- Horizontal scalability
- Decentralization
- Fair pricing
- Cost-effective operation
- No authorization system
- Incentivization
DePIN stands for Decentralized Physical Infrastructure Network, which is an umbrella term for networks that use blockchain technology to decentralize control and ownership of physical infrastructure in the real world.
In the traditional world, physical infrastructure, such as data networks, transportation or electricity networks, is owned and operated by centralized organizations. DePIN projects seek to replace this by creating peer-to-peer (P2P) networks where individuals can use their own physical resources and jointly manage the network. This approach integrates blockchain and cryptocurrency into the real world and the real economy and has many advantages.
Horizontal scalability
The first benefit of DePIN is horizontal scalability, which allows entities to expand their capabilities in a more flexible way. Networks can increase the number of resources instead of increasing the capacity of each resource. This provides a good level of flexibility, and facilities built using this system can easily scale with demand. Blockchain can control the available resources and needs.
DePINs facilitate sharing of underutilized resources within the community. In a low-demand scenario, some providers may experience less load. In high-demand scenarios, the network may re-activate idle resources, adding more instances and increasing overall network capacity without any change. Depending on the available idle resources and the DePIN rationing system, such systems can scale indefinitely. By maximizing resource utilization, DePINs promote a more sustainable and cost-effective approach.
Decentralization
The second benefit of DePIN is decentralization, which like DeFi, decentralizes infrastructure systems from corporations to a collective of individuals committing their resources to the construction of a facility. This system distributes control of the facility to different providers – this is similar to the miners in a PoW network. DePIN is a kind of industrial DAO where each participant in the system contributes resources and has control according to their capabilities. In a system where every provider has equal power, DePIN becomes an (almost) perfectly decentralized system.
Fair pricing
DePIN pricing models are different from traditional services. Factors affecting the pricing model include the costs incurred by private providers to operate their individual services and other network-related factors. Additional platform charges may be lower because the platform itself does not incur any costs to provide these services.
In general, the DePIN pricing model is expected to be less expensive, with the expectation that pricing will be fair because it takes into account the underlying factors without the unfair overpricing that is typically associated with facilities operated by centralized institutions. In terms of a people-based system, DePINs are also more likely to consider affordability in their pricing model than corporations.
Through token incentivization and efficient resource allocation, DePIN networks can generate sufficient revenue to maintain and expand their infrastructure without constant external investment. This creates a more sustainable and independent infrastructure system.
Cost-effective operation
DePINs are created through crowdsourced funds and efforts. They bypass bureaucracy and spread costs among participants, resulting in faster and more affordable infrastructure development. The DePIN network spends virtually no money to start up the network; providers have a good level of flexibility in terms of the services they provide. For example, a provider can connect its enterprise to multiple networks. Users also pay a fair price for the services they receive on the network. DePINs are designed to provide the best possible service at the lowest possible cost, offering a cost-effective system.
No authorization system
Another advantage of DePIN is that anyone can contribute their resources to DePIN. On the user side, anyone can also get the services offered by DePIN. There is no haggling over price or user verification for each. Once a provider has the necessary infrastructure in place, they can open a provider-side account in DePIN, just as anyone can easily deploy a liquidity pool on DEX or get a money market loan.
Incentivization
Incentivization is a great tool for DePIN. Providers offer passive or active income opportunities depending on how the DePIN works. Individuals can also generate income through DePIN. Projects such as Nunet hope to reduce the amount of idle computing resources through its artificial intelligence-based computing marketplace. Providers generate revenue from their facilities that would have been idle in the first place.
