DePIN: The Ultimate Guide to Decentralized Physical Infrastructure Networks

DePIN or Decentralized Physical Infrastructure Networks represent a class of distributed applications that attempt to solve the issues of real-world economy with the power of blockchain.

DePIN, short for Decentralized Physical Infrastructure Networks, is a class of distributed applications that attempt to solve the issues of real-world economy with the power of blockchain. Together with AI cryptos, meme coins, real-world asset tokenization tools and liquid staking protocols, DePIN tokens are among the hottest cryptocurrency narratives of this cycle.

DePIN or Decentralized Physical Infrastructure Networks represent a class of distributed applications that attempt to solve the issues of real-world economy with the power of blockchain.

Together with AI cryptos, meme coins, real-world asset tokenization tools and liquid staking protocols, DePIN tokens are among the hottest cryptocurrency narratives of this cycle.

What is blockchain?

Blockchains or decentralized (distributed) networks should be referred to as a class of databases that records transactions across multiple computers in a secure, transparent and tamper-proof manner. The majority of computers in blockchain networks should agree between each other to include this or that chunk of data (“block”) to the database (“blockchain”).

Blockchain systems rely on various consensus mechanisms to achieve this goal. However,” all of them leverage decentralized computational infrastructure (multiple servers turned into blockchain nodes) and blockchain clients (software installed on these computers) to reach synchronization.

Launched in 2009, Bitcoin (BTC) is the first viable implementation of the blockchain concept. Ethereum (ETH), running since 2015, is the first blockchain that supports its own software programs called smart contracts.

What is AI?

Artificial intelligence, often abbreviated as AI, is a class of technologies designed to simulate human intelligence for solving tasks that normally require human cognitive abilities, such as learning, problem-solving, reasoning and decision-making. Some implementations of AI might include trading, content generation, resource management and so on.

The term “artificial intelligence” was introduced by John McCarthy back in 1955. The ongoing trend of interest in this concept was triggered by the releases of ChatGPT, an AI-powered chatbot by OpenAI, an American corporation.

Also, X made headlines by integrating its own AI instrument Grok for browsing content.

What are AI cryptocurrencies?

AI cryptocurrencies are altcoins that somehow use artificial intelligence in their tech and marketing strategies. For the vast majority of them, AI is only part of their promotional narrative. However, some cryptocurrency projects really leverage AI and machine learning as the tech basis for their development.

Some AI cryptocurrencies are integrated as monetization tools in technology mechanisms based on AI and ML. For instance, these tokens can be part of the tokenomical design of a system that is backing a distributed GPU ecosystem for large language models.

AI teams might also use cryptocurrency tokens as a convenient, transparent and inclusive way of raising funds from the retail audience.

Why are AI cryptos popular?

Starting from 2023-2024, AI cryptocurrencies have been the strongest narrative in crypto. A number of AI altcoins managed to log over 1,000% upsurges in a few weeks. Largely, they became popular thanks to two catalysts: aggressive marketing and community management, as well as eccentric tech designs focused on solving major real-world problems.

However, the majority of retail investors were attracted to the segment of AI cryptocurrencies by the promises of enormous gains amid the hype around generative AI protocols.

DePIN in crypto explained: Comprehensive guide

DePIN or Decentralized Physical Infrastructure Network represents a class of distributed systems designed for the control and management of infrastructure resources. DePIN cryptocurrencies are integrated into these systems as a way of incentivization and monetization for resource owners and managers.

What is DePIN: Basics

Decentralized Physical Infrastructure Network (DePIN) is a type of peer-to-peer (P2P) resource network managed and governed by distributed instruments. It might rely on blockchains and permissioned distributed systems for more resource-optimized, transparent and inclusive governance.

Every DePIN is based on physically accessible resources (computational capacity, IoT devices network and so on). Simply put, there is a group of network actors interested in leasing resources, while the other group is sharing them for rewards in cryptocurrency.

For instance, a group of GPU owners might offer their computational resources for large language model (LLM) training. Other groups of actors are leveraging these GPUs for their purposes and paying rewards to the “providers.”

The way both groups are organized is what is special about DePIN and what makes it look different from regular infrastructure networks (centralized servers, databases, processors like AWS and so on).

What is DePIN: Tech

In DePIN, all participants of the interaction are typically represented by their on-chain accounts. Therefore, they can establish fair, cost-effective and transparent models of resource sharing that are beneficial for all parties involved.

For instance, “consumers” (the owners of LLMs to be trained) can utilize cryptocurrency from their accounts to top up the ones owned by “providers” (GPU ecosystem maintain