DePIN Investment Logic Overview: Opportunities and Challenges Coexist

Grayscale listed some leading DePIN projects and their market capitalizations in the DePIN research report released at the beginning of the year. Since 2022, DePIN and AI have been considered two major new directions for cryptocurrency investment. However, it seems that there has not yet been a flagship project in the DePIN space. Although Helium is a leading project, its emergence predates the DePIN concept itself; projects such as Bittensor, Render, and Akash are more often categorized under the AI track.

This indicates that the DePIN track currently lacks a sufficiently strong leading project to break the industry's ceiling. Therefore, there may still be some investment opportunities in the DePIN track in the next 1-3 years. This article will sort out the investment logic of DePIN from scratch, explore why DePIN is worthy of attention, and propose a simple analytical framework. Since DePIN is a comprehensive concept covering multiple sub-tracks, this article will explain the relevant concepts from a more abstract perspective, while also providing some specific examples.

Why Pay Attention to DePIN Investment

DePIN is not just a buzzword.

First, it is essential to clarify that decentralizing the infrastructure of the physical world is not a flashy idea, nor is it merely a "narrative hype"; it is something that can be implemented. In DePIN, there are indeed scenarios where decentralization can "achieve" or "optimize" certain things.

Taking the telecommunications field as an example, traditional communication operators often need to invest huge amounts of money for spectrum license auctions and base station deployment. Helium Mobile, through a community crowdsourcing approach, spreads early costs among each user, allowing individuals to access the network by purchasing hotspot devices for just $249 or $499, becoming "micro-operators." This model significantly reduces overall investment.

In the field of AI data, traditional AI companies need to pay high API fees to social platforms to acquire training data, and they face increasing copyright and technical restrictions. Grass has solved this problem through distributed Web Scraping, allowing users to share idle bandwidth by downloading a browser extension, which helps scrape publicly available web data and earn token rewards. This model significantly reduces the data acquisition costs for AI companies while achieving data diversity and geographic distribution.

as a junction between infrastructure and users

DePIN can better balance the advantages and disadvantages of infrastructure projects and user-oriented projects.

1. DePIN is based on the real demands of the physical world, such as energy, wireless networks, etc. High-quality projects have a solid product-market fit and revenue sources, are not easily falsifiable, and are easily understood by the market.

2. DePIN also has user-side usage needs that can attract attention. For example, users can download the Grass browser extension to contribute idle bandwidth. Currently, Grass has reached 2.5 million terminal users, many of whom are non-crypto native users.

DePIN Investment Framework

Direction

From the perspective of market size and demand intensity, 5G and wireless networks are large markets, while in-vehicle data and weather data are small markets. It is necessary to consider whether the demand is essential or strong. Even if DePIN can only capture a small portion of the traditional large market, it is still quite substantial under the scale of the cryptocurrency field.

product

The DePIN model is particularly suitable for industries with high capital requirements, high entry barriers, obvious monopoly patterns, and underutilization of resources. The assessment of product-market fit mainly focuses on two points:

1. Supply Side: Has DePIN achieved functionalities that were previously unattainable, or does it have significant advantages over existing solutions in terms of cost, efficiency, etc. (.

2. Demand Side: The products provided by DePIN must have real market demand, preferably with a strong willingness to pay.

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) hardware

The hardware involves a timeline of "manufacturing - sales - distribution - maintenance." The project needs to consider whether to design and manufacture the hardware in-house or use existing hardware, how to price and sell it, how to distribute it efficiently, and the convenience of user maintenance. Ideally, the project should minimize the barriers to user participation in the early stages.

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) token economy

Token mechanism design is the most challenging aspect of DePIN projects. Unlike other fields, DePIN requires early incentives for various participants in the network, so it is usually necessary to launch tokens in the early stages of the project.

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) Team

An ideal team configuration should include: at least one member with extensive experience in relevant traditional industries, responsible for technology and product implementation; and at least one member from the crypto industry, proficient in token economics and community building, who understands the preference differences between crypto users and non-crypto users.

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) Other factors

Regulatory issues also need to be considered, for example, collecting road images and data may have sensitivities in certain areas.

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Summary

Although the characteristics of DePIN that integrate with reality result in a longer development cycle, some projects have already shown positive signals. For example, Helium Mobile has partnered with T-Mobile to achieve seamless network switching; and it has collaborated with Telefónica in Mexico to begin expansion in South America.

The two unique advantages of DePIN are:

1. Compared to traditional monopolistic enterprises, DePIN has a more flexible deployment method and can align incentives within the ecosystem through a token model.

2. DePIN has the potential to generate positive externalities, creating value for real life and other industries, and feeding back the entire ecosystem through token economics.

However, DePIN also faces many uncertainties, such as cyclical uncertainties caused by hardware operations, regulatory risks, due diligence risks, and so on.

Overall, DePIN will be one of the key areas to watch in 2025, and more related research findings will be released in the future.

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