State of Solana DePIN 2024

Dive deep into Decentralised Physical Infrastructure (DePIN) and why Solana is the #1 chain for DePIN — Ft. Helium, Hivemapper, Render, io.net, Grass, Nosana, ShdwDrive, and more!

This was originally published on Superteam Substack; it’s the same version

‘Solana is the DePIN chain’ or to put it in another way, Solana is unquestionably today the best chain suited for DePIN. The story of dominance began with Helium, the biggest DePIN project, migrating from its own L1 to Solana in Q2 2023.

Today, Solana is now home to category leaders like Helium, Hivemapper, and Render (think 3 of the FAANGs of DePIN) — Solana DePIN representing a combined FDV of over $10 billion and $4 billion in market cap now!

The integrated infrastructure and developer community of Solana are now attracting DePIN projects at every stage of their lifecycle. While Solana is a general-purpose chain with a booming DeFi and NFT ecosystem, its emergence as the DePIN category leader is truly remarkable. Many regard DePIN as one of the most bullish bets for the Solana ecosystem, owing to its vast TAM and Solana’s first-mover advantage in DePIN.

Messari estimates the total TAM of DePIN to be over $2.2 trillion, with expectations to reach $3.5 trillion by 2028. This projection assumes that much of the physical infrastructure will be token-incentivized, which may lead to exaggerated figures. Nonetheless, it represents one of the most audacious bets in crypto.

In this essay, we will briefly explore DePIN, examine why Solana is chosen as the DePIN chain, discuss various Solana projects briefly, and finally, conclude with themes that are worth watching for both Solana and DePIN in general. By the end of this essay, you will gain all the necessary insights you need about Solana DePIN.

What and Why DePIN:

DePIN, or ‘Decentralized Physical Infrastructure Networks’, consists of token-incentivized networks. They utilize crypto-economics to align incentives and encourage individuals to allocate their capital or unused resources. From Bitcoin to Solana, we have seen that tokens have proven to be an exceptional mechanism for coordinating large-scale human activities and creating tribalism.

Simply, DePIN help rapidly build efficient real-world infrastructure driven by crypto-native capital formation.

As per Messari, the DePIN ecosystem has grown to over 650 projects in 2023, spanning six subsectors: compute (250), AI (200), wireless (100), sensors (50), energy (50), and services (25).

Just like any network, the DePIN network has two sides: Supply and Demand. We will look into both sides for each projects throughout the essay.

Supply Side — Token Incentivised:

The supply side of DePIN is driven by crypto incentives to coordinate the capital, equipment, and labor necessary for scaling global infrastructure. According to Messari, DePINs added over 600,000 nodes (supply-side) in 2023 across wireless, compute, and sensor networks. For Helium, this means adding more hotspots, while for Hivemapper, it involves adding more mapping data.

So far, DePINs have proven to be highly efficient at scaling supply. However, capital efficiency will determine long-term sustainability, i.e., the tokens spent to scale supply. The tokenomics can be primarily based on various parameters such as:

1. Time-based — Helium experiences halvings every two years.
2. KPI-based — Hivemapper’s tokenomics are based on the percentage of global roads mapped, with city-level multipliers and time-based KPIs, making its tokenomics quite detailed.
3. Demand-based — Based on the usage of the network by consumers.

As evident, tokens serve as products and are vital to the functioning of any DePIN network. Given that tokens can only be issued once, the management of token emissions becomes crucial. Furthermore, token prices (and thus speculation) play a significant role, which also renders the system cycle-dependent.

Recently, non-DePIN projects have been using ‘Points’ to drive usage of their protocols instead of directly distributing tokens — a trend that could also gain traction within DePIN (an entire section on this later).

Demand Side — B2B vs B2C

While this supply is incentivized by token, speculation plays a significant role. The demand side is entirely driven by real-world utility and cycle-independent, which brings revenues and, in turn, accrues value to the token.

Since much of the demand is off-chain, such as a web2 company using Hivemapper maps, the revenues generated on-chain and off-chain differ. For instance, Hivemapper clients will pay in fiat currency, contributing to off-chain revenues, while their native token, HONEY, is burned, contributing to on-chain revenues.

