The DePIN (Decentralized Physical Infrastructure Network) sector emerged as a compelling trend in late 2023, attracting significant investment capital. This momentum continued into 2024, with the market capitalization surging over 30%, from $20 billion to nearly $30 billion.
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While DePIN’s market cap may not rival established sectors like Lending/Borrowing or Liquid Staking, DePIN protocols boast robust business models and effective tokenomics. This resilience is evident in their consistent growth, regardless of bull or bear market conditions.
A Messari report highlighted DePIN’s stability during the 2023 downturn. While NFT, Dex, and Layer 1 projects experienced revenue declines of 70% to 90%, DePIN projects saw a more moderate decrease, ranging from 20% to 60%.
Revenue comparison across crypto sectors. Source: Messari.
This analysis evaluates leading DePIN projects based on their business models (flywheels) and tokenomics, key indicators of long-term sustainability and potential token appreciation. We’ll also highlight projects with potential future airdrops. Our top 5 DePIN projects include:
- Helium
- Filecoin
- Bittensor
- Arweave
- Gradient Network
Top 5 Promising DePIN Projects
Helium: Building a Decentralized 5G Network
Helium, one of the largest DePIN projects, enables users to deploy Hotspots providing 5G data coverage and earn HNT tokens as rewards.
Helium aims to create affordable 5G coverage for IoT devices, bypassing the millions of dollars required for traditional infrastructure. By leveraging LoRaWAN for IoT and CBRS bands for 5G, Helium minimizes expensive licensing fees typically incurred by traditional network providers.
A Helium Hotspot.
Helium’s sustainable economic model benefits both users and the network. Initially, a $350 Hotspot yielded 4.82 HNT (approximately $33.5), offering a 10-day return on investment. As more Hotspots joined, HNT rewards decreased. By late 2021, daily earnings were around $7.61, extending the ROI to 46 days.
This dynamic creates a compelling flywheel:
- Network growth fuels competition among Hotspot providers, lowering prices and attracting more participants, further expanding coverage.
- Increased Hotspot deployment reduces HNT supply, driving demand and incentivizing further network growth.
However, user profitability remains linked to HNT’s price, making returns vulnerable to market downturns.
Helium’s Flywheel. Source: Multicoin Capital.
With over 1 million Hotspots globally, coverage in over 200 countries, and over 900,000 connected IoT devices, Helium demonstrates significant potential for continued growth.
Filecoin: Decentralized Data Storage
Filecoin, a pioneering DePIN project, allows users to rent out unused storage space on their devices. FIL, the native token, facilitates transactions within the network.
Filecoin’s flywheel is straightforward: Attracting storage providers increases network capacity, drawing in more users and driving FIL adoption and value appreciation. Competition among providers reduces storage costs, further attracting users.
However, like Helium, Filecoin’s model relies on FIL’s price stability, leaving the network vulnerable to market volatility.
Currently, Filecoin boasts over 4,000 storage providers offering over 17 EiB of capacity – enough to store over 340 million 50GB HD movies. This demonstrates the project’s success in building a substantial network with minimal infrastructure costs.
Filecoin’s Flywheel. Source: IOSG Ventures.
Bittensor: AI-Powered DePIN
Bittensor, an AI-focused DePIN project, enables developers to contribute data for AI training. These trained AIs are then sold to businesses and individuals.
Bittensor’s model involves two key entities:
- Validators: Assess the output and quality of AI models submitted by Miners.
- Miners: Execute AI requests from users and businesses, earning TAO tokens based on the quality of their work, as evaluated by Validators.
This fosters competition among Miners to deliver high-quality AI models, enhancing the network’s value and attracting more participants, driving TAO token appreciation. With a fixed supply of 21,000,000 tokens and a halving mechanism every four years, TAO mirrors Bitcoin’s scarcity model.
Bittensor’s Flywheel.
However, potential validator bias and the high barrier to entry for Miners, requiring significant computational resources and AI expertise, pose challenges.
Arweave: Permanent Data Storage
Launched in 2019, Arweave offers permanent data storage with a single upfront payment using AR tokens.
With over 170 TB of data stored from 2 million users and over 350,000 active wallets, Arweave has established a significant presence.
Arweave’s flywheel relies on user adoption and network growth driven by the appeal of one-time payment for perpetual storage. Increased usage drives AR token demand and potential price appreciation. However, this simple model’s reliance on user growth presents a significant dependency.
Gradient Network: Contributing Computing Resources for AI
Gradient Network allows users to contribute unused computing resources to AI development by installing a simple browser extension. While still in its early stages and without a token launch, Gradient Network offers potential airdrop opportunities and enjoys backing from prominent investors like Pantera Capital and Multicoin Capital. A clear flywheel model has yet to emerge.
