Introduction

Decentralization Physical Infrastructure Network (DePIN) is an emerging concept that combines blockchain technology with the internet of things (IoT) and is gradually gaining wide follow inside and outside the industry. DePIN redefines the management and control mode of physical devices through a decentralized architecture, demonstrating the potential for disruptive changes in traditional infrastructure fields such as the power grid and waste management systems. Traditional infrastructure projects have long been subject to centralized control by governments and large enterprises, often facing high service costs, inconsistent service quality, and limited innovation. DePIN provides a new solution aimed at achieving the decentralization management and control of physical devices through distributed ledger and smart contract technology, thereby enhancing system transparency, trustworthiness, and security.

The functions and advantages of Depin

1. Decentralization Management and Transparency: DePIN achieves the decentralization management of physical devices through the Distributed Ledger and Smart Contract technologies of blockchain, enabling device owners, users, and relevant stakeholders to verify the status and operations of the devices through Consensus Mechanism. This not only enhances the security and reliability of the devices but also ensures the transparency of system operations. For example, in the field of Virtual Power Plants (VPP), DePIN can publicly and transparently trace the data of sockets, allowing users to have a clear understanding of the production and flow process of the data.
2. Risk diversification and system continuity: By distributing physical equipment to different geographical locations and longer participants, DePIN effectively drop the centralization risk of the system, avoiding the impact of single point failure on the entire system. Even if a Node fails, other Nodes can continue to operate and provide services, ensuring the continuity and high availability of the system.
3. Smart Contract automated operation: DePIN uses Smart Contracts to achieve automation of device operation, thereby improving operational efficiency and accuracy. The execution process of Smart Contracts is completely traceable on-chain, with every operation step being recorded, allowing anyone to verify the execution of the contract. This mechanism not only improves the efficiency of contract execution but also enhances the transparency and credibility of the system.

Analysis of the Five-layer Architecture of DePIN

Overview

Although cloud devices typically have highly centralized characteristics, the DePIN (Decentralization Physical Infrastructure Network) successfully simulates centralized cloud computing functionality through the design of a multi-layer modular technology stack. Its architecture includes the Application Layer, Governance Layer, Data Layer, Blockchain Layer, and Infrastructure Layer, each playing a critical role in ensuring the efficiency, security, and decentralization operation of the network. The following will provide a detailed analysis of these five-layer architectures.

1. Application Layer（Application Layer）

• Function: The Application Layer is the part of the DePIN ecosystem that directly faces users, responsible for providing various specific applications and services. Through this layer, the underlying technology and infrastructure are transformed into functions that users can directly use, such as internet of things (IoT) applications, distributed storage, Decentralized Finance (DeFi) services, etc.
• Importance:

• User Experience: The Application Layer determines the interaction between users and the DePIN network, directly affecting user experience and the extent of network adoption.
• Diversity and Innovation: This layer supports a variety of applications, contributing to the diversity and innovative development of the ecosystem, attracting developers and users from different fields to participate.
• Value realization: Application Layer transforms the technical advantages of the network into actual value, promoting the continuous development of the network and the realization of user benefits.

2. Governance Layer

• Function: The governance layer can operate on-chain, off-chain, or in hybrid mode, and is responsible for formulating and enforcing network rules, including protocol upgrades, resource allocation, and conflict resolution. Decentralization governance mechanisms such as Decentralized Autonomous Organizations (DAOs) are typically used to ensure transparency, fairness, and democracy in the decision-making process.
• Importance:

• Decentralization Decision: By decentralizing decision-making power, the governance layer reduces the risk of single point control and improves the censorship resistance and stability of the network.
• Community Participation: This layer encourages active participation of community members, enhances users' sense of belonging, and promotes the healthy development of the network.
• Flexibility and adaptability: Effective governance mechanisms enable the network to respond quickly to changes in the external environment and technological advances, maintaining competitiveness.

3. Data Layer (Data Layer)

• Function: The Data Layer is responsible for managing and storing all data in the network, including transaction data, user information, and Smart Contracts. It ensures the integrity, availability, and privacy protection of data while providing efficient data access and processing capabilities.
• Importance:

• Data Security: User data is protected from unauthorized access and tampering through encryption and Decentralization storage in the Data Layer.
• Scalability: Efficient data management mechanisms support network expansion, handle large amounts of concurrent data requests, and ensure system performance and stability.
• Data Transparency: Open and transparent data storage increases the trust of the network, allowing users to verify and audit the authenticity of the data.

4. Blockchain Layer

• Function: The Block chain layer is the core of the DePIN network, responsible for recording all transactions and Smart Contracts, ensuring the immutability and traceability of data. This layer provides a Consensus Mechanism of Decentralization, such as PoS (Proof of Stake) or PoW (Proof of Work), to ensure the security and consistency of the network.
• Importance:

• Trust in Decentralization: Blockchain technology eliminates the reliance on intermediaries, and establishes a trust mechanism through Distributed Ledger.
• Security: Strong encryption and Consensus Mechanism protect the network from attacks and fraud, maintaining the integrity of the system.
• Smart Contract: The Block layer supports automated and Decentralization business logic, enhancing network functionality and efficiency.

