As experts in the cryptocurrency, and Web3 marketing agency landscape, we’re always excited when new opportunities emerge in these industries, DePIN is just one example of a concept that could have a transformational effect on our Web3 clients. Decentralized physical infrastructure networks (DePINs) represent a potential evolution in blockchain technology, influencing both the realm of Web3 and the real world.
For decades, centralized digital platforms have leveraged the power of community management to create a network of resources for millions of users. Just look at companies like Uber. With Uber, drivers contribute physical resources and services to a “community”. They’re paid for these services, and advertise them through a digital platform.
While centralized platforms use fiat-based (cash) rewards and traditional perks to grow their communities, Web3 and blockchain-based projects often explore an alternative approach. Similar to centralized platforms, they focus on the power of community (something we prioritize at Crowdcreate), but they offer a more equitable, flexible way to get involved in network opportunities.
DePIN projects extend Web3, (the decentralized internet built on blockchains, smart contracts, and cryptocurrencies) to physical infrastructure services, like ride-sharing and energy networks. They basically blend the benefits of Web3, with real-world services and solutions.
So how exactly does DePIN work, and why is it so important to the future of Web3?
What is DePIN? Defining DePIN
DePIN stands for “decentralized physical infrastructure networks.” These are blockchain protocols that revolutionize tangible infrastructure by applying blockchain, smart contract, and IoT technologies, ensuring transparency, autonomy, and security while improving accessibility.
DePIN is essentially a humanizing force for Web3, with endless applications for data storage, wireless connectivity, computing, energy management, and more. Using a peer-to-peer network structure, DePIN meets demands for tangible solutions, while preserving an open and decentralized marketplace, similar to an NFT marketplace. Let’s break the concept down a bit further.
In many ways, DePIN builds on and extends the existing benefits of the Web3 landscape, drawing elements from crypto and NFT project case studies. DePINs use blockchain as an administrational, record-keeping, and remittance facility. Through the blockchain, they can offer access to a permissionless system for providers and users to access and deliver services and solutions.
Cryptocurrencies and tokens also exist in the heart of the DePIN environment. Token rewards incentivize huge numbers of people, and infrastructure operators to join DePIN global networks. Similar to a standard cryptocurrency project, when the value of a DePIN’s token rises, adoption and demand grow, attracting more investors, users, and service providers.
On a broad level, DePINs are currently classified into two categories:
PRNs: PRNs, or Physical Resource Networks are location-based decentralized networks of physical resources. Providers in these networks offer real-world, non-fungible resources such as connectivity, mobility (transportation services), and energy.
DRNs: DRNs, or Digital Resource Networks, are decentralized networks of digital resource providers, such as computing power, bandwidth, or data storage. They’re not limited to a specific location or environment.
How Does DePIN Work? The DePIN Flywheel
Broadly, DePIN creates a connection between the blockchain and physical facilities. The major role players in the ecosystem are the physical facility provider, the middleware connecting the facility to the blockchain, and a secure public ledger:
Physical infrastructure: The physical facility offered in DePIN could be anything from an internet router to a solar panel, managed by a provider. Some providers already own facilities before taking part in a DePIN project.
Middleware: The middleware is what handles the majority of the connection between the physical infrastructure and the blockchain, such as a decentralized oracle network (DON) that collects data from the outside world and delivers it to the blockchain.
Blockchain: The data gathered by middleware solutions is sent to the blockchain, which serves as the administration and remittance system for providers and users. Based on the data provider, the blockchain distributes demand among providers and computes rewards, which are often sent in the form of cryptocurrencies. It’s similar to how NFT projects reward members of their community.
How Does DePIN Work? The DePIN Flywheel
Ultimately, the heart of DePIN lies in its unique flywheel approach. First, providers are incentivized to share their physical facilities with a decentralized network in exchange for token incentives. For instance, providers may earn tokens whenever they contribute infrastructure and data to the ecosystem. In the pursuit of rewards, providers help supply to arise prior to demand.
For instance, the Filecoin DePIN system initially had a huge storage supply to offer, but as the DePIN ecosystem grows, demand and developer activity follow. The growth of the network leads to a growth in token value, boosting supply incentives, and so on.
In essence, DePIN creates an environment where every participant and component within the community plays a crucial role in accelerating growth, similar to a modern NFT project. For more insight, look at how this NFT project rewarded community members with in-game tokens.
The Benefits of DePIN
DePINs represent a powerful opportunity in the Web3 landscape, facilitating an open market for hardware infrastructure in an environment currently dominated by big tech organizations. One of the biggest benefits of DePIN is the ability to create operator ecosystems that are more efficient and equitable. With DePIN, we can create community-driven protocol networks that coordinate hardware-based services with tokens, driving the way for growth.