Apart from demand, on-chain revenue is significantly influenced by how buybacks are happening (the purchase of native tokens with fiat or stablecoins). Are these tokens being burned or locked? Is the decision to conduct buybacks based on a percentage of revenues or ‘profits’?

Many DePINs like Render use a Burn and Mint Equilibrium (BME) model to balance payments and rewards. Here’s how it works:

Customers want to pay in dollars, but the network needs to distribute a set number of governance token regularly. In the BME model, customer payments in dollars are converted to the network’s native tokens, like $RENDER, behind the scenes. During each period, called an epoch, GPU providers, or node operators, earn points based on the work they complete.

At the end of each epoch, these operators receive $RENDER tokens as rewards, proportional to their share of the total work done across the network. The $RENDER spent by customers and the points accumulated by node operators are then “burned” (removed from circulation). New $RENDER tokens are created according to a predefined inflation schedule and distributed to the node operators as their earnings.

Additionally, demand can be categorized as either B2B or B2C. In the case of Hivemapper, the demand is B2B, meaning it is utilized by enterprise clients requiring mapping data. Conversely, for Helium, the demand is B2C, indicating it is employed by consumers in need of connectivity.

What’s Solana’s secret recipe for DePIN — Really OPOS?

Performance. DePINs prioritize high throughput and low fees. Although I have a bias towards Solana as the most efficient blockchain, here are several reasons why DePIN teams opt for Solana:

1. Performance: It’s no surprise that Solana stands out as one of the most efficient blockchains, offering low transaction costs, high processing speed, and scalability. For example, to incentivize contributors on a large scale and execute micro-payments, low fees are crucial. Additionally, the introduction of Firedancer later in 2024 will enhance the network’s speed and resilience.
2. Network Effects: The transition of Helium from its native blockchain to Solana marked a significant moment for the Solana DePIN community. They have developed numerous open-source tools that other DePIN projects can utilize. From a business development standpoint, the presence of a pre-existing community of DePIN projects is advantageous.
   Unlike DeFi, where the capital network effect is a critical reason for EVM’s dominance in DeFi TVL, DePIN projects do not experience the same level of capital network effects. Given, that most of the demand is generated off-chain.
3. Robust Token Standards and Ecosystem: A vibrant ecosystem with well-tested DEXs, along with established standards such as cNFTs (Compressed NFTs), pNFTs (programmable NFTs), Token Extensions, and more, equips DePIN projects with the fundamental components to develop and launch their on-chain products — a section on this later.
4. Solana Mobile: Solana is unique in having its own mobile phone, highlighting its commitment to mobile integration. Solana Mobile 1 already boasts a user base of 20,000, while Solana Mobile 2 has over 50,000 pre-orders. This provides DePIN projects with an immediate distribution channel to address initial user acquisition challenges. For example, Helium offers one month free to Solana mobile users, and projects like Grass can debut their applications on Solana Mobile.
5. Solana Foundation: Importantly, the Solana Foundation has been a staunch supporter of DePIN, offering a dedicated track for DePIN in hackathons, active grants, and more, demonstrating the Foundation’s commitment to DePIN. Additionally, VCs like Multicoin have played a critical role in bringing DePIN projects to Solana.

Another angle to consider is the value DePIN brings to the Solana Ecosystem:

1. Users: Projects like Helium significantly contribute to the number of active wallets. Helium alone reports over 60,000 monthly active wallets engaging in activities such as claiming, staking, delegating, or burning tokens, and over 30,000 wallets use other SPL programs, highlighting Helium’s impact on the Solana Ecosystem.
2. Legitimacy and Branding: From a regulatory standpoint, DePIN showcases Solana’s practical applications to regulators and policymakers, enhancing its legitimacy and brand.

DePIN Projects on Solana:

Let’s have a look at different DePIN projects on Solana within each category:

1. Wireless Networks

Also known as DeWi (Decentralized Wireless) networks, this approach involves setting up various types of wireless networks, such as:

1. Cellular 5G — Offering high download speeds and low latency.
2. WiFi — Providing network connectivity specific to areas.
3. Low-Power Wide-Area Network (LoRaWAN) — Facilitating communication in the Internet of Things (IoT).
4. Bluetooth — Enabling the transmission of data over short distances.

