MT Capital: DePIN reshapes the decentralized future of physical infrastructure

Author: Ian, Xinwei, Severin, MT Capital

TL;DR

1. DePIN Overview: Decentralized Physical Infrastructure Network (DePIN) combines the physical world with Web3, reduces costs and improves efficiency through decentralized technology. It is widely used in computing, storage, wireless networks and other fields, from traditional fixed devices to new generation portable and wearable devices. Market prospects broad.

2. Investment Trends and Projects: DePIN projects have shown significant growth during both bull and bear market cycles, with project types covering wireless networks, maps, Internet of Vehicles, and agriculture. , drones, weather, energy and many other aspects. Investment institutions have expanded from Europe and the United States to Asia, and the number of participating institutions and investments continues to increase, showing strong interest in the DePIN field.

3. Market demand and potential: There are many emerging DePIN markets, including health data, weather, energy, bandwidth, AI and mobile phones, etc., with huge market space and High growth rate. In particular, the energy and mobile phone markets have huge potential, and the year-on-year growth rates of the health data and AI markets are also very impressive.

4. Project Ecology and Blockchain Selection: Ethereum and Solana have become the main choice chains for existing DePIN projects and emerging DePIN projects respectively. With high performance, low cost and strong community support, Solana has attracted a large number of new projects and has gradually become the platform of choice for DePIN projects. Representative projects such as Render, Helium, Hivemapper, etc. demonstrate the diverse applications of DePIN. Core players such as Solana, IoTeX and other platforms have provided strong technical support and ecological environment for the DePIN project, promoting the rapid development of DePIN.

5. Modular blockchain trend: Modular design significantly enhances DePIN’s scalability and adaptability. Through standardized interfaces and interchangeable components, DePIN can flexibly adapt to different application scenarios and technical requirements, thereby promoting rapid network deployment and maintenance.

6. The evolution of the token economy: From the early fixed incentive model to the current dynamic incentive mechanism, DePIN projects such as Helium have adjusted incentives for new and old equipment and regional incentives. Measures such as policy and time period incentive adjustments ensure the continued growth and healthy development of the network.

DePIN definition

DePIN, the full name is Decentralized Physical Infrastructure Network, which literally means "decentralized physical infrastructure network". Among them, "De" stands for Decentralized, "P" stands for Physical, "I" stands for Infrastructure, and "N" stands for Network.

The core definition of DePIN is to bring real-world users into Web3, achieving low cost and socialization through a decentralized network. In the current world, especially in the field of physical business, DePIN achieves the goal of reducing costs and increasing efficiency through decentralized technology.

In previous studies and reports, DePIN tended to focus more on infrastructure, while this report (please download the full PDF version from the official website) focuses more on decentralization. section, trying to show the diverse DePIN market and investment opportunities in the future.

DePIN project types

Classic DePIN devices:

Features: These devices are usually immovable and are usually fixed in a certain position.

Main business: including computing, bandwidth and storage.

Market characteristics: The market for classic DePIN projects is biased toward technology, especially in fields such as AI computing power, where it is more sought after by funds and traffic. This type of market is large in scale but fiercely competitive and is a red ocean.

Representative projects: Filecoin, RNDR, etc.

New Generation DePIN Devices:

Features: These devices are small and flexible and can be carried around or even worn.

Main business: life-related services, such as health monitoring, weather forecast and mobile phone functions.

Market characteristics: The market for the new generation DePIN project is more life-oriented, low-cost, and suitable for daily applications. This type of market has a wide variety of applications and a wide range of applications. It still needs to be deeply explored. It is a blue ocean with huge potential.

By comparing these two generations of DePIN projects, it can be seen that DePIN technology continues to develop and application scenarios continue to expand. From traditional fixed devices to today's more flexible and portable devices, DePIN's market prospects are increasingly broad, covering various needs from high-tech fields to daily life. The traditional DePIN market is large in scale and is a red ocean with fierce competition; while the innovative DePIN market has a wide variety of types and a wide range of applications, yet to be further explored, it is a blue ocean with huge potential.

DePIN investment new ecological landscape

The number and types of DePIN projects have increased significantly in this bull market cycle, and new generation lightweight DePIN projects have appeared frequently, including AI, bracelets, Wearable devices such as watches that collect health data, as well as a large number of portable lightweight physical devices DePIN.

