### DePIN 101 Decentralised Physical Infrastructure - Protocols that use blockchain technology to support a global network of physical infrastructure maintained by participants providing the necessary compute. 2 types: - **Physical Resource Networks (PRN)**: These include hardware systems essential for connectivity, such as wireless internet, energy distribution, and geospatial data. An example is Helium Hotspots, which are similar to internet routers. - **Digital Resource Networks (DRN):** These supply the network resources needed to operate physical systems, such as computing assets, bandwidth, decentralized cloud storage, and connectivity. ![[Pasted image 20250124121415.png]] 1. DePINs use blockchain technology to incentivize individuals to create and maintain physical infrastructure, offering rewards for contributions like sharing resources and building infrastructure. 2. DePIN tokens facilitate network operations through governance, service payments, and staking, while also helping to incentivize the network's growth and ethical operation. 3. DePINs promote accessibility, efficiency, and democratized ownership of infrastructure while facing challenges like technical hurdles, regulatory uncertainties, and adoption barriers DePIN is made up of physical and virtual infrastructure networks that serve as the framework supporting operations, distribution and management of services and resources. Irrespective of the network, we classify as DePIN when they do both of the following: 1. Use crypto-based, decentralized coordination to create and maintain infrastructure. 2. Rely or have an impact on physical nodes in the real world (for ex. Servers, sensors, drivers, housing, etc). DePIN is maturing and so is the scope of where decentralized infrastructure networks can apply to. ### The DePIN flywheel The DePIN flywheel is the name given to this self-reinforcing cycle that helps any network grow and develop.  There are a few steps associated with the flywheel:  1. **Incentivize participation** – Users contribute resources to the network and earn tokens as rewards. These incentives attract more participants who contribute their own resources and expand the network’s capacity. 2. **Improved services** – Increased capacity translates to better services. For example, in a broadband DePIN, more participants typically means wider internet coverage and faster speeds.  3. **Network expansion** – The enhanced service quality tend to attract more users, who contribute their own additional resources  4. **New resources** – The network's growth and potential rising token value attracts investors who bring additional funding and support, further accelerating the network's development. This flywheel effect can sometimes result in rapid growth and scalability, creating a thriving ecosystem where everyone benefits. Contributors earn rewards, users enjoy improved services, and the network itself becomes more valuable as new users join. ## How do DePINs work? ⚙️ DePINs create a community-driven network where people can share their unused resources in exchange for tokens. These pooled resources are then used by the network to offer services like improved internet access in areas with limited connectivity, decentralized cloud storage solutions, or even the power to run complex analyses for businesses or researchers.  DePINs create a self-sustaining ecosystem where users are rewarded for their contributions, and those rewards can be used to access the services provided by the network.  This closed-loop system incentivizes participation and helps to ensure the network's long-term sustainability. ## What is a DePIN coin? 🤷‍♂️ DePIN tokens are vital for projects that issue them, offering incentives for participants who contribute resources to the network. This economic motivation ensures the network operates smoothly, ethically, and promotes growth. Additionally, these tokens serve several purposes: 1. **Governance** – [Token holders](https://www.kraken.com/learn/what-is-a-governance-token) can influence the direction of the DePIN project, voting on changes and upgrades to the DePIN software. 2. **Payment for Services** – Tokens can be used to pay for services provided by DePIN, such as accessing storage or paying for bandwidth. 3. **Staking** – Some DePIN tokens can be staked by validators to secure the network, and by delegators who assign their tokens to validators. Both validators and delegators are often rewarded with a share of new coins from block rewards for their contributions to the network. For more information on crypto staking, check out our Kraken Learn Center guide, [What is crypto staking](https://www.kraken.com/learn/what-is-crypto-staking) ## What are the benefits of Decentralized Physical Infrastructure Networks? 🏆 DePINs offer several key advantages over traditional, centralized infrastructure models, and aim to revolutionize the ways in which we access and use essential resources. ### Enhanced accessibility DePINs enable individuals in underserved or remote areas to connect to these networks and either contribute their resources or use other individual’s ones.  This helps foster a more inclusive environment where anyone with a device and an internet connection can participate, which helps expand access to essential services like internet connectivity, energy, and storage.  Importantly, by eliminating intermediaries and reducing overhead costs, DePINs can often provide these services at a more affordable rate than traditional offerings. ### Increased efficiency Traditional infrastructure often suffers from inefficiencies due to centralized control and limited resource utilization. DePINs, thanks to their distributed nature, tap into underutilized resources to optimize the use of existing infrastructure.  This, in effect, helps minimize waste and maximize efficiency, resulting in a more sustainable and cost-effective system. ### Democratized ownership DePINs empower individuals to own and monetize their resources. Rather than relying on large corporations or governments to provide infrastructure, anyone can become an active participant and earn potential rewards for their contributions.  This shift towards democratized ownership promotes a more equitable distribution of resources and financial benefits within the network. ### Resilience and security Centralized systems are vulnerable to single points of failure, such as outages or cyberattacks. DePINs are inherently more resilient thanks to the distribution of resources. Even if nodes or participants go offline, the network can continue to function.  Additionally, this distribution allows DePINs to be less susceptible to censorship or control by any single entity, which helps enhance their security and privacy. ## What are the challenges facing DePIN? ⚠️ DePINs, while promising, are still in their early stages of development, which brings unique challenges: - **Technical hurdles –** Unlike digital resources, physical assets require coordination and management in the real world (like dealing with hardware maintenance, connectivity issues, and geographical distribution complexities). Ensuring the efficient and secure operation of a decentralized network of diverse physical resources requires innovative solutions and robust protocols. - **Regulatory Considerations –** The regulatory landscape for DePINs is still evolving. As these networks blur the lines between traditional industries and blockchain technology, they face uncertainties around token classification, taxation, and compliance.  - **Adoption Barriers –** Technical complexities and the need for specialized hardware may deter non-technical users. Additionally, incentivizing participation and ensuring fair distribution of rewards can be a hurdle. Building trust and educating potential users about the benefits of decentralized infrastructure are essential steps in overcoming these adoption barriers. ![[Pasted image 20250124120839.png]] ### DePIN Architecture ![[Pasted image 20250124121337.png]]