The Problem It Addresses — Traditionally, establishing a wireless network infrastructure requires substantial investment — a factor that has led to the dominance of this sector by a few large telecom companies with the necessary scale and financial resources.

DeWi networks present an alternative by allowing numerous independent entities or individuals to collaboratively set up wireless infrastructure, driven by token-based incentives.

Helium — The DeWi Torchbearer:

Arguably one of the first major and largest DePIN projects, its migration from its native blockchain to Solana marked a renaissance for Solana’s DePIN ecosystem. The network is governed by HNT, the native token of Helium, which plays a crucial role in facilitating network usage as it is burned to obtain ‘Data Credits’ used for data transfers. Hotspot hosts can also exchange network tokens (e.g., IOT, MOBILE) for HNT.

It offers two main services:

1. Helium IoT Network: Launched in 2019, the Helium Hotspot provides wireless connectivity for IoT devices.
   Governed by $IOT — The token for the Helium IoT network is mined by LoRaWAN Hotspots through data transfer proceeds and Proof of Coverage.
2. Helium 5G Network: This network combines large-scale operators with crowdsourced 5G hotspots.
   Governed by $MOBILE — Token for the Helium 5G Network rewards those who provide 5G wireless coverage and verification for the Helium Network.

Supply-side: The crowdsourced model eliminates site acquisition costs and allows users to contribute to high-bandwidth coverage. For instance, to join the network and provide cellular coverage, interested operators can purchase FreedomFi Gateway hardware and earn MOBILE tokens in return.
Following the introduction of Helium Mobile’s $20/month unlimited data, text, and talk plan in US, along with the increase in Solana Saga smartphone sales (includes a free 30-day Helium Mobile subscription), the Helium Network has seen a significant rise in newly onboarded hotspots in recent months.

Demand-side: Data Consumers pay for the usage using Data Credits. As more data is transmitted and more Data Credits are consumed, the subnetwork (e.g., IoT Network) earns more HNT tokens, thus rewarding and incentivizing activity.

Overall, the HNT is the primary token, while IOT and MOBILE are sub-DAO tokens linked to HNT.

WiFi Dabba — Helium for Indian WiFi

Similar to Helium but with a focus on consumer WiFi, specifically in India. Although current mobile data prices in India are relatively low, there has been a recent uptrend in prices, making the expansion of WiFi infrastructure challenging for traditional telecom companies. WiFi Dabba aims to deploy WiFi in areas with high consumer density, such as residential buildings. Backed by tier-1 VCs like Y-Combinator, Multicoin, and Borderless, WiFi Dabba is set to launch soon on the Solana platform, offering tokens as incentives for the installation of WiFi hotspots — Tokenomics.

Demand-side: Unlike most decentralized peer-to-peer networks (DePINs), Dabba has begun by addressing the demand, i.e., customers are paying for the service provided.

Supply-side: Dabba will be empowering Local Cable Operators (LCOs) across India. There are ~150,000 LCOs across the country, and they have already started piloting and training with the first 5 LCO partners.

2. Storage Networks

Operating on a peer-to-peer (P2P) network model, the decentralized storage system allows users, acting as storage providers or miners, to allocate unused resources and earn tokens as incentives.

The Problem It Addresses — It encrypts and shards data, dispersing it across the network for enhanced security. Enabled by on-chain primitives, the system offers features such as perpetual, encrypted, and verifiable storage.

ShdwDrive by Genesys — Better Filecoin on Solana

A competitor to Filecoin, Shdw Drive takes advantage of high-powered traditional and mobile computing to reduce the costs of enterprise-grade data center storage — calling this technology “D.A.G.G.E.R”. Its native token, $SHDW is used to pay for services within the ecosystem with more network mechanisms such as staking, halving, slashing, and recycling on the roadmap.

Supply-side: Powered by Shdw Operators who provide storage.