2022.1.1 - 2023.1.1

There were a total of 19 DePIN project financings, and the average financing amount disclosed was 18M. After excluding Helium’s D round of 200M large financing, the average The financing amount is 5.9M.

The project categories are wireless networks, maps, Internet of Vehicles data, agriculture, drone images, weather, power markets, and DePIN infrastructure. Among them, the wireless network category has the largest number of projects, up to 7.

2023.1.1 - 2024.1.1

There were a total of 9 DePIN project financings, and the average financing amount disclosed was 7.2 M, which was significantly lower than in 2022 (bear market) , the amount increased by 22% compared with 2022.

Project types include wireless networks, decentralized computing power, maps/geospatial data, weather, DePIN infrastructure, and the number and types of financing have been significantly reduced. (The bear market requires more reasonable business scenarios and models)

2024.1.1 - 2024.5.20

There were a total of 26 DePIN project financings, and the average financing amount disclosed was 6.5M , the number of financing increased significantly and the amount of financing decreased.

Project types include decentralized computing, Internet of Vehicles, Internet of Things, wireless networks, FHE, maps, weather & environment, bandwidth, DePIN infrastructure, mobile phones, energy, storage, mixed reality

New first-level undisclosed financing types: AI, VPN, bracelets/watches and other wearable and portable device type projects (health data)

source: MT Capital

Number of DePIN projects and institutions

The DePIN participating institutions in the previous cycle were dominated by Europe and the United States. In this DePIN cycle, more Asian institutions have gradually emerged, demonstrating the strong interest of Asian institutions in DePIN. The number of DePIN projects has also increased significantly, with the total number of second-level DePIN projects exceeding 135 and the total number of first-level DePIN projects exceeding 130.

Projects:

•Secondary market projects: 137

•>$1B FDV: 20

•$500M - $1B: 19 pieces

•$100M - $500M: 48 pieces

•$50M - $100M: 16 pieces

•$30M - $50 M: 14 pieces

•$10M - $30M: 12 pieces

•<$10M: 6 pieces

•Primary market projects: 133 pieces

•Since the beginning of the current bull cycle (from October 2023 to present), a total of 8 projects have raised more than $2 million in funding, and 6 projects have raised more than $10 million.

source: MT Capital

Last cycle:

•Andreessen Horowitz (A16z)

•Multicoin Capital

•HashKey Capital

•IOSG Ventures

•Spartan Group

•Borderless Capital

•Lattice Ventures

•Variant Fund

•Delphi Digital

•Big Brain Holdings

•Cogient Ventures

This cycle:

•OKX< /p>

•Animoca Brands

•JDI

•IoTeX

•FMG

•Waterdrip Capital

•MH

DePIN market demand

In the last cycle, there are still emerging projects emerging in the DePIN sub-track represented by computing power, storage, wireless networks and maps. This cycle has added emerging sub-track categories such as wearable devices, weather, energy, bandwidth, AI and mobile phones, which focus on health data.

From the perspective of market demand, the energy market and mobile phone market have huge market space. The health data market and AI market not only have large market space, but also have very high year-on-year growth rates. The market size Very objective.

Market: (number of primary market projects + number of secondary market projects)

Health (5+/), weather (9+1), energy (15+10), Computing power (17+29), storage (7+19), wireless network (9+11), bandwidth (6+4), map (3+2), AI (8+13), mobile phone (5+)< /p>

Number of market projects in the last cycle

•Computing power: 17+29

•Storage: 7+19

•Wireless network : 9+11

•Map: 3+2

Number of projects in emerging markets

•Health data (wearable devices): 5+ /

•Weather: 9+1

•Energy: 15+10

•Bandwidth: 6+4

•Cellphone: 5+

•AI: 8+13

Market size and growth rate

•Health market: $243B, CAGR 17%

•Weather market: $7B, CAGR 7%

•Energy market: $880B, CAGR 8.4%

•Hash rate market: $95.7B, CAGR 6.8%

•Storage market: $108B , CAGR 22%

•Wireless Network Market: $500B, CAGR 12%

•Bandwidth Market: $8.6B, CAGR 13.75%

•Map Market: $19B, CAGR 12.5%

•AI market: $150B, CAGR 36.8%

•Mobile phone market: $484B, CAGR 7.3%

source: MT Capital

Public chain selection and equipment type

h2>

source: MT Capital

Currently, there are the largest number of DePIN projects in the secondary market on the Ethereum chain. A total of 70 DePIN projects have chosen to be built on Ethereum, accounting for 81% of the total.

