Decentralized Physical Infrastructure Networks (DePINs) are blockchain-based networks that reward people who contribute hardware like servers and energy grids.
You could think of them as a natural next stage in blockchain’s evolution:
Stage 1
Blockchains are configured to incentivize network participation (e.g. securing transactions and deciding on updates)
Stage 2
Blockchains are configured to incentivize resource contribution (e.g. the physical equipment needed to keep the network running)
How are people incentivized? With token rewards: payment in the form of a network’s native token (the cryptocurrency that belongs to a specific blockchain and is essential for its functioning).
An interesting use case is cloud storage. Typically cloud storage is centralized and can lead to predatory pricing and exploitation of personal data. Companies like AIOZ Network are working towards a more distributed model by incentivizing the contribution of hard drives: users with extra hard drive space earn tokens by renting it out. They’re paid by those who need space, thus creating a circular economy.
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The DePIN flywheel
In theory, DePINs create a flywheel: a system that builds momentum through a positive feedback loop.
Potential uses
Cloud storage
Participants contribute data storage space (instead of a central entity renting it)
Hardware contribution: Hard drives, Servers
Reward: Network's native token
Purpose: Avoid predatory pricing and mitigate the risk of a single point of failure
Smart cities
Citizens contribute data for city management
Hardware contribution: Sensors, Thermostats
Reward: Network's native token
Purpose: Improve accuracy of data readings to enhance public services
Ride-hailing apps
Riders and drivers engage directly without intermediaries
Hardware contribution: Vehicles
Reward: Network's native token
Purpose: Removal of intermediary’s profit leads to lower prices for riders and higher earnings for drivers
Decentralized AI
Participants provide computing power for processing AI workloads
Hardware contribution: Graphics Processing Units (GPUs)
Reward: Network's native token
Purpose: Democratize AI development so that it’s fair, transparent, and beneficial to society
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