Outlier Ventures publishes DePIN investment theme, a one-minute overview

Author: Outlier Ventures; Translation: 0xjs@金财经

Note: On March 19, 2024, the well-known encryption venture capital Outlier Ventures announced the DePIN investment theme and announced the opening of DePIN base camp accelerator applications. Applications close in April 2024 and will begin in May and last for 12 weeks. This article is an overview of the "DePIN Investment Theme".

DePIN has achieved early success in digital infrastructure including storage and connectivity. We believe that through decentralized coordination of physical infrastructure and resources, more business models will be disrupted. The next wave of DePIN will revolve around data and services increasingly built on purpose-built blockchains and custom SDKs.

This research aims to provide founders and investors with a comprehensive understanding of DePIN, an area we anticipate will have a significant impact on multiple industries.

Unlocking the decentralized platform

The business model for operating physical infrastructure consists of two parts.

The first is the "platform", the infrastructure layer that coordinates physical resources or economic activities between nodes.

The second is "service", which refers to the economic services or products produced by the coordination of these resources in a specific way.

Traditionally, the platforms on which these businesses are built have been centrally organized due to the complexity of creating and maintaining these platforms. Blockchain technology changes this. Through technological innovation, the platform can achieve decentralization by leveraging the trustless nature and automated execution of blockchain. Replacing centrally coordinated platforms with decentralized alternatives can eliminate costs and create more direct routes from resources to users.

All of this leads to the optimization of existing services and makes entirely new service categories economically viable, which were previously hampered by the high costs and inefficiencies associated with centralized platform coordination. service is not possible. This breakthrough forms the basis of Web3 and is called Decentralized Physical Infrastructure (DePIN) when it comes to handling physical resources.

New Frontier

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Applications built using DePIN are expanding beyond the scope of traditional physical infrastructure into verticals such as data collection, artificial intelligence infrastructure, and platform economies.

We see two drivers behind this.

• The purpose of physical infrastructure is changing – moving to data network DePIN Data network DePIN is changing the purpose of physical infrastructure beyond its traditional role, from digital services to data extraction . By creating a network of decentralized nodes, hosts can provide a way to extract valuable data. In the process, DePIN is redefining the value proposition of infrastructure, blending connectivity with data generation.

• The definition of physical infrastructure is changing - moving to service networks

• strong>, the definition of (critical) physical infrastructure is moving beyond traditional physical structures. Over the past decade, society's economic dependence on service networks has increased (social like Facebook, etc., services like Uber, etc...). These networks have historically relied on centralized entities that coordinate socioeconomic activities. DePIN is moving from digital infrastructure to service networks.

Why now?

In addition to the obvious technical improvements in blockchain-based systems, we believe there are five key drivers Factors driving DePIN adoption on both demand and supply sides.

1. Cost Curve - The cost curve for computing and hardware has dropped significantly, making small-scale node operations economically feasible.

2. Usability - AI-enabled front-ends are falling into the hands of consumers, improving decision-making and management of DePIN and tokens.

3. Privacy and Security - Since the spread of generative AI among billions of users around the world, concerns about the privacy and security of data and services have increased dramatically, leading to more Many users explore alternative solutions.

4. Data generation - Driven by the AI ​​and open source movements, data generation across network nodes has increased.

5. Utility Tokens - Token economics lays the foundation for the incentive structure behind DePIN. After a few cycles, we believe the expertise in creating utility token structures has matured enough for many DePINs to successfully launch.

For the full text of the report "DePIN and The Platform Economy", link: https://outlierventures.io/wp-content/uploads/2024/03/DePIN-OV-Thesis.pdf