Among the collected first-level projects, the number of Solana ecological projects is 28, accounting for 62% of the total. Solana is gradually becoming the first public chain for the new cycle of DePIN projects.

source: MT Capital

< p>From the perspective of equipment types, the number of new energy and sensor equipment types is greater. And more projects using Wearable, Portable, and Home Device devices as physical hardware are beginning to emerge in the primary market.

DePIN entire industry chain

Upstream supply chain

1. Hardware manufacturing and supply

Hardware supplier: production for DePIN network Various devices and sensors, such as GPUs, servers, IoT devices, wireless devices, etc. For example, LoRaWAN hotspot provided for Helium network, driving recorder provided for Hivemapper.

Professional hardware manufacturers: Some professional hardware manufacturers provide customized hardware for specific DePIN projects, such as Filecoin’s storage mining machines and Render Network’s GPUs.

2. Chips and semiconductors

Chip manufacturers: such as NVIDIA and AMD, provide high-performance GPUs for computing networks, such as Render and Akash, these chips are used to handle AI workloads and at the heart of complex computing tasks.

3. Internet of Things equipment

Sensor manufacturers: Provide sensor equipment required for environmental monitoring, traffic data collection, etc. For example, Bluetooth sensors in the Nodle network, Silencio’s noise pollution detector.

Smart devices: Such as smartphones and other mobile devices, these devices can be used as part of a sensor network for data collection and transmission.

4. Power and energy equipment

Energy equipment suppliers: Provide solar panels, wind turbines, energy storage batteries and other equipment for decentralized energy networks. Such as solar panels and battery systems in the Daylight Energy network.

Midstream industry chain

1. Network operation and maintenance

Network operators: such as Helium and Hivemapper, manage and maintain the normal operation of decentralized networks, Including node management, data transmission and storage.

Service provider: Provides network infrastructure services, such as cloud computing services, storage services, etc.

2. Software and platform development

Blockchain platforms: such as Solana and IoTeX, provide basic blockchain technology support for the DePIN project, including smart contract execution, data storage and verification .

Software developers: Develop software platforms and tools for managing and operating the DePIN network, such as the distributed storage management platform provided by Filebase and the video stream management tool provided by Livepeer Studio.

3. Data processing and analysis

Data analysis companies: Process and analyze data collected from sensor networks to provide users with valuable insights and services.

AI and machine learning services: such as Beam, which provides cloud AI computing services and distributes model training and inference workloads to decentralized GPU networks.

Downstream industrial chain

1. Applications and services

Enterprise customers: use the services provided by the DePIN network to enhance their own business efficiency, such as logistics companies using Hivemapper Map data, agricultural companies utilize Geodnet’s high-precision positioning data.

Consumer applications: such as Teleport’s shared travel application and DIMO’s vehicle data platform, provide consumers with convenient services and obtain rewards through the data contributed by users.

Smart cities and public infrastructure: Use data and services from decentralized networks to optimize urban management and public services, such as energy management, traffic management, etc.

Modular/Data Layer/Middle Layer

Modular blockchain optimizes the blockchain by dividing core functions such as execution, consensus, data availability and settlement into different layers scalability, security and flexibility. For example, Ethereum improves data availability and processing capabilities by adopting a sharding architecture and rollup, while Cosmos achieves cross-chain interoperability and a high degree of customization through the IBC protocol and Tendermint consensus mechanism. The advantages of modular blockchain include higher transaction processing capabilities, enhanced security and greater development flexibility, which will further promote the development of blockchain technology in the future.

DePIN’s modular trend significantly enhances its scalability. The modular design allows DePIN to flexibly adapt to different application scenarios and technical needs, simplifying network deployment and maintenance through standardized interfaces and interchangeable components. For example, the Render network achieves expansion from image rendering to AI model training through a modular structure, increasing the service scope and market potential of the network. Additionally, Filecoin’s modular design allows it to expand storage services and add hot storage and data computing capabilities, further enhancing the utility and appeal of its network. The modularization trend not only improves the technical compatibility and upgrade capabilities of the DePIN network, but also enables independent development and optimization of each independent module, thereby accelerating innovation and progress of the entire network ecosystem. This flexible and efficient architecture greatly improves the scalability of DePIN, allowing it to respond more quickly to market demands and technological changes, promoting the widespread application and development of decentralized infrastructure.

