DePIN Investment: Potential Profits of Over 400x in the Medium to Long Term

DePIN — Current Status and Prospects

Decentralized Physical Infrastructure Networks (DePIN) are reshaping the blockchain landscape through innovative use of existing infrastructure and data-centric business models. Going beyond traditional IoT frameworks, DePIN stands out for its decentralized efficiency and cost-effectiveness.

This report explores the rapidly evolving DePIN space, particularly within the Solana network, known for its robust infrastructure and innovative applications. DePIN projects prioritize practical profitability over speculative finance and play a crucial role in integrating technologies such as privacy enhancement, zero-knowledge proofs, and artificial intelligence. With strategic combinability with other ecosystems, DePIN is positioned to transform the economic system through data integrity and scalable solutions.

As a leading platform for DePIN, Solana embodies the integration of high-performance blockchain technology with physical networks, promising significant economic returns and pioneering new ways to integrate technology with practical applications.

Although DePIN is called a Decentralized Physical Infrastructure Network, the core logic of its business growth is not the hardware itself, but how to more effectively utilize data, whether it’s data storage, transmission, sharing, or usage.

DePIN doesn’t need to benchmark traditional IoT and doesn’t need to be categorized as Web2 or Web3; as long as it can utilize data more efficiently and distribute economic benefits more effectively, it’s considered valuable.

The development of DePIN will combine blockchain to address data credibility issues while expanding large-scale protocols along the IoT, creating an infinite network between creators and humans, humans and machines, and machines and machines.

When evaluating DePIN projects, it’s important to discard speculative or financial attributes, which are more applicable to DeFi, memes, and BRC-20 tokens. Evaluating DePIN should focus on the project’s genuine profit-making ability.

In the short term, what’s worth paying attention to in the DePIN space is its combinability with other ecosystems, including DePIN x Privacy, DePIN x Gaming, DePIN x ZK, DePIN x AI. In the long term, the envisioned blueprint for DePIN’s future includes the gig economy, the sharing economy, and data credibility.

Solana Network has become the preferred blockchain for deploying DePIN projects, representing over $100 billion in Fully Diluted Value (FDV) and a market capitalization of $40 billion.

Solana’s advantages in DePIN development include:

1. Performance advantages combined with technological upgrades;
2. Strong token standards and ecosystems;
3. Cost advantages;
4. Centralized liquidity, strong ecosystem combinability, unified community;
5. Active developer community, continuous emergence of innovative projects and new concepts.

What is DePIN ?

The concept of DePIN (Decentralized Physical Infrastructure Networks), officially proposed by Messari in the early 2023 research report “The DePIN Sector Map,” is defined as “deploying real-world physical infrastructure and hardware networks using cryptographic economic protocols.” In short, DePIN incentivizes various stakeholders to collectively build physical infrastructure networks through blockchain-based token incentives.

Apart from the evolution of terms, projects that “deploy real-world physical infrastructure and hardware networks using cryptographic economic protocols” have actually existed for a long time. For example, decentralized networks like Helium were founded in 2013, and decentralized storage like Storj was founded in 2014. These teams have been exploring how to build physical infrastructure networks in a decentralized manner in areas such as communication and storage. Subsequently, sectors such as the Internet, artificial intelligence, energy, and data collection gradually joined in. Although there are differences in specific sectors, the core logic is consistent, eventually forming today’s thriving DePIN space.

According to Messari and Depin.Ninjia data, by 2023, the DePIN ecosystem had developed to include over 650 projects, with a market value of $35 billion, covering six sub-industries: computing (250), artificial intelligence (200), wireless (100), sensors (50), energy (50), and services (25). Messari’s forecast for the total potential market size of the DePIN sector is approximately around $22 trillion, potentially reaching $35 trillion by 2028.

According to CMC data, there are a total of 60 DePIN projects with issued tokens, with a market value of $1.33 billion. The top 100 DePIN projects in terms of market capitalization include FIL, RNDR, HNT, THETA, BTT, AKT, and AR. Other prominent projects in the space include IOTX, ANKR, and AI-related projects like TAO. Looking at the top 10 projects in terms of market capitalization in the DePIN space, most of them belong to the AI, Storage, and Computing sectors. DePIN currently accounts for a very small share of the entire crypto market, lower than sectors such as Meme, DeFi, and NFTs. Compared to the traditional IoT industry with projects valued at over $100 million, there are only 21 projects, with only 4 projects valued over $1 billion.

If we infer from this data, in the short to medium term, the potential profit expectation for entering DePIN is around 243 times, while in the medium to long term, the profit expectation exceeds 400 times.

Here, the breakdown of the sector is based on IOTEX’s sector decomposition method, divided into software and hardware parts.

The hardware part includes two main sectors: sensors and wireless networks, while the software part includes four sectors: computation, storage, network distribution, and artificial intelligence.

Branching Diagram of DePIN Track

Although DePIN projects are called Decentralized Physical Infrastructure Networks, all core business logic revolves around how to extract value from data.

