6 min readDePIN, short for Decentralised Physical Infrastructure Networks, was one of crypto’s most dominant trends in 2024. Enabled by blockchain technology, DePINs allow pools of contributors to own and control networks of real-world hardware. Even though the sector is relatively nascent, it has already grown to a market capitalisation of $44.34 billion, led by high-profile projects like Bittensor, Render and Filecoin.
This article explains how DePINs work and explores use cases associated with the projects mentioned above before discussing how these networks can help to drive adoption for blockchain protocols.
Depin Definition
Physical infrastructure networks, like energy grids, are expensive to build and maintain and have traditionally been controlled by central authorities. DePINs offer an alternative model: peer-to-peer (P2P) networks that allow entities (using their own hardware) to supply resources directly to consumers and take part in a network’s governance. Blockchain technology serves as a record of contributions and a means to incentivise participation by issuing rewards in the form of cryptocurrency.
DePINs distribute either physical or digital resources, generally distinguished by their location. The hardware used to supply physical resources needs to be situated in a particular place, such as an energy grid near a city. On the other hand, digital resources, like computing power, can be supplied from anywhere in the world. Nevertheless, both types require some degree of infrastructure, hence the use of physical in the umbrella term.
One of the biggest advantages of DePINs is scalability. While centralised networks may have to invest in hardware or facilities to meet growing demand, which sits dormant if demand subsequently falls, DePINs can generate additional capacity by attracting new suppliers seeking to monetise their surplus resources. Leveraging blockchain technology also yields benefits:
DePINs are permissionless, meaning anyone can become a supplier
Decentralised networks are less vulnerable to a single point of failure
The fee structure should be fairer to consumers because DePINs cut out intermediaries
However, it’s still early days for this new model. Adoption is a key success factor, especially if a supplier’s profitability depends on the value of a DePIN project’s native token.
Depin Use Cases
While there are a broad range of use cases for DePINs, data from CoinMarketCap shows that the three projects with the largest market capitalisation as of November 2024 were Bittensor ($4.1 billion), Render ($3.8 billion) and Filecoin ($3.3 billion). Rounding out the top five (but not covered in this section) are decentralised video streaming platform Theta Network ($1.9 billion) and Arweave ($1.3 billion), a decentralised storage network.
Bittensor
Artificial intelligence (AI) is already having a major impact on our day-to-day lives, but centralised models such as ChatGPT put a huge amount of control in the hands of a limited number of tech giants while providing little transparency into how they work. Decentralised AI (DeAI) has the potential to overcome these challenges, but few blockchains can provide the computing power required to train models and produce an output, known as inference. That’s where DePINs like Bittensor come into play, a protocol allowing suppliers to contribute processing power, which it uses to collectively train and improve AI models. The network rewards suppliers with its TAO token.
Render
Decentralised Computer Networks democratise access to computing resources, making it more affordable to smaller companies and individuals. The Render Network connects suppliers with surplus graphics processing unit (GPU) power with artists and studios that use it to create graphics, such as converting three-dimensional models into two-dimensional images. Payments in its RNDR token are held in escrow until the protocol’s ‘proof of render’ consensus mechanism confirms that the graphic has been successfully created.
Filecoin
Decentralised storage networks are a more secure way to store data than centralised databases which are vulnerable to hackers and outages. Suppliers can generate income by renting out unused storage space on their hardware, while users benefit from lower costs and greater peace of mind. Launched in 2020 as an alternative to the cloud, Filecoin was one of the first projects in the DePIN space. Contracts can be flexible, and users pay to store and retrieve their data in FIL, the platform’s native token.
Depin Impact on Blockchains
One of the biggest drivers of blockchain adoption is the number of real-world use cases it enables, which contribute to its network effect (the increase in value as more people use it) and generate transaction fees. That’s why it’s important for protocols to embrace innovations, such as DePINs, DeAI and decentralised identity solutions.
Some DePIN projects like Bittensor and Filecoin run on standalone blockchains, but others rely on third-party protocols. Given the sector’s market cap, securing a sizeable share should boost the value of a protocol’s native token.
Take Solana, for instance, which hosts Render (although it also operates on Ethereum and Polygon) and Helium, a DePIN project providing a decentralised WIFI network. Solana is widely considered one of the most suitable chains for DePINs due to its efficiency (according to Chainspect, it can process 1,154 transactions per second as of 11 December 2024, scalability and low transaction fees ($0.000032 as of 11 December 2024, according to Dune analytics).
According to the latest Solana DePIN Snapshot, published by analytics firm Flipside, Render and Helium were among the strongest drivers of DePIN activity on the network in the first half of 2024. The number of suppliers on Render peaked at 1,900 and rewards reached 228,000 RNDR in January 2024 (worth 1,048,800 at that time), while Helium subscribers hit nearly 90,000 in the same month.
Conclusion
DePINs offer an alternative to traditional physical infrastructure networks, such as energy grids. They operate as P2P networks, which allow suppliers to provide resources directly to consumers and earn crypto rewards in return. Some of the benefits they offer include scalability, security and accessibility.
Examples of some of the most successful DePIN projects to date include Bittensor, which facilitates onchain AI; Render, a decentralised computer network; and Filecoin, a decentralised storage network.
By providing real-world use cases, DePINs can contribute to a blockchain’s growth. Solana, home to Render and decentralised WIFI network Helium, is one of the most popular protocols among DePIN projects thanks to its scalability, efficiency and low transaction fees. To gain exposure to the DePIN sector without purchasing tokens directly, a wide range of existing products already target this promising market.