Representative project

DePHY

DePHY is a development framework specially designed for DePIN, through the message layer, DID (Device ID), open source hardware design, and off-chain computing Key functions such as network and remortgage layers significantly reduce development costs and time, support any standard interface hardware, and enable fast, efficient and secure deployment of decentralized infrastructure projects.

PINGPONG

PINGPONG is a DePIN liquidity and service aggregator that optimizes and maximizes mining revenue across multiple networks through innovative tools and solutions.

DePIN Track Platform and Players

Solana

Solana is becoming DePIN’s new super infrastructure. Solana’s high performance, low network fees, strong developer and user community, and high purchasing power make it the preferred launch network for many DePIN projects. Some established DePIN star projects such as Render and Helium have achieved better development after migrating to Solana, which shows the vitality that Solana's strong infrastructure and extensive community user base bring to the DePIN project. Solana has gradually attracted emerging and cutting-edge DePIN projects in different categories, including Grass, Natix, Exabits, etc., and is gradually improving its DePIN ecosystem.

Representative Project

Render

Render Network is a decentralized GPU rendering platform that uses blockchain technology to connect artists with GPU providers , enabling scalable, more cost-effective rendering solutions.

Hivemapper

Hivemapper is a decentralized mapping network that uses blockchain technology and crowdsourced dash cam data to create detailed real-time maps.

Helium

Helium is a groundbreaking DePIN project that creates a decentralized wireless network that allows IoT devices to connect globally through a distributed network of hotspots.

Natix:

Natix Network is a blockchain-based crowdsourced camera network for creating real-time world maps.

Exabits:

Exabits is a decentralized infrastructure for artificial intelligence and computing-intensive applications. It allows users to provide distributed GPU services, data storage, or expertise to the AI ​​community without the need for a central authority or intermediary.

Grass:

Grass is a DePIN project developed by Wynd Network that allows users to invest in digital assets by adding their connected devices to a decentralized network designed to provide data for AI training. Monetize its unused network resources.

EV3

EV3 is an investment company driven by investment philosophy and supports outstanding entrepreneurs who build DePIN. By investing up to $1 million in early-stage projects, EV3 aims to unlock the next $100 trillion in global GDP through next-generation open infrastructure networks such as telecommunications, logistics, energy, cloud computing and artificial intelligence. Founded by institutionally trained investors Mahesh Ramakrishnan and Salvador Gala, EV3 combines deep industry expertise and long-term partnerships with support from leading investors.

Representative Project

3DOS

3DOS is the world’s largest decentralized on-demand manufacturing network, aiming to revolutionize the manufacturing industry through blockchain technology and 3D printing. . The platform allows anyone to upload designs, receive royalties, and have them manufactured on-demand globally.

Zonal

Zonal is developing a decentralized network based on micro-location protocols, using wireless communication technologies such as Ultra-Wideband (UWB) and Bluetooth Low Energy (BLE) to provide Highly reliable global and indoor positioning services to verify real-world interactions. The goal is to create a unified protocol that provides location verification tools for various services and businesses.

XNET

XNET is a next-generation mobile operator that uses blockchain technology to build a decentralized network. By using the CBRS spectrum, XNET aims to establish a reliable, industry-grade neutral host network. The project aims to solve the inefficiency and capital-intensive problems of the telecommunications industry through its distributed radio access network (RAN).

IoTeX

IoTeX is an open platform that modularly constructs AI+DePIN infrastructure. It aims to open up the connection channel between smart devices and real-world data and Web3, so that Web2 can be convenient and effective Connect to the blockchain to create a decentralized real-world open ecosystem of multi-dimensional data and scenarios. Through modular construction, developers can connect smart wearables, Internet of Vehicles, green energy, environmental data and other innovative applications in all scenarios from smart life to smart industry in Web3.

