Blockchain platforms are adaptive to changes prioritizing decentralization of the industry. A decentralized physical infrastructure network transforms how physical infrastructures are connected to the digital world. Utilizing the advancements in blockchain technology, DePIN creates a network of physical attributes.
What is DePIN?
A decentralized physical infrastructure network is a bridge that connects the physical world with blockchain technology by utilizing digital or physical attributes to share the data in a decentralized manner. By providing a network of physical attributes like WiFi and storage space, DePIN allows people to share data directly to the blockchain network without any involvement of a third party.
By creating a peer-to-peer network, DePIN allows on-demand access to resources, providing a need-on-the-go service. Integrating with blockchain technology, the infrastructure network ensures security and transparency throughout the platform.
Users who share their resources with the network receive digital tokens as a reward, which are then utilized for transactions. The no permission requirement feature makes decentralized physical infrastructure an open system allowing everyone to provide services.
Components of DePIN
- Blockchain network: Blockchain network allows decentralized automatic transactions using smart contracts and also distributes rewards for their resources in the form of tokens.
- Physical and digital infrastructure: Physical infrastructure like WiFi and data storage is utilized to share the resources to the blockchain platform.
- Token rewards: Cryptocurrency tokens are given as rewards for people sharing their resources with DePINs.
- Off-chain network: Monitors the actual transaction of resources.
Advantages of DePIN
- Integrating with blockchain technology, DePIN creates a distributed system allowing small groups to control their infrastructure rather than relying on big single entities.
- The infrastructure offers service to all reducing competition, and cost and enabling diversification.
- It allows faster deployment and adaptation according to the needs of users, creating opportunities for small-scale businesses and entrepreneurs to take part in the infrastructure.
How does DePIN work?
- DePIN utilizes the physical hardware node to connect to the physical world. The physical hardware includes sensors, wireless hotspots, routers, and other computing devices.
- Blockchain records all transactions and automates the sharing of rewards with the help of smart contracts and the Internet of Things (IoT) ensuring fast and secure transactions. The transaction is processed only when the predetermined conditions are met.
- Users who share their resources with DePIN are compensated with crypto rewards, encouraging people to invest in and utilize the infrastructure.
- The decentralized infrastructure enables direct interaction between infrastructure providers and users, ie no intermediaries are required.
Types of DePINs
Depending on the purpose they serve, DePINs are classified into two.
1. Physical Resource Network (PRN)
Physical Resource Network services use physical resources as the base of the decentralized network. The physical resources include hardware, goods, or any other infrastructure. They are location-dependent.
Eg: Hive mapper and Dimo.
2. Digital Resource Network (DRN)
A Digital Resource Network utilizes digital resources to function as as a decentralized network. The digital resources include computing power, GPU rendering, or storage space. They are location-independent.
Eg: File coin and Nodes AI.
How to create a DePIN?
The creation of DePIN involves different steps.
1. Analyze your requirements
Every individual needs will be different, analyze the requirements that need to be defined in the DePIN. It can be cost-cutting, reducing energy consumption, or enhancing grid resilience.
2. Select a blockchain network
Choose a blockchain network that abides by the requirements. Consider transaction speed, scalability, security, consensus mechanism, governance, smart contracts, throughput, etc to be included in the blockchain platform you select.
3. Create a native token
A native token is necessary for smooth transactions and rewards. You can create a token-based voting mechanism for decision-making or a reward point system for trading.
4. Build smart contracts
Creating an efficient smart contract helps automate the transaction when predetermined conditions are met. By eliminating the need for an intermediary, DePIN provides fast and cost-effective transactions.
5. Deploy physical infrastructure
Deploy hardware devices to connect with the blockchain. Hardware devices can include smart meters and energy sensors.
6. Connect network participants
Connect network participants including energy providers, service providers, and consumers. Provide incentives and benefits to encourage them to invest in the DePIN platform.
7. Implement security protocols
Implement DePIN protocols to prevent security threats and cyber-attacks.
Different use Cases of DePIN
DePIN provides many services similar to conventional technology companies, but the open system and decentralized nature make DePIN different from the latter.
1. Data storage
By connecting many physical infrastructures, DePIN provides a new mechanism to store data. The decentralized nature of DePIN allows data to spread across multiple nodes, making them more secure and reliable. By fragmenting the data and sharing them across the network, DePIN eliminates the dependants of a single system.
2. Wireless network
The peer-to-peer infrastructure network allows devices to connect directly with other devices. The wireless connection is easy to install and cost-effective. The Helium project allows hotspot hosting by which IoT devices are connected to other devices to earn cryptocurrency rewards.
3. Sensors
By integrating blockchain technology with the physical architecture of sensors, DePIN can monitor traffic and other environmental issues. Sensors collect data and store it across the network. When people share their data they receive rewards. Decentralized sensors are a great advantage in yield farming and weather predictions.
4. Energy distribution
Smart grids manage energy flow, thereby creating a balance between supply and demand. By properly managing energy and finding alternatives like renewable energy, DePIN can contribute to a green environment, making the world more sustainable and green.
Limitations of DePIN
- The varying regulatory frameworks in different countries can create complexity among DePIN builders. Since abiding by the crypto laws and regulations is important for the smooth working of the platform, the lack of clarity in laws can create a hurdle.
- Though DePIN runs on a blockchain network offering robust security features, the risks associated with smart contracts and data privacies concern the project builders demanding they maintain the right balance between blockchain’s transparency and security.
- Managing a decentralized platform is not easy, builders need to understand the management of physical infrastructures and their integration with the blockchain network.
Final Thoughts
DePIN has revolutionized the way in which infrastructures are accessed, by creating the right balance between decentralized governance and rewards, DePIN made more transparency and efficiency to the trading platform. By overcoming the existing challenges, DePIN can create a strong thrift in the economic sector.