Demand-side: Projects can utilize Shadow for cloud services such as:

1. Web hosting and content management (store files)
2. Social media platforms (for immutable backlog)
3. Archival purposes (preseve valuable records)
4. Datasets (on-chain library accessible to all)
5. Personal and editable storage space (personal alternative to Google Drive).

Synx is a private cloud storage solution supported by a mobile and desktop app that utilizes ShdwDrive.

3. Sensor Networks

Facilitate the monitoring and capture of data such as:

1. Environmental: For eg: weather conditions.
2. Mobility: For eg: traffic or vehicle-related data.
3. Location and Mapping: For eg: maps of local streets.

The Problem It Addresses — By employing a bottom-up approach, a decentralized sensor network can diminish the potential for data manipulation or censorship, thereby enhancing reliability.

Hivemapper — Mapping and Fastest growing DePIN:

A global mapping network that collects up-to-date, high-resolution data (4K street-level imagery) in a permissionless manner using vehicle dashcams. It’s governed by the $HONEY token. The 50k+ contributors to the network range from rideshare drivers to delivery drivers and hobbyists and have collectively mapped over 125 million KM+ !!

Supply-side: Hivemapper offers dashcams priced between $300 and $650, which reward contributors with $HONEY tokens for sharing footage and metadata with the network. This model allows contributors to share in the value generated by the demand for mapping data, thereby motivating them to expand the network. The outcome? In 2023 alone, the Hivemapper community mapped more than 10% of global roads while using less than 5% of the total token supply.

Validation of the Data — There’s an additional layer represented by Hivemapper’s AI training community, which earns $HONEY tokens for accurately classifying map features and turning them into valuable information customers require.

Demand-side: Companies make payments in HONEY for accessing map images and data. They also have the option to purchase existing maps or place bounties on new areas through bursts, enables companies to request up-to-date data as needed. In this process, the demand side expends $HONEY, with ~$250k worth of $HONEY already consumed.

Example Use Cases of Companies: Insurance (Timely data on the exterior conditions of homes, aiding in home insurance assessments), Autonomous vehicle developers (latest road conditions and construction zone information), and Real-World Assets (RWA)

Overall, short feedback loops between map contributors & map customers, enabled by token rewards, are the key to creating highly useful digital maps.

onocoy — Emerging Location-based DePIN

GPS satellites are highly effective for many positioning use cases and aid in determining location, but they lack high accuracy. To enhance precision, additional sensors like RTK (Real-Time Kinematics) employ ground-based receivers to refine GPS accuracy from meters to millimeters.

Supply-side — To establish a robust supply and ensure extensive coverage, Onocoy plans to incentivize the deployment of these RTK receivers, which are relatively expensive. Currently in beta testing, the project already boasts over 2000 participants. New users are encouraged to identify and map out areas lacking coverage, with the incentive structure designed to reduce rewards in areas where signals become too dense (with 3 overlapping signals).

Demand-side — High-quality positioning data is valuable for applications such as deformation monitoring, agriculture, mining, natural disaster warnings (tsunamis/earthquakes), drone/robotics positioning, and autonomous vehicles. Similar to other projects, onocoy adopts a BME model, enabling customers to pay for services in cash, while network participants receive rewards in $ONO tokens, proportional to their contributions.

WiHi — Weather and Climate Forecasting

Large-scale monitoring of weather has been a practice since 1873, initiated by the founding of the International Meteorological Organization for this precise purpose. Today, the sharing of weather data involves a sophisticated network of public and private entities. These organizations operate various sensor networks, develop weather models, and provide forecasts. WiHi aspires to serve as the unified platform that links all these entities, streamlining data sharing, enhancing forecast accuracy, and improving climate monitoring.

Supply-side — Any entity operating a weather sensor can apply to contribute data to WiHi. An intriguing prospect is the potential use of Solana Mobile for weather data collection. Although mobile phones are relatively low-quality sensors, their sheer number could compensate for this limitation.

Demand side — Accurate weather data holds immense value for financial firms and insurance companies, which benefit financially from precise weather forecasts. Additionally, WiHi is aligning with the growing ReFi narrative by aiming to monitor climate change in real-time.