As of the first quarter of 2024, the IoTeX network has 108 active nodes, with a total pledged value of $29 million, a 73% quarter-on-quarter increase. The average staking participation rate reached an all-time high of 40.6%. In addition, node rewards increased by 71% month-on-month to $3.3 million.

IoTeX provides complete “plug-and-play” products and tools that enable blockchain-powered IoT applications to be efficiently built and deployed. The platform is divided into four layers: hardware layer, middleware, tool layer and blockchain layer. Since its founding, IoTeX has raised over $90 million in funding to support its R&D and market expansion. IoTeX's solutions support various IoT ecosystems, such as the sharing economy, smart home, autonomous driving, and supply chain management.

Representative project

Network3

The Network3 project is a Layer 2 blockchain platform that integrates AIoT technology and aims to provide efficient model training for AI developers. and verification tools, while empowering users to earn cryptocurrency by running nodes.

Inferix

Inferix is ​​a decentralized GPU visual computing platform dedicated to 3D/AR/VR rendering and AI inference.

Wayru

Wayru Network is a decentralized wireless network that implements various intelligent functions through WayruOS and Wayru Connectivity Superapp.

DePIN segmentation track divided by physical hardware equipment

source: MT Capital

source: MT Capital

Track Mapping

Sensor Track

We define "sensors" as outdoor sensors that can help users collect various types of data, such as maps, weather, and vehicle information. After these outdoor sensors collect data, users can contribute their data to create a data value network and receive corresponding token rewards. The DePIN project can aggregate the data shared by these users, provide B-side customers with a more diverse data sample, and capture business revenue from Web2.

Representative Project

Map Network

Hivemapper

Hivemapper is a decentralized map network that uses blockchain technology and the public Includes dash cam data to create detailed real-time maps.

Internet of Vehicles Data Network

DIMO

DIMO is a decentralized IoT vehicle data DePIN network that enables vehicle owners to collect, use and monetize ize its vehicle data.

Positioning Network

Geodnet

GEODNET is a blockchain-based decentralized global earth observation network that uses real-time kinematic technology (RTK) to significantly improve GPS accuracy.

Wireless Network Track

Mobile Wireless Network:

• Market Size and Growth: 2022 It accounted for more than 76% of the market share in the telecommunications industry in 2018, with this growth mainly driven by 5G and IoT technologies. It is expected to grow at a CAGR of 6.2% from 2023 to 2030.

• Role: Provide extensive personal and business connectivity through cellular technology. Support various devices and applications to implement mobile communications and data services.

• Future Outlook: Demand for mobile wireless networks will continue to grow due to increased demand for higher bandwidth, advancements in 5G technology, and the integration of IoT devices.

Helium

Helium is a groundbreaking DePIN project that creates a decentralized wireless network that allows IoT devices to pass through distributed hotspots Networks connect globally.

Fixed Wireless Access (FWA):

• Market size and growth: as an alternative to wired broadband, especially It is growing rapidly in areas where laying cables is not practical. The market size is expected to grow from 130 million connections at the end of 2023 to 330 million in 2029.

• Function: Uses radio waves to provide Internet services between fixed points. Usually deployed in areas with insufficient mobile wireless network services, compared with wireless mobile networks, the cost of laying is lower and the deployment is easier.

• Future Outlook: Thanks to the improvement of 5G technology, FWA is expected to become a more common form of Internet access, especially in areas with insufficient infrastructure services such as remote areas and rural areas. .

Andrena

Andrena is a high-speed fixed wireless access network service provider using cutting-edge radio technology to reach cities and areas underserved by mobile wireless networks Create high-speed, low-cost wireless networks.

Wi-Fi network:

• Market size and growth: The market value in 2023 is approximately US$14.5 billion, and it is expected to It will reach US$39.4 billion in 2028, with a compound annual growth rate of 22.2%.

• Role: Provides LAN connectivity to devices via radio waves, supporting a wide range of consumer electronics products from smartphones to home appliances, in limited private settings such as homes, businesses, and public hotspots used within the space.

• Future Outlook: Market growth will be driven by increasing demand for reliable internet connectivity from smart devices and the increasing implementation of IoT in the public and private sectors.

Roam

Roam is a decentralized global WiFi network that provides enterprise-grade OpenRoaming WiFi roaming services to the global public.

