As of Q2 2024, out of 650 DePIN projects, around 60 have launched tokens, with a total market cap of $1.33 billion. The top DePIN projects are primarily focused on AI, storage, and computing.
In August 2024, Messari reported DePIN’s market value at $20 billion, a 400% growth in a year. They anticipate the market to expand from $2.2 trillion to $3.5 trillion by 2028. Additionally, a report by CMC shows that these 60 DePIN projects have a combined market value of $1.33 billion
Despite the growing interest, Matt Stephenson, Head of Research at Pantera Capital, remains skeptical about DePINs due to their complexity and high costs. He argues that DePINs often suffer from a “Rube Goldberg problem,” where the system becomes too convoluted for anyone but its creator to understand, making it challenging to critique or improve.
DePIN (Decentralized Physical Infrastructure Networks) is a concept that links real-world resources like storage space and energy to digital networks using blockchain technology. Essentially, DePIN enables individuals to share their physical resources with others in an organized and secure manner.
With DePIN, individuals can contribute things like unused storage or computing power to the network, and in return, they earn cryptocurrency tokens as rewards for their contributions. This system creates a community where people can access resources on demand without relying on a central authority or company to provide them.
Debating at the Breakpoint, Matt also pointed out the reason DePIN (Decentralized Physical Infrastructure Networks) projects are particularly prone to issues. Under capitalism, capital (money and resources) typically hires labor (workers). DePIN attempts to reverse this by having workers (or users) control capital, which can be effective when both monitoring and capital costs are low.
For example, in a law firm, lawyers can easily oversee each other’s work, and they charge by the hour, making their contributions and values clear. Business costs are minimal, requiring only basic supplies like paper and computers.
However, DePIN faces challenges due to high monitoring costs and issues such as the Oracle problem (the difficulty of accurately obtaining and validating external data). Additionally, the costs of capital can be high and vary between projects.
DePINs are capital-efficient
On the opposing side, Abhay Kumar, CEO of Helium Foundation said that while he agrees with Matt on several aspects of DePINs, he believes that DePINs (Decentralized Physical Infrastructure Networks) are a crucial part of the cryptocurrency market, as they focus on building the necessary infrastructure.
He stated that a lot of money has been spent on connectivity in the U.S. – around $2 trillion from the 1990s to 2020, and $60 to $80 billion annually in recent years. Despite this investment, many people still lack broadband access.
He added that just like it’s important to give attention to the basic needs of humans such as food, water, and shelter, focusing on cryptocurrency development is important as it can be a source of financial security. With the infusion of DePINs, via which users are rewarded with cryptos, human connections, which is another basic need of man, can be built by people from anywhere around the world as users share their devices and earn from it.
Even though governments and organizations are working to improve internet access, many people in the U.S. still don’t have it, he said. He pointed out that installing fiber internet can be very expensive, especially in rural areas, and believes DePIN could be a cheaper solution for building this infrastructure. He thinks investing in DePIN is a good idea because it can enhance current efforts to improve connectivity.
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For instance, a coffee shop that already offers Wi-Fi could easily support a DePIN like Helium Mobile without much extra cost. Abhay believes that successful DePINs can use resources that people are already providing, like internet access for customers and neighbors, rather than needing to start completely new projects.
More experimentation
Shayon Sengupta, Investment Partner, MultiCoin Capital, who was the host, noted the rapid growth of the DePIN market, with the number of projects increasing significantly over the past year. He compared the current DePIN market map to one from 12 months ago, highlighting that it has grown about 10 times in size with many more names.
He opined that more experimentation should be supported in the market, believing that it is essential for resolving the true value and output of DePINs through multiple experiments.
Again, Abhay said he wants to see more innovation in mobile technology. He believes it’s important to have more experimentation and competition to create new ways of setting up mobile networks beyond what already exists.
He mentioned that there’s currently a lot of excitement around energy solutions, which he finds interesting. He also talked about the challenges of making hardware, saying it often takes a long time to get a working prototype. He would like to see more companies that allow you to quickly design something in software and receive a physical prototype the next day.
Matt also expressed his enthusiasm for DePIN projects, appreciating their ambition and energy. He finds it exciting that these projects aim to solve real-world problems.
He remains optimistic about the broader cryptocurrency space, including stablecoins, AI, and various blockchain innovations. However, when it comes to DePIN, he believes it’s important to evaluate each project individually. He emphasized the need to consider two key aspects: how well they handle monitoring and the costs of capital.