Another upcoming project on Solana, Srcful, which aims to enable the creation of a decentralized energy grid. It enables homeowners to engage in the energy transition and receive rewards for their contributions

Solana Mobile can be another interesting DePIN play in the near future, given Mobile phones are incredibly powerful sensing machines. There are some projects on other chains, like Silencio, which allow the collection of noise pollution data from any smartphone.

4. Compute Networks and AI

A compute network enabled by crypto-economics allows for the unique scaling of compute resources up and down as needed, without the overhead or contractual lock-in associated with centralized providers.

The problem they solve: Demand for computing power is at an all-time high, all thanks to AI. With uneven distribution, users seeking computing powers find it difficult to obtain machines. DePIN here acts as a marketplace, where hardware owners can lend out computational power to users looking to leverage it. Akash (built on Cosmos) is a leader in this category, which serves a generalized computing network of CPUs/GPUs.

Render — Airbnb for GPUs

One of the oldest computing networks provides a network of GPUs that 3D artists can utilize for graphical rendering in games or movies. The network offers a software suite named Octane, enabling 3D artists to outsource their rendering tasks to the GPU network.

Initially an Ethereum project, Render has recently transitioned to Solana, a move that the community widely regarded as a significant improvement. Additionally, Render has expanded its offerings to encompass AI/ML and spatial computing, bringing a hugely positive narrative.

Supply Side — Miners apply to become rendering nodes and rent out idle GPU computing power.

Demand side — Artists upload files and choose rendering plans. Render network is focussed on three areas:

1. AI — Compute client like io.net
2. Spatial — For eg. Las Vegas Sphere projections and Vision Pro Spatial Computing
3. Multi-Render — Integration like Cinema4D

Io.net — GPU Aggregator

Io.net is building a network to harness computing power for machine learning applications by integrating a network of GPUs from data centers, crypto miners, and established projects like Render, positioning themselves as a ‘GPU Aggregator’. Unlike traditional GPU aggregators, which only provide access to individual instances without the capability for clustering, io.net is pioneering the creation of clusters comprising thousands of GPUs. These clusters function as a unified instance specifically designed to handle machine learning workloads.

Supply-side — Acting as an aggregator, anyone can plug their hardware into the network and start earning.

Client-side — Anyone looking to create or operate an ML model or AI app is their potential customer. Unlike their competition, spinning up an io.net instance takes a couple of minutes (demo at Solana Breakpoint 2023).

Nosana — GPU Grid

Nosana is a marketplace connecting a network of user-sourced GPUs with consumers aiming to develop AI products.

Supply Side — Individuals possessing idle consumer GPUs can become part of the Nosana network as nodes. Within the Nosana ecosystem, the token $NOS serves as a means of transaction, allowing consumers to pay for services using $NOS and providing staking collateral for node operators.

Demand side — Developers creating AI applications can utilize Nosana’s proprietary AI Interface. This interface is integrated with Stable Diffusion and Llama 2 workloads, offering significant cost savings. According to Nosana’s testnet data, developers might reduce expenses by up to 85% compared to conventional cloud infrastructure providers.

The main grid of Nosana is set for release in Q2 2024, which will include comprehensive development toolkits for more experimentation within the Nosana network.

Grass — Crowdsourced data scrapping for AI:

AI training involves processing large datasets, and many AI training labs prefer to scrape the internet to accelerate the process, rather than relying on manual data entry. However, most of the scraped data lacks contextual information, such as device location. To address this issue, Grass has secured $3.5 million in a seed funding round and build the ‘data provisioning layer for decentralised AI’.

Supply-side — Individual users have the option to download the Grass browser extension and opt-in to become a node in the network. Companies can then pay to utilize the idle bandwidth from these nodes, effectively paying for access to the data. On the back of the points system, it has grown to more than 600K+ users and growing like fire. It’s yet to launch the token!

Notably, Grass has initiated mobile support starting with the Solana phone, marking a unique offering that is only possible on the Solana platform.

Demand-side: Web Scrappers looking for reliable and verified source data.

Synesis One — Crowdsourced data collection for AI

Solving the problem of data used to train AI models. Synesis One is a data crowdsourcing platform where anyone can earn $SNS by completing micro-tasks that train AI.