Energy Track

The traditional energy market faces the following problems: mismatch between supply and demand in regional energy networks, lack of transparent and tradable energy market, huge untapped clean energy market, energy Network scaling is slow and costly… However, DePIN can help shape a new generation of decentralized energy networks.

From a market perspective: The clean energy market is experiencing significant growth, with the market currently valued at approximately $1.4 trillion and expected to grow at a CAGR of 9.1% from 2022 to 2032. The renewable energy market is expected to grow from a market size of US$881.7 billion to approximately US$1.9 trillion in 2030, at a compound annual growth rate of approximately 8.4%. Energy DePIN projects have huge market space.

Power Plant:

StarPower

Starpower is a groundbreaking DePIN project that aims to create a virtual power plant through a decentralized network utilizing blockchain technology (VPP), revolutionizing energy management and distribution.

Energy Trading

Daylight

Daylight is an open source blockchain network focused on creating a decentralized market for renewable energy and carbon credits. Promote more sustainable energy trading and use around the world.

Energy Storage

PowerPod

Powerpod aims to revolutionize by creating a shared, blockchain-powered network of community-owned charging stations Electric vehicle (EV) charging methods.

Home Equipment Track

The home equipment field focuses on using decentralized technology to improve and optimize all aspects of daily life. This field addresses key issues such as high costs, privacy concerns, and unequal distribution of resources, providing solutions by transforming standard home devices into decentralized network nodes. By using blockchain and other decentralized protocols, these devices provide a low-cost, secure and efficient alternative to traditional cloud services and computing power. This approach not only reduces reliance on centralized infrastructure, but also gives users greater control over their data and resources. Furthermore, the integration of these devices not only enhances the smart home ecosystem and gaming experience, but also aims to enhance daily interactions and create a globally connected community.

FX land

FX Land provides distributed cloud storage solutions that solve high storage fees and privacy issues through Crowd Storage nodes and Fula protocol.

Hajime AI

The Hajime AI project aims to create a global edge computing power supply network to provide cost-effective computing services to AI startups and solve computing resource allocation through a decentralized platform To solve the problem of unevenness, it will also be seamlessly integrated with smart home and IoT ecosystems in the future.

FrodoBots

The FrodoBots project uses real-world robots to solve Embodied AI problems through gamification.

Wearable device track

In the field of wearable devices, the focus is on combining smart wearable devices with blockchain technology. They leverage advanced artificial intelligence and data privacy protection technologies to provide personalized health monitoring and data management services. By enabling users to monetize their data and providing a reward mechanism, these devices incentivize users to actively participate in health management. These devices are usually made of high-quality materials, have long battery life, and are highly waterproof to ensure user convenience and safety. In addition, these smart wearable devices are compatible with mainstream mobile devices and cryptocurrency ecosystems, promoting the widespread adoption of decentralized applications and the Web3 ecosystem while improving users' health and quality of life.

CUDIS

CUDIS is a stylish, groundbreaking AI smart ring that inspires users by rewarding them on their health journey. It comes with core features such as immutable data collection and control, personalized AI coaching, healthy motivational tasks, and social activities.

WatchX

The WatchX project aims to integrate millions of smartwatch users into the Web3 ecosystem and provide a wide range of opportunities for partners within the ecological space.

Dogewalk

A DePIN platform that integrates innovative software and hardware through GameFi and SocialFi elements to enhance the interaction between pet owners and Web3 users.

Portable Device Track

Portable devices share common features, such as providing convenient mobile devices and applications to enhance the Web3 experience. They focus on simplifying user interactions, improving security, and implementing data ownership and reward mechanisms. These projects integrate hardware and software solutions to facilitate the development and use of decentralized applications, especially in mobile environments. The goal of this section is to promote the adoption and application of Web3 technology by lowering barriers to entry, optimizing user experience, and providing practical application cases.

Solana Mobile Saga

The Solana Mobile Saga project aims to lead the Web3 mobile revolution by providing top-notch hardware and powerful developer resources to provide a secure and user-friendly decentralized application experience .

Universal Phone Oyster Labs

The Universal Phone project was launched by Oyster Labs, targeting 800 million Telegram users, focusing on emerging markets such as India, Indonesia and Nigeria.

