Messari: Explain the PoPW token distribution mechanism in detail, or will it ignite the next bull market?

Original title: "Using Crypto to Build Real-World Infrastructure》

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Original compilation: Biscuit, chain catcher

summary

• Proof of Physical Work (PoPW) is a novel token distribution mechanism that rewards participants for completing verifiable physical work in the real world.

• Many protocols are leveraging physical proof-of-work frameworks to incentivize supply-side participation in building hardware networks. These include wireless, mobile, environmental, computing and storage networking.

• Many protocols are leveraging physical proof-of-work frameworks to incentivize supply-side participation in building hardware networks. These include wireless, mobile, environmental, computing and storage networking.

• Cryptoeconomic protocols are powerful in incentivizing and coordinating human activity, making them useful for developing real-world networks of decentralized infrastructure and hardware.

Using a physical proof-of-work framework, protocols can incentivize participants to build their network in such a way that users find it attractive.

During the market drop, cryptocurrency critics became active, slamming whether the industry had any real use cases. Aside from innovations in capital formation and use cases for non-sovereign currencies, removing middlemen, and breaking monopolies, their arguments seem to make sense. But in practice, cryptographic protocols have been so successful at coordinating activity in the digital sphere that projects have begun using crypto for real-world infrastructure.

Multicoin Capital calls this mechanism Proof of Physical Work (PoPW). PoPW rewards users for performing verifiable physical work, such as deploying 5G hotspots. The protocol algorithm verifies the state of the device and rewards the owner according to a predetermined set of rules. Many PoPW protocols are already coordinating hundreds of thousands of participants around the world, covering areas such as wireless networking, mobility, environment, computing, and storage.

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proof of physical work

There are two main types of infrastructure networks: fungible and non-fungible. Alternative infrastructure networks use hardware devices that are location-independent. Computing and storage protocols fall into this category because their services do not depend on where the servers/nodes are hosted. 1 TB of storage in Hong Kong is exactly the same as 1 TB of storage in Singapore. The location of wireless network hotspots is very important, which makes it defined as an irreplaceable infrastructure network.

• Many communities are building in the PoPW space, many of which are still in their early stages. Most of these protocols build applications on top of existing L1. So far, the applications in the PoPW track can be divided into the following categories:

• wireless network

• logistics network

• computing and storage

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Helium and Pollen Mobile are two well-known protocols operating in the decentralized wireless (DeWi) space. Helium currently consists of IoT and 5G networks, with Pollen Mobile focusing on 5G. These protocols incentivize supply-side participants (hotspot operators) to provide network coverage in exchange for token rewards. In addition, participants also earn fees for routing data through their hotspot service.

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logistics network

DIMO allows users to take ownership of their mobile data to provide services in the fields of auto finance, insurance, maintenance and more. Supply-side participants (data miners) are rewarded for connecting hardware devices to their cars and contributing that data to the network.

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natural environment
PlanetWatch is a decentralized global network of air quality sensors. The protocol rewards supply-side participants (sensor operators) for streaming real-time air quality data back to the network.

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computing and storage
Render Network is a distributed GPU rendering platform. Its token economics is designed to reward supply-side participants (node ​​operators) for dedicating GPU hardware to the network and doing rendering work.

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Why use blockchain?

Since large physical networks require large capital injections and complex security systems, they usually require large companies to build. This often results in a small number of companies controlling the pricing structure and conditions for users, preventing a free market.

Cryptoeconomic protocols solve this problem entirely, allowing globally distributed individuals to collectively steer the network in a permissionless and trustless manner. This is a much more cost-effective solution by jointly building and maintaining the network and distributing the benefits entirely to supply-side participants.

In an article by Evan Conrad, he highlighted that if Filecoin were a centralized entity, it would tend to take a share of the network's revenue. As the network grows in popularity, Filecoin's network effects continue to grow. As Filecoin stands now, all the value goes to the protocol, making it "the cheapest marketplace for goods, with no single middleman taking a cut."

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Benefits of using encryption for infrastructure

As Tushar Jain, managing partner of Multicoin Capital, describes, using cryptoeconomic protocols for infrastructure networks has two benefits: the ability to rapidly scale the network globally, and being a system that is co-owned by participants rather than by Owned by a small group of shareholders.

Cryptoeconomic protocols allow users around the world to build permissionless networks in parallel. Participants can also focus on deploying infrastructure that meets local market needs. In exchange for establishing a network provider, participants receive an ownership stake in the network, which incentivizes them to grow the network.

While the aforementioned agreements allow individuals to contribute to the network and earn passive income, they also open the door for franchise-like businesses. Mike Zajko, co-founder of Lattice Capital, described the entrepreneurial opportunity:

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economic model

economic model

Token incentives play a very important role in building real-world infrastructure and solving coordination problems. Helium has proven this theory for over a year. It expanded the IoT network from 30,000 to over 900,000 physical hotspots in 170 countries by offering incentives to hotspot deployers.

To start this economic model, the project party first needs to provide users with rewards for completing verifiable physical activities in the real world:

Supply-side participants are incentivized by inflation tokens targeting specific activities needed to grow the network. These rewards act as subsidies to supply-side participants. Rewards typically support participants in building the network before the network starts generating sustainable fees from demand-side usage.

As the web grew, developers and product builders were drawn to it. Additionally, the protocol’s subsidies to its supply-side participants allow them to offer cheaper services, helping to attract more users.

End-users start paying for network services, increasing revenue for supply-side participants and protocols. This creates a positive feedback loop that can attract more supply-side players and investors.

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final thoughts

final thoughts

Physical Proof-of-Work represents a novel token distribution mechanism. Tushar Jain believes that the new token distribution mechanism may trigger the next bull run.