DePIN shares a lot in common with DeFI marketing strategies and benefits. Similar to DeFI, DePIN’s top economic benefit is the ability to dissolve intermediaries seeking rent and redistribute their rents to various stakeholders. Look at the Teleport DePIN ride-hailing app, for instance. It coordinates a ride-hailing community using token incentives and its internal protocol, eliminating the need for corporations. This paves the way for better wages for drivers and lower prices for users.
At the same time, operators gain an economic stake in the network with the tokens they collect. As the network expands, these tokens help operators access pre-IPO venture returns, just like the early miners did in the Bitcoin landscape.
Flexibility and Scalability
DePIn empowers facilities to grow their offerings in a flexible manner, increasing resources, rather than increasing the capacity of each resource. Companies can scale based on demand, and the blockchain can ration demands evenly to allow for sustainable growth.
Additionally, DePIN is permissionless, which reduces the barrier to entry and attracts a wider range of participants. DePIN networks are transparent, providing protection against algorithmic discrimination and offering extensive value to a range of operators.
Already, countless industries are investing in DePIN for its flexibility and scalability, such as:
- Computing operators: Computing operators can provide access to essential communication and processing services through DePIN. The Aethir Cloud project, for instance, shows the benefits of decentralized cloud rendering solutions.
- Data operators: Data operators can turn raw data into valuable assets, deploy hardware to process data, and create APIs for commercial use. Examples include DIMO and Hivemapper, which allow users to gather vehicle data for insurers and street mapping.
- Storage operators: Ensuring data permanence in the operator economy, Storage operators give users access to decentralized file storage, a form of DAO project. Companies like Filecoin and Arweave ensure data is saved, secured, and remains accessible for future use.
- Hardware operators: With DePIN, hardware operators can match physical assets with human demand. For instance, Helium links small cell hardware owners with users requiring access to 5G connectivity.
Fair Pricing and Cost-Efficient Operation
DePIN pricing models are generally quite different from those used by traditional facilities. Most pricing models depend on the cost incurred by private providers when running individual facilities, as well as other network-related elements. Overall, the pricing model for DePINs is expected to be a lot cheaper, and more fair to consumers.
This is because DePIN pricing considers basic pricing without being affected by unfair price bloating, which is common in environments operated by centralized institutions. DePINs are also easier for beginners to access. With DePINs, you can leverage peer-to-peer, crowdsourcing, and crowdfunding models that make it easier to support product development.
DePIN providers can commit their facility to multiple networks, to increase income without significant upfront investment, and users gain access to cost-efficient solutions.
The Blockchain Benefit
Blockchains have pre-established protocols designed specifically to help govern peer-to-peer networks, such as the “consensus mechanism.” Because a DePIN leverages blockchain trends and technology, those mechanisms are already available, reducing the need to devise new ways to administer and manage network roles.
Additionally, the blockchain element comes with mechanisms built in to incentivize good behavior and participation. DePINs can leverage their own tokens to administer rewards based on user contribution to each network, leading to consistent metaverse community building.
The Challenges Facing DePIN
Although DePIN shows promise in the Web3 landscape, it’s still an emerging concept. There are challenges to overcome. For instance, the DePIN flywheel (mentioned above) is dependent on the progress of the network and the ability of the token to develop value.
DePIN project managers will need to elevate awareness of their solution in a range of ways, such as PR and influencer marketing, to increase engagement and investment.
DePIn innovators rely on the top Web3 marketing agencies to ensure growth. These agencies help them navigate the complexities of Web3 marketing, such as raising awareness and building demand for complex projects. For instance, look at how KuCoin worked with Crowdcreate to boost Web3 investment through Twitter marketing.
On top of that, the cost of running private facilities can vary from one location to the next. This means project managers will need to find effective ways of connecting with relevant investors.
Examples of DePIN in the Modern World
Despite being a relatively new concept, interest in DePIN is already growing. One of the most commonly referenced examples of a DePIN project is the “Filecoin” solution. Launched in 2014, this project builds on the concept of IPFS, with an incentive layer.
Filecoin functions like a library that stores data in multiple locations. When you want to access a file, the IPFS layer finds the nearest copy and brings it to you. DePIN decentralized storage networks like Filecoin ensure digital assets are always accessible and protected. Since multiple copies of each digital asset exist, it’s almost impossible to tamper with the data comprehensively.
Plus, Filecoin incentivizes community growth with access to tokens and benefits. It’s similar to how companies like Sharp Platform have propelled growth using rewards to boost lead generation.