Puffpaw

Puffpaw is a "quit smoking and earn money" project incubated by Arweave and OrangeDAO. Through e-cigarette devices and blockchain technology, users can help users quit smoking and receive financial rewards.

Token economy of the DePIN project: fixed incentive model evolves into dynamic incentives

Internal logic analysis: taking Helium as an example

Early incentive mechanism and its impact< /p>

In the early days of the Helium project, early participants were able to obtain very high token rewards by purchasing and deploying mining machines. This high yield attracted a large number of early users and quickly promoted the expansion of the network. However, this incentive mechanism also brings some problems:

Early participants’ profit proportion is too high: Early users quickly realized high profits because they obtained a large number of tokens. While this phenomenon drove the rapid growth of the network in its early days, it also led to a rapid increase in the supply of tokens on the market.

Token economic fluctuation adjustment: Due to the large number of tokens in the hands of early participants, they began to sell tokens on the market, causing token prices to fluctuate and fall. When new users enter the market, they find that the rate of return is much lower than that of early users, causing new user growth to slow down.

Stagnation of network growth: As early high returns gradually disappear, new users are less willing to enter, and the expansion of the network slows down, causing project growth to slow down.

Introduction of dynamic incentive mechanism

In order to deal with the above problems, the Helium project introduced a dynamic incentive mechanism to ensure the continued growth and healthy development of the network.

Adjusting incentives for new and old devices: Helium adjusts the incentive mechanisms for new and old devices so that users of new devices can also receive attractive rewards. For example, increasing the initial rewards for new devices, while maintaining network robustness, while gradually reducing the proportion of rewards for outdated devices to encourage users to purchase and deploy new devices.

Regional incentive policies: In order to promote the balanced development of the network on a global scale, Helium develops differentiated incentive policies based on the equipment deployment in different regions. In areas with fewer devices, higher token rewards are provided to attract users to deploy devices in these areas.

Time period incentive adjustment: Helium balances network load and improves device utilization by providing different rewards at different periods. For example, users who run their devices during off-peak hours can receive additional incentives to ensure stable network operation around the clock.

Device density incentives: In areas with low device density, Helium provides additional incentives to promote stable operation of equipment and efficient transmission of data. This not only improves user revenue, but also improves the overall performance of the network.

Specific implementation of dynamic incentives

The Helium project implements a dynamic incentive mechanism through smart contracts and algorithms to ensure real-time adjustment and fair distribution of incentives. These measures not only increased the enthusiasm of new users to participate, but also stabilized market expectations and prevented market fluctuations caused by early high returns.

Smart contract adjustment incentives: Through smart contracts, rewards for different devices are dynamically adjusted based on the device's usage and market demand. This mechanism ensures the flexibility and real-time nature of incentives.

Real-time data feedback: By collecting and analyzing equipment operating data, the Helium project can promptly adjust incentives in different regions and time periods to ensure optimal configuration and utilization of network resources.

Transparent incentive mechanism: The transparency and openness of the dynamic incentive mechanism enhances user trust and encourages more users to participate in network construction.

Changes in incentives for new and old devices

Incentives for new devices: In order to lower the barrier to entry for users, new devices usually have higher initial incentives to attract early adopters. Project parties may incentivize users to purchase and deploy new equipment through high token rewards and low initial costs, making it easier for new users to participate.

Old equipment maintenance incentives: In order to prevent users from abandoning old equipment, the project will provide continuous incentives, but these incentives may gradually decrease over time. Through equipment upgrade incentives and maintenance cost subsidies, the project side can adjust the operating costs of old equipment to ensure its continued and effective operation.

Physical market changes

Equipment price adjustment: Based on market demand and the service life of the equipment, the project party will adjust the prices of different types of equipment. New equipment typically costs more due to capacity, supply and ordering reasons, but its incentives are also higher. The price of old equipment is lower, but it can still obtain stable income, thus attracting different levels of users.

Secondary market trading: Equipment can be traded on the secondary market, and the project party can charge transaction fees and use part of the proceeds to repurchase and destroy tokens to support token prices. This approach not only increases the liquidity of the device, but also stabilizes the value of the token.

Different regional markets

Regional incentive policies: In order to promote the balanced deployment of equipment around the world, the project team will formulate differentiated policies based on the market needs and development conditions of different regions. Incentives. For example, in areas with low device density, higher incentives may be offered to attract more device deployments to achieve global coverage of the network.

