from typical public infrastructure projects, which are often managed by the government or a private company. DePIN projects are democratic and fair.
- Blockchain Transparency: DePIN uses transparent blockchain technology, which increases user trust.
- Community-Driven Needs: DePIN projects are designed for the specific needs and values of local communities.
With DePIN, users can benefit from the infrastructure, not the company. Meanwhile, from the contributor's perspective, DePIN is an easy way to leverage existing resources or assets to generate passive income.
Advantages and Challenges of DePIN
Advantages of DePIN
- Improving Security and Transparency: Traditional centralized systems are vulnerable to cyber attacks or operational disruptions. DePIN eliminates this risk by distributing control over the infrastructure across the network.
- Increasing Scalability: In traditional systems, infrastructure development requires high costs and approval from various parties. Meanwhile, in DePIN, the network can grow organically as more participants join.
- Reducing Cost and Resources: DePIN incentivizes individuals to contribute their unused resources, eliminating the need for large investments in infrastructure development.
Challenges of DePIN
- Regulatory Barriers: DePIN involves critical infrastructure, such as wireless networks or electrical grids, that operate across borders. Therefore, DePIN must comply with a variety of regulations designed for traditional systems.
- Complex Systems: In integrating blockchain technology with physical hardware such as hotspots, sensors, and storage devices, factors such as hardware conditions, network security, and interoperability must be considered.
- Adoption Barriers: The success of DePIN depends on how many individuals are willing to contribute their resources. However, this can be hampered by high initial costs, lack of technical capabilities, or unclear short-term benefits.
Conclusion
DePIN is an innovation in physical infrastructure development. By combining real-world resources with blockchain technology, DePIN enables the development of decentralized and transparent services with high community involvement.
In Indonesia, DePIN has the potential for widespread application. It can be implemented in designing renewable energy systems, urban transportation development, and even internet networks in rural areas. DePIN is the gateway to more affordable and accessible infrastructure development.