• Sensors: responsible for data collection
• Wireless networks and network distribution: responsible for data transmission
• Computation: responsible for data processing
• Storage: responsible for data storage
• Artificial intelligence: responsible for data application

Therefore, while DePIN projects start with hardware, the real development lies in how to effectively utilize data, which is similar to the development model of traditional Internet economy.

When evaluating the prospects of a Depin project, it’s important to think from the perspective of data—who uses data well, who controls data, is a good project.

We need to set aside the speculative parts in crypto and return to the practical value.

Investors in DePIN

As mentioned earlier, there have always been investment institutions and entrepreneurs in the DePIN space, but the market environment in early 2023 was not suitable, and the new paradigm of DePIN was still being explored, so few new DePIN projects were launched. By the end of 2023, whether it was the improved market environment or the exploration and accumulation of entrepreneurs, many projects gradually took shape from their initial concepts and began to be introduced to the market one after another. It wasn’t until later that these actions were captured by the market, and at this point, DePIN quickly gained an important position in the market with a lack of technological innovation.

For example, VCs such as Multicoin, Borderless, A16Z, HTX Ventures have significant layouts in DePIN, and the projects they invest in are highly practical and have weak speculative attributes. Of course, compared to their own portfolios, DePIN projects only account for a small portion.

The following chart supplements the financing situation of top DePIN projects.

Solana DePIN represents over $100 billion in FDV and a market capitalization of $40 billion.

According to CMC, among the top 500 Solana DePIN projects by market capitalization, there are Render Network (RNDR), Helium Network (HNT), Helium Mobile (MOBILE), among others. Other DePIN projects include Helium IOT (IOT) and Hivemapper (HONEY). Recently, projects in high demand in this space include Solana-related HNT series such as MOBILE and IOT, along with getgrass, a bandwidth network market project that is likely to launch tokens soon.

The choice between DePIN and the Solana network is mutual.

Solana’s irreplaceability for mass adoption, especially for DePIN and Web2 applications. Solana successfully supported the demand for STEPN, which truly brought Web3 projects into the spotlight.

Solana’s cNFT provides more cost-effective authorization certificates for DePIN / PoPW nodes, which is a common practice.

The migration of RNDR and Helium projects has endowed the projects with stronger capabilities. For example, this transition has brought new capabilities to Render, including real-time streaming, dynamic NFTs, and state compression, significantly improving network performance and scalability while opening up richer and more diverse application scenarios for users.

Projects like DePIN, unlike high-value DeFi applications, are closer to traditional concepts such as edge computing and IoT and value stability and low prices. Solana naturally has advantages in synchronous speed. Taking the current hot project Helium as an example, there are over 300,000 IoT devices and over 3,000 5G devices, and only Solana can meet the deployment needs of such a large amount of hardware.

DePIN Brings High Value to the Solana Ecosystem

Projects like Helium significantly increase the number of active wallets. Helium alone reports over 60,000 active wallets participating in activities such as claiming rewards, staking, delegating, or burning tokens monthly, while over 30,000 wallets use other SPL programs, highlighting Helium’s impact on the Solana ecosystem.

From a regulatory perspective, DePIN demonstrates Solana’s practical application in the eyes of regulators and policymakers, enhancing its legitimacy and brand awareness.

Ecological Development

Leading Projects: RNDR, Helium

• RNDR, a decentralized rendering platform.
• Helium Network, a wireless network project. Established in 2014, it has raised over $350 million in cumulative financing, with investors including a16z, Deutsche Telekom, Google, Tiger Global, and other well-known funds inside and outside the industry. Helium migrated to the Solana blockchain in April of this year. HNT is currently ranked 64th on CMC.

Second-tier Projects: Helium Series (MOBILE and IOT), io.net, Nosana

MOBILE and IOT belong to the Helium ecosystem.

• MOBILE: This is the protocol token for the Helium 5G network, rewarded to those providing 5G wireless coverage and verifying the Helium network. MOBILE is currently ranked 166th on CMC.
• IOT: This is the protocol token for the Helium IoT network, mined by LoRaWAN Hotspots through data transmission revenue and coverage proof.
• io.net integrates computing power for machine learning applications from data centers, crypto miners, and established projects like Render, positioning itself as a “GPU aggregator.” It has not yet launched its token, with 426k Twitter followers. Series A financing totaled $30 million, led by Hack VC, with participation from Multicoin Capital, 6th Man Ventures, M13, Delphi Digital, Solana Labs, Aptos Labs, among others. The number of GUP miners has exceeded 50,000.
• Nosana, a marketplace connecting GPU networks provided by users and consumers developing AI products.

Potential Projects: ALEPH, HONEY, Shadow

• ALEPH, a storage solution, cross-chain database.
• Hivemapper (HONEY) launched in November 2022, is a decentralized global map network that rewards contributors who collect large amounts of 4K street images using dashcams through a Drive-to-Earn model. In April 2022, it completed a $18 million financing round, led by Multicoin Capital, with participation from industry professionals such as Solana founders, former Apple Maps executives, and the CEO of Helium. It is currently ranked 513th on CMC.
• Shadow, a competitor to Filecoin, utilizes efficient traditional and mobile computing to reduce the cost of enterprise data center storage—referred to as “DAGGER” technology.