Localized support: The project party will provide localized technical support and training in different regions to help users better install and maintain equipment, improve equipment operating efficiency and user participation enthusiasm. This kind of localized support can effectively promote the promotion and development of projects in various regions.

Equipment density

Intensity rewards: In areas with lower equipment density, the project party may provide additional incentives to enable growth in lower density areas to promote Stable operation of equipment and efficient transmission of data. These rewards can include higher token incentives and equipment upgrade subsidies to incentivize users to keep their equipment in good operating condition.

Dynamic adjustment: The project party can dynamically adjust the equipment density in different areas based on real-time data to ensure balanced development of the network and optimal allocation of resources. Through such dynamic adjustments, project parties can flexibly respond to market changes and optimize network performance.

Equipment running time period

Time period rewards: In order to balance the network load and improve equipment utilization, the project team can set different rewards in different time periods. For example, equipment operating during off-peak periods can receive additional incentives to ensure stable operation of the network around the clock.

Load balancing mechanism: Project parties can dynamically adjust incentives in different time periods through smart contracts and algorithms to achieve balanced distribution of network loads and optimal utilization of resources. Through this mechanism, project parties can effectively manage network resources and improve overall operational efficiency.

Summary and Outlook

We believe that in the DePIN track, both classic DePIN and new generation DePIN have enough categories and broad markets, and have the potential to give birth to big-name products. Great project for scaling user adoption. In the future, it is very likely that a Top 20 Web3 project will be born in this field.

The core logic of DePIN lies in the cost reduction and efficiency increase of WEB3 on existing global businesses. By bringing real-world users into Web3, DePIN not only achieves low-cost and socialization, but also greatly increases the number and accuracy of data sources. Among DePIN's three generations of devices, from fixed devices to flexible and portable devices, the market prospects continue to expand, covering various needs of high technology and daily life.

In recent years, the types and number of investments in the DePIN market have increased significantly, and the number of institutions and projects has also continued to grow. From the demand side, DePIN shows great potential in multiple markets (such as weather, air quality, health, AI, etc.) and device types (such as wearable devices, mobile phones, etc.). The upstream and downstream industrial chains are also gradually improving, including interactive data on the chain, equipment middle layer, data and hardware, etc.

What is particularly noteworthy is that the life cycle of DePIN is theoretically longer than that of non-DePIN projects due to the combination of physical equipment and token design. This makes the DePIN track has huge potential and deserves investors' high attention and investment.

Looking to the future, with the development of the DePIN project and technological advancement, we have reason to believe that more innovative and influential projects will be born on this track, injecting new ideas into the Web3 ecosystem. Vitality and possibility.

Thanks for the support:

Salvador @DAnconia_Crypto from EV3

Anna @gizmothegizzer from Solana

Raullen@raullen from IoTeX

Peter from Hashkey

EO @ Future money group

Reference:

-https://messari.io/report/state-of-depin -2023

-https://messari.io/report/infrastructure-sector-brief-gpu-networks

-https://messari.io/report/navigating-the -depin-domain

-https://messari.io/report/the-depin-sector-map

-https://public.bnbstatic.com/static/files /research/depin-an-emerging-narrative.pdf

-https://htxresearch.medium.com/depin-current-state-and-prospects-ad6b1a59b3d4

-https ://nel4ibmr2ip7ahcw5g6plxbpavywdcgi6zjvb3bkizi632su4vta.arweave.net/aRfEBZHSH_AcVum89dwvBXFhiMj2U1DsKkZR7epU5WY

-https://foresightnews.pro/article/detail/50839

-https://twitter.com /rsarrow/status /1778471355425386928?s=46

MT Capital

MT Capital is a global investment institution managed by a team of experienced investors, focusing on investing in innovative Web3 projects around the world. The layout covers the United States, Hong Kong, Dubai, Singapore and other places. Our main investment areas include: 1) Mass Adoption: decentralized social platforms, games, applications and DEPIN, which are key to driving the diffusion of Web3 technology to a broad user base; 2) Crypto-native infrastructure: we focus on Invest in public chains, protocols and other infrastructure that support and strengthen the ecosystem, as well as native DeFi solutions. In addition, our team has many years of professional experience in secondary transactions.