Original author: Miles Deutscher

Original compilation: Frank, Foresight News

Artificial Intelligence will be one of the best-performing areas of cryptocurrencies in this bull market, but instead of randomly buying AI-related tokens, I am focusing on one major beneficiary: the DePIN track.

It is expected that the output value of the DePIN industry will reach US$3.5 trillion by 2028. I will introduce it in detail in this article:

• How DePIN works;

• Why DePIN is poised for significant growth in 2024 (and beyond);

• Specific DePIN projects I am investing in;

Let’s take a closer look.

What is DePIN

DePIN stands for Decentralized Physical Infrastructure, and these are blockchain protocols that incentivize decentralized communities to build and maintain physical hardware. Users provide hardware or software resources to the network and receive token rewards.

DePIN’s market landscape is vast and spans the multi-billion dollar hardware sector, including:

• cloud storage;

• Calculate ability;

• wireless sensor network;

Messari predicts that DePIN could add $10 trillion to global GDP over the next decade ($100 trillion a decade later).

Physical infrastructure has historically been monopolized by big tech companies because it requires a lot of capital to build and high maintenance costs, and is out of reach of smaller players - so Internet giants like AWS tend to take advantage of this to sell theirs at a premium Serve.

However, DePIN has many advantages over centralized solutions because it is able to:

• cut costs;

• horizontal expansion;

• Reward network contributors;

• Enhanced security;

How DePIN works

• Suppliers (users) can invest their resources in receiving token rewards from the network;

• These rewards incentivize network participants to deploy more decentralized infrastructure;

Growth in infrastructure attracts more demand from end users, resulting in increased network activity. Network growth leads to higher returns, thus incentivizing more suppliers (users).

So as we can see, DePIN has a built-in flywheel effect that helps projects gain traction as they scale.

According to Messari Crypto, the DePIN industry is expected to reach an overall scale of US$3.5 trillion in the next four years. In the long term, I expect this number to be higher because the inertia of the previously mentioned flywheel effect will be strong.

Unlike many other crypto industries, this is a mature model that is already able to generate revenue - DePIN generates over $15 million in on-chain revenue annually, and this number will grow rapidly in the coming years.

Generalized DePIN track classification

Broadly speaking, DePIN projects can be divided into:

• Physical resource networks (sensors, wireless);

• Digital resource network (computing, bandwidth, AI, storage);

• DePIN module;

Each sub-sector can serve as a benchmark for disrupting a $10 trillion industry, which means DePIN’s growth potential is huge.

Let’s break down some of these sub-sectors further.

1. Decentralized storage

These projects create an entirely new market for unused storage capacity:

• Storage service providers provide computing resources based on token incentives;

• The project uses this storage network to encrypt and split customer data;

• Customers pay the network to store and retrieve their data;

Storage is a key adoption vertical for DePIN as it has perfect product-market fit.

For example, splitting data eliminates single points of failure and improves accessibility and security. These networks are also 78% cheaper than centralized networks.

2. Decentralized computing

Decentralized computing networks allow us to borrow GPU power to run complex calculations on the cloud, including using it to drive AI innovation, render cool scenes, or run blockchain nodes.

The current market value of traditional computing networks is US$5 trillion, and even if DePIN only captures 1% of this market, the utilization rate will likely increase by 10 times.

3. Artificial Intelligence Infrastructure

The exponential growth of artificial intelligence over the past decade has exposed some key scaling challenges:

• Lack of specialized hardware;

• Lack of effective collaboration;

• data storage;

• low efficiency;

DePIN can solve these problems and more.

For example, computing networks like AKT can alleviate the dilemma of hardware shortages by crowdsourcing GPU resources; similarly TAO gamifies research collaboration through cryptographic incentives.

These are just a few examples, and DePIN also has many applications across the machine learning circuit.

To be honest, we have only scratched the surface of AI + cryptocurrency, and as the industry matures, more synergies and use cases will emerge.

Now that you all should have a better understanding of what DePIN is (and how it works), lets take a deeper look at the specific projects across the industry that interest me.

DePIN specific projects

Akash

AKT bills itself as the “Airbnb of server hosting” and allows users to buy and sell decentralized cloud storage resources on their marketplace.

As it stands, the Akash network is powerful — capable of hosting websites, blockchain nodes, and video game servers, all at less than 1/6 the cost of Azure.

Render Network

RNDR leverages unused GPU power to unlock next-generation artificial intelligence and 3D rendering services, and network activity has been on a month-on-month upward trend as of the time of publication.

Aethir Cloud

Aethir is a very exciting product coming soon, they have:

• The GPU capability is 20 times that of RNDR Network;

• TFLOPS (computing power) is 45 times that of Akash Network;

• The infrastructure capital invested is 31 times that of Akash Network and RNDR Network combined;

They also have partnerships with major players in telecom, gaming, and cloud computing, and a number of major updates/announcements are expected to be coming in the coming months.

Filecoin 

Filecoin is my favorite representative project in the field of decentralized data storage, currently spanning 3 major growth verticals:

• Storage (2.8 times year-on-year growth);

• FIL Virtual Machine FVM (TVL $254 million);

• Projects built on Filecoin (254,000 users);

At the time of writing, Filecoin offers relatively the cheapest usage fees in the entire storage space.

Arweave

Arweave allows users to store data permanently on the blockchain for a one-time fee, making it ideal for Metaverse, DeSci and social media project applications that require data preservation.

As of the time of publication, the Arweave network has just reached the milestone of 3 billion transactions, and the overall TPS has reached 300.

Ator Protocol

ATOR serves as a scalable privacy middleware for DePIN and other crypto projects, who use relays to route application traffic through the TOR network to help maintain anonymity. At the same time, their new hardware provides users with complete privacy and access to reward incentives.

In addition, other noteworthy projects include Bittensor, Helium, Hivemapper, Storj, etc.

All in all, the DePIN space is broad and growing, and it’s an area where we can see clear adoption for real-world applications.

Long term, DePIN is one of the most obvious use cases for decentralization, so I expect it to be one of the biggest areas for growth in the crypto industry.