Supply-side — Contributors can either earn:

1. Actively: Choose a campaign and provide raw data/data labeling/data annotation.
2. Passively: Synesis’ Kanon NFT collection allows users to buy ‘keywords and earn from Mind AI clients.

Demand-side — Clients like Mind AI.

UpRock — Bandwidth for AI

UpRock is a mobile-first platform that creates an auto-earning wallet for its users by offering token earnings for sharing internet access, with additional gains from automatic staking. Beyond merely auto-earning tokens, these tokens can be swapped for flights, airtime minutes, and more. It has been catering to a growing user base with 160,000 installs and adding about 10,000 users weekly, processing over 16 million transactions!

Supply-side — UpRock leverages the untapped potential of user bandwidth as a resource for AI. By contributing unused internet capacity, users earn tokens, thereby democratizing the creation of data value. This strategy not only motivates participation but also supports the ecosystem’s growth by enhancing the capabilities of AI agents and specialized models.

Demand-side — The need for UpRock’s network stems from companies in search of unique IP addresses to access real-time, uncensored data crucial for AI agents. UpRock transcends the functionality of a mere wallet, evolving into an AI agent capable of offering conversational support, demystifying complex crypto concepts, and facilitating onboarding to Web3.

Hyperdrive winners — Shaga and DAIN

Shaga — Lending of PCs — The winner of the Solana Hyperdrive hackathon is another project to watch out for as they try to solve the problem of cloud gaming. Historically, cloud gaming has mostly been sub-par due to expensive service and latency issues from accessing servers. Shaga enables trustless lending of Personal computers on a local level that can better mitigate these costs and latency issues.

DAIN Protocol — AI agents — Another upcoming project (runners of Hyperdrive Hackathon) trying to solve for Autonomous Agents. Building an ecosystem and a platform for anyone to build and deploy AI agents to the internet. These agents are capable of connecting to any device and utilize blockchain to conduct business securely and transparently. Integrating with Solana provides agents with identity and reputation, supported by an epoch scoring and rewards system to encourage high performance. With secure Agent-to-Agent (A2A) communications, DAIN ensures the completion of tasks, including payments and transactions, enabling meaningful interactions.

5. Services:

Teleport — Tokenised Uber:

Teleport (raised $9 million) is akin to Uber, but driven by token incentives. Both drivers and riders are fed up with Uber, lacking any effective means of coordination between them.

Teleport calculates the minimum density required to initiate services in a new city and then offers incentives for drivers and riders to register before the launch.

Similar to Teleport, there is potential to explore concepts like ‘Crypto Airbnb’, ‘Crypto Amazon’, and so forth. For an insightful example, consider the case study by Superteam Members on what a Token-incentivised Amazon would like!

Proto:

Proto is a user-generated, token-incentivized world map that reduces the entry barriers and unit costs associated with map-building. It offers high-quality, frequently updated data from around the globe.

Supply-side: Users contribute map data via the app to earn rewards. Currently, the focus is on India, with a particular emphasis on Mumbai and Bengaluru.

Demand-side: Proto SDK enables businesses to access accurate, real-time map data for various needs, including navigation and digital marketing.

6. DePIN Infra:

The tools that make DePIN on Solana possible:

1. Payments:

• Sphere: Has emerged as the #1 payment gateway for DePIN projects, powering payments for the top projects like Helium, ionet. For, e.g. Helium uses a sphere for topping up DePIN compute credits.

• Solsplits: Solsplits is a composable standard for splitting on-chain income on Solana, providing a pseudo-privacy mechanism since the income for contributors flows through a contract.

It’s important to note that Solana boasts a rich ecosystem featuring 50+ major on/off-ramps, which serve as a critical infrastructure for payments and facilitate fiat-crypto conversions. GetCode could also be a valuable protocol for enabling micro-payments at scale within DePIN projects.

2. Token Standards: Token standards play a critical role in:

a. Compressed NFTs: Solana is one of the only chains that enables NFT minting at scale at a very low cost (1 million NFTs at 5 SOL or ~$500). This was one of the highlights of Helium’s transition to Solana when each of its nearly one million hotspots was minted as an NFT. Further, other DePIN networks can also represent contributors by NFTs, as they are an ideal mechanism to showcase ownership and distribute rewards at scale.