Let’s take a closer look at some other examples of DePIN in action.
Wireless Communications
In the wireless landscape, DePIN enables access to IoT and mobile connectivity solutions. Helium is an excellent example of this. The DePIN project takes a share of connectivity from larger network providers and operates on a multi-token system. Each token in the ecosystem serves a specific purpose in provisioning network resources and rewarding providers.
Users burn the HNT token to obtain connectivity services, alternatively, the MOBILE token powers the 5G project. This means the company can attract B2B SaaS investors, network investors, and consumers. Currently, the circulating supply of HNT is consistently growing, demonstrating the growing power of DePIN in wireless services.
Geospatial (Location) Services
Location-based services are another area where DePIN can thrive. PRNs incentivize providers in this landscape to offer physical location services, in exchange for native cryptocurrency rewards. Usually, these projects operate using sensors and community contributions, to supply locational data to the network, which can be used for tasks like area mapping.
For instance, Hivemapper is building a crowd-sourced map with community support. Contributors provide access to mapping resources, or use the Hivemapper dashcam to collect data within their vehicles. These contributions are rewarded with the HONEY token. Currently, HiveMapper has amassed more than 130,000 contributors, in over 2,300 regions.
Rewarding users with tokens once again matches the strategies used by other Web3 and NFT companies to drive engagement and awareness. For example, look at how Venom boosted engagement with token rewards and drops.
Mobility and Transportation
The mobility landscape has been evolving at a relatively slow pace. Aside from vehicle infrastructural developments, we haven’t seen many changes to how car owners actually manage their vehicles. Mobility DePIN projects could address this gap.
The DIMO project, for instance, focuses on data management for manufacturing companies and car owners. Services include access to special identity systems for vehicles using NFTs, data availability for cars, and access to various information that helps users make better decisions. Users of the application receive DIMO tokens in exchange for their data.
Energy
In the energy sector, DePIN projects are emerging to promote green energy generation, by connecting renewable power providers to companies. These projects promote the congregation of energy supply data and the use of this data for the development of environmentally friendly practices.
Projects like these frequently attract a lot of startup incubators and accelerators focusing on sustainability. For instance, the Arkreen project, launched in 2024, incentivizes green energy providers to share data on their energy processes, such as their solar setup and the resources they use.
Renewable Energy Certification issuers and computation operators use this data to build applications and services that assist in the distribution of renewable energy.
Computing, Storage, and Bandwidth Networks
All located within the same “DRN” category, computing, storage, and bandwidth network DePINs are experiencing significant growth in today’s world. We’ve already mentioned Filecoin as an example, but there are others to consider. For instance, Nunet, an AI-powered marketplace for computing resources, helps to make dormant computing resources available to everyone.
Resource providers are rewarded for making their solutions available with NTX tokens, and companies and individuals can borrow available computing power on demand. Similarly, in the bandwidth landscape, Theta Network offers an EVM-compatible network that leverages blockchain and smart contract developers to handle the management of media assets. Bandwidth providers earn THETA tokens, and users gain access to flexible bandwidth solutions.
What DePIN Marketing Agency Services Does Crowdcreate Offer?
DePINs have the potential to change the future of Web3, connecting physical solutions with blockchain technologies and cryptocurrencies. However, navigating this evolving landscape, building demand for your solution, and leveraging the right tokenomics can be complex.
As a DePIN marketing agency, Crowdcreate offers the services DePIN project leaders need to ensure the consistent growth and success of their projects, ranging from tokenomics consulting, to:
- DePIN strategy development: We can develop strategies for your DePIN tokenomics and distribution strategy, helping you to leverage the right blockchain technologies, smart contracts, and other solutions within the Web3 landscape.
- Crowdfunding and investor marketing: For companies struggling to manage the financial impact of launching a DePIN project, Crowdcreate offers dedicated investor outreach and crowdfunding options to help boost their budgets.
- Influencer marketing: To drive demand from both providers and customers in your DePIN community, we work with Web3 influencers around the world, helping to increase brand awareness, and boost adoption.
- Web3 marketing: Our expertise in Web3 marketing means we can help you build everything from comprehensive PR campaigns to video marketing strategies, social media management and email marketing solutions, and content marketing strategies to boost your online presence and generate demand for your project.
- Community management: A DePIN project’s success lies in its community’s engagement. Our community and relationship management skills have helped countless cryptocurrency and NFT projects achieve phenomenal growth.
Demand for DePIN will only continue to grow in the years ahead, and opportunities are already abundant for early adopters. If you’re ready to join the DePIN revolution, contact Crowdcreate today to see how we can help your project thrive.
