DePIN stands for Decentralized Physical Infrastructure Networks, or in simple terms, real-world applications that are actually useful, says Max Thake, cofounder of Peaq, a layer-1 for DePIN.

Few things get your average crypto enthusiast as excited as a brand-new cryptic abbreviation to rally around. This cycle, the DePIN banner is flying high, and compared to some of the past crazes, this one is actually pretty wholesome. Not just that — it’s exciting, it has a ton of potential, and it marries Web3 and the real world in a way that actually makes sense… All while being a beast the mainstream crypto space is unprepared for.

Demystifying DePIN

For now, quite a few people — even crypto-natives — arch their eyebrows at the mention of DePIN as the term is yet to fully settle in. So in the interest of clarity, DePIN stands for Decentralized Physical Infrastructure Networks, or in simple terms, real-world applications. DePINs leverage tokens to incentivize people to set up hardware for providing and rendering real-world services. Think car-sharing, peer-to-peer solar power trading, 5G or WiFi connectivity, street mapping, electric vehicle charging, environmental data collection through smartphones, and other exciting use cases.

This op-ed is part of CoinDesk’s new “DePIN Vertical” devoted to exploring the future of decentralized infrastructure.

As an example, consider Silencio, which enables people to record noise pollution levels with their smartphones and earn token rewards for it. Another DePIN, Wingbits, uses tokens to incentivize people to set up private antennas tracking planes’ location data broadcasts. For history buffs among us, the fundamental model behind DePINs isn’t new; only the term, coined by Messari in late 2022, is actually relatively recent.

Early on, the name got its fair share of smirks — nothing wrong with that, memes are the way of Web3 — but its introduction set off a powerful movement imbued with a promise of change. And this change, interestingly enough, goes both ways, not only aiming at how we manage and earn from devices, but also making us, the Web3 natives, reconsider the way we think about Web3.

Bringing crypto into the real world is an exciting idea, if not a one-of-a-kind opportunity. It’s what the masses have been waiting for: real, tangible use-cases for blockchain that people actually need and use daily. The flipside is that this one-of-a-kind opportunity takes a bit more effort from launching another dog-themed memecoin, and has a lot of its own specifics too.

Why DePINs aren’t regular dApps

So what makes DePINs special? To answer this question, let’s imagine a hypothetical DePIN that enables you to earn tokens for measuring local temperature through a smart thermometer. That’s already where we bump right into one of the many, many elephants in the room: the hardware.

How do we go about the thermometers? Do we let users connect any third-party devices capable of recording and sending data? Sure, and let’s applaud our own open-source spirit while we’re at it. But let’s not forget to write the code that will support the widest variety of smart sensors and will feature a simple user interface that will make adding them a breeze. And that’s no easy task, mind you.

“It’s what the masses have been waiting for: real, tangible use-cases for blockchain that people actually need and use daily”

The good news is, they are up to the challenge. When they’re armed with a solid idea and execution, DePINs have several unfair advantages over their Web2 incumbents. For example they can bootstrap their way to scale – fast – and they can undercut virtually any centralized competitor. You read that right; Uber, the undercutter of all undercutters, may have met its match. The bad news is, crypto isn’t as used to this business model as it thinks. Thus, solid enterprise ties are a must for any aspiring DePIN ecosystem, as they help with securing this demand, and with various other headaches, such as hardware manufacturing.

Let’s not forget about having to win the hearts and minds, too. DePINs have to approach entirely new audiences, people who are an afterthought for most crypto projects. Think IoT and tech geeks, but also anyone who could host and run hardware, from drivers (they really love their world-mapping DePINs) to small businesses. It’s no easy task, marketing-wise, and one that further distinguishes DePINs as a unique Web3 sector.

None of this is fatal, obviously, as the sector powers on, but all of this makes for a gauntlet that calls for a new mindset, architecture and language.

• Mindset: more attentive of real-world challenges that DePINs can tackle and savvier in accounting for the hurdles in the path, including things like actual product marketing and user experience to compete with Web2 rivals.
• Architecture: merging smart contracts with edge computing and peer-to-peer device interactions, mindful of the real-world challenges involved.
• Language: more accessible to the non-Web3, those who didn’t spend their last few years chasing the crypto bags, language of business cases and efficient solutions.

The beauty of DePIN is that it gives us all a chance to judge crypto based on its real-world usefulness. By tapping into real demand and supply, DePINs give us all clearer metrics to go by.. How many devices are on a DePIN? How many people use the DePIN’s services? Is its pricing and services better than those of Web2 rivals? It’s not about speculation anymore, but about making a positive impact on the world. This is what truly singles DePINs out across the entire Web3 space as a unique and self-standing sector. Their supporting layer-1 backbones should be as wary of this as the wider Web3 community if we want this space to finally bring in real-world blockchain adoption — this time, for real.

Source: Coindesk