Further, Metaplex has a set of other NFT standards like Programmable NFTs, which also can allow for DePIN players to represent their nodes.

b. SPL Token Standard and Token Extensions: Token Extensions are the next-gen SPL (Solana Program Library) token standard with advanced features like Confidential Transfers, Transfer Hooks, Transfer Fees, Non-transferable Tokens, Interest-earning Tokens, and more.

3. Oracles and Interoperability: Oracles are an important source of truth for off-chain asset data. Solana has two major oracles — Pyth (permissioned) and Switchboard (permissionless), which can be used for streaming off-chain data (for eg. sensor data) onto the Solana for on-chain program calculations.

Given DePIN projects migrating from other chains, cross-chain messaging protocols like Wormhole have also played a critical role in facilitating the migration of RNDR tokens.

Further, Solana boasts a vibrant set of tools like Privacy (Elusiv and Light Protocol), DEXs (for native token trading), multi-sig (Squads), and dev tooling (Helius).

The Opportunities and Trends Prediction for Solana DePIN:

1. More DePIN Sectors: In the coming months, we will see more projects emerge in DePIN sectors like:
   a. Clean Energy Infrastructure and Virtual Power Plants: Energy Infra is unpredictable due to the intermittent nature of sources such as wind and solar, batteries can help mitigate this issue by storing excess energy for later use. The effectiveness of batteries increases as more are connected to a public energy network. The DePIN network utilizes token incentives to encourage households to deploy their batteries and aggregate them for future use. However, regulatory overhead in the energy sector can make experimentation slow and costly. Projects like Daylight and Etheos are at the forefront of addressing these challenges — I expect them to integrate/migrate Solana in 2024!
   b. Advanced on-chain AI: While we are still very far, we can see ideas like ZK-verifiable GPU clouds (currently expensive) enabling an on-chain inferencing economy that centralized providers won’t be able to service.
   - The entire LLM and neural network stack can be put onto a decentralized infrastructure. Much of the generative AI movement, similar to crypto, is open-source, making it conceptually feasible to deploy and maintain a multitude of open-source models on protocols that decentralize the computational load. This approach also creates incentives to provide best-in-class machine intelligence services.
   - Using DePIN for AI Agents like Olas.
2. PIPIN (Points Incentivised Physical Infrastructure Networks): Points are regarded as the most significant innovation of this cycle, so why do DePIN get left behind? The impact is already evident with entities like Grass, which attracted 150,000 users in a few months primarily through points, before even launching a token.
   The advantage of points is their familiarity with a concept from web2 like airline miles, which everyone understands. For projects, points provide greater control in the early stages, allowing for fine-tuning of mechanics before the eventual token launch.
   Another adjacent concept is gamification. Beyond token incentives, providing proof of accomplishment for contributions and creating a delightful experience is crucial for enhancing engagement and, consequently, increasing contributions. For example, contributors to Hivemapper feel rewarded for mapping a street, sometimes engaging in the activity as if it were a game (akin to Pokemon Go). Leaderboards can further enhance this gamification aspect.
3. Platformization of DePIN Networks: Major DePIN platforms on Solana are experiencing their transformative platform moment:

• Helium, as a platform, has facilitated the emergence of two sub-DAOs, along with innovations like Mobile cellular plans and DIMO using Helium.
• Render has attracted clients such as Octane video rendering and io.net.

Although this represents a long-term strategy, I anticipate that all prominent DePIN projects will evolve into platforms that smaller DePIN projects can leverage for development.

4. SVM-based Rollups/L1s for DePIN: Although Solana is a highly scalable chain, it is quite feasible that a project might develop a DePIN-specific SVM fork, or a DePIN project might create its version. This approach would offer greater control, especially for regulatory compliance, while still utilizing existing SVM tooling and developers. Already, we see two DePIN-specific EVM/substrate chains, such as Peaq and IoTex. Further, one of the blue-chip DePIN projects, Dimo is also building their chain now using Polygon CDK, showing demand for an app chain.

However, newer DePIN projects are likely to opt for direct deployment on Solana to save time and resources involved in maintaining an L1.

5. Abstraction and Aggregation: As large DePIN networks address supply-side issues, the focus will inevitably shift to the demand side. It is clear that the majority of the demand will come from mainstream users who might find DePIN protocols too complex. This implies that users may engage with a Web2 front-end, oblivious to the fact that the underlying back-end utilizes DePIN, with the back-end handling all aspects of buying and burning tokens. For example, Helium’s partnership with T-Mobile exemplifies ‘aggregation’ for enhanced network coverage, whereas Helium Mobile serves as an ‘abstraction’ of the Helium Protocol.

6. DePIN x Memecoins: Solana has recently emerged as the preferred chain for memecoins, thanks to its strong community and robust DEXs like Jupiter. Although it might seem unusual, memecoins have significantly contributed to DePIN adoption:

1. The $BONK airdrop, valued at over $600 at its peak, led to the sell-out of more than 20,000 Solana Saga units.
2. Within the memecoin community, $MOBILE was regarded as a memecoin, leading to a surge in prices as well.

7. DePIN x DeFi: DeFi’s momentum is stronger than ever and given all DePIN projects have a token, they would start experimenting with more token integrations (like HNT integrated into lending protocols like Marginfi). This will further lead to more composability and additional yield and speculation for token holders, increasing the utility.

8. Convergence between DePIN and RWAs: The DePIN networks, equipped with assets such as sensors, drones, and wearables, are set to provide real-time, highly reliable data, while RWAs address their financing needs. The convergence can pave the way for a new supply chain that integrates physical, financial, and legal elements, all fueled by DePIN and RWAs.

1. A noteworthy initiative, Entheos, has made strides in DePIN x RWA by enabling investors to fund a decentralized network of physical infrastructure (like smart battery assets). The prospect of hardware financing for DePIN through RWAs is an area to watch closely!
2. Another intriguing application of RWA x DePIN composability is seen in Baxus, a tokenized whisky marketplace that employs Helium devices to monitor the temperature of their whisky over time. In a similar vein, real estate projects like Liquidprop and Homebase could compensate Hivemapper contributors for recent photos of a property’s surroundings.

9. DePIN as an on-ramp for Crypto: For most DePIN projects, the supply primarily comes from non-crypto individuals and entities earning crypto-native tokens on-chain. As Akshay BD puts it, “Earning is a powerful niche” and serves as the optimal on-ramp for the next millions of users.

Closing Thoughts: DePIN Will Build a Parallel Infra System

In a world plagued by unreliable institutions and ineffective bureaucrats, DePIN redistributes wealth and power directly to individuals and their communities. If you have faith in Crypto Economics, then DePIN should also resonate with you. Certainly, DePIN, in its current state, has a fair number of flaws. Nevertheless, sectors like DePIN and RWA facilitate a bidirectional flow of tokens between synthetic (crypto) and real-world (physical) assets.

DePIN represents a bold bet on utilizing crypto-economic incentives to address real-world problems, and many believe it could even disrupt traditional infra models. However, I see DePIN coexisting alongside traditional infrastructure players, given that the latter possess significant capital resources, established infrastructure and coverage, and superior economics. DePIN is likely to create a parallel system, facilitating last-mile coverage in scenarios where it may not be financially viable for traditional entities, thereby complementing each other.

Feel free to contact me at Yash Agarwal (@yashhsm on Twitter) for any suggestions or if you have any opinions. If you find this even slightly insightful, please share it — justifies my weeks of effort and gets more eyeballs :)

Special thanks to Kuleen (Solana Foundation), Sitesh (Superteam), Kash (Superteam), Akshay (Superteam), Mark (WiHi & Onocoy), and Lamborghini (WiHi & Onocoy), who reviewed and provided insights at different stages of the draft.

This essay was hugely inspired by Messari, who coined the term DePIN, pioneering DePIN research.

References and Further Reading:

1. Messari — State of DePIN 2023
2. Blocmates DePIN Report
3. Binance DePIN Research
4. DePIN Talks and Podcasts on the Solana channel