5. Infrastructure Layer

• Function: The infrastructure layer includes the physical and technical infrastructure that supports the operation of the entire DePIN network, such as servers, network equipment, data centers, and energy supply. This layer ensures the high availability, stability, and performance of the network.
• Importance:

• Reliability: Solid infrastructure ensures the continuous operation of the network, avoiding service unavailability due to hardware failures or network interruptions.
• Performance optimization: Efficient infrastructure improves network processing speed and responsiveness, enhancing user experience.
• Scalability: The flexible infrastructure design allows the network to expand according to demand, supporting more users and more complex application scenarios.

6. Connection Layer

In some cases, a connection layer is added between the infrastructure layer and the Application Layer to handle communication between smart devices and the network. The connection layer can be a centralized cloud service or a Decentralization network that supports various communication protocols such as HTTP(s), WebSocket, MQTT, CoAP, etc., to ensure reliable data transmission.

How AI Changes DePin

Intelligent Management and Automation

• Equipment Management and Monitoring: AI technology makes equipment management and monitoring more intelligent and efficient. In traditional physical infrastructure, the management and maintenance of equipment often rely on regular inspections and passive repairs, which are not only costly but also prone to problems such as undetected equipment faults. By introducing AI, the system can achieve the following optimizations:

• Fault prediction and prevention: Machine learning Algorithm can predict possible equipment failures by analyzing historical operating data and real-time monitoring data of the equipment. For example, through the analysis of sensor data, AI can detect potential failures of transformers or power generation equipment in the power grid in advance, arrange maintenance in advance, and avoid larger-scale power outages.
• Real-time monitoring and automatic alarm: AI can conduct 24/7 real-time monitoring of all devices in the network and immediately issue an alarm when anomalies are detected. This includes not only the hardware status of the devices, but also abnormal changes in their operational performance, such as temperature, pressure, current, and other parameters. For example, in the Decentralization water treatment system, AI can monitor water quality parameters in real time and notify maintenance personnel immediately when pollutants exceed the standard for processing.
• Intelligent Maintenance and Optimization: AI can dynamically adjust maintenance plans based on the usage and operational status of the equipment, avoiding excessive or insufficient maintenance. For example, by analyzing the operation data of wind turbines, AI can determine the optimal maintenance cycle and measures, thereby improving power generation efficiency and equipment lifespan.

• Resource allocation and optimization: The application of AI in resource allocation and optimization can significantly improve the efficiency and performance of the DePin network. Traditional resource allocation often relies on manual scheduling and static rules, which are difficult to cope with complex and changing real situations. AI can dynamically adjust resource allocation strategies through data analysis and optimization Algorithm to achieve the following goals:

• Dynamic Load Balancing: In the Decentralization computing and storage network, AI can dynamically adjust task allocation and data storage locations based on the load and performance indicators of Nodes. For example, in a distributed storage network, AI can store data with high access frequency on Nodes with better performance, while distributing data with low access frequency on Nodes with lighter load, improving the storage efficiency and access speed of the entire network.
• Energy efficiency optimization: AI can optimize the production and use of energy by analyzing the energy consumption data and operation modes of devices. For example, in a smart grid, AI can optimize the start-stop strategy of generator units and the distribution of electricity based on users' electricity usage habits and power demand, reduce energy consumption, and reduce carbon emissions.
• Resource utilization improvement: AI can maximize the utilization of resources through Depth learning and optimizing Algorithm. For example, in a Decentralization logistics network, AI can dynamically adjust delivery routes and vehicle scheduling schemes based on real-time traffic conditions, vehicle locations, and cargo demands to improve delivery efficiency and drop logistics costs.

Data Analysis and Decision Support

• Data Collection and Processing: In the Decentralization Physical Infrastructure Network (DePin), data is one of the core assets. Various physical devices and sensors in the DePin network continuously generate a large amount of data, including sensor readings, device status information, network traffic data, etc. AI technology demonstrates significant advantages in data collection and processing: +Efficient Data Collection: Traditional methods of data collection may face issues such as data dispersion and low data quality. AI, through smart sensors and Edge Computing, can collect high-quality data in real-time at the device level and dynamically adjust the data collection frequency and scope based on demand.

• Data preprocessing and cleaning: Raw data usually contains noise, redundancy, and missing values. AI technology can improve data quality through automated data cleaning and preprocessing. For example, using machine learning Algorithm to detect and correct abnormal data, fill in missing values, ensuring the accuracy and reliability of subsequent analysis.
• Real-time data processing: The DePin network needs to process and analyze massive data in real time to quickly respond to changes in the physical world. AI technology, especially streaming processing and distributed computing frameworks, makes real-time data processing possible.

• Intelligent decision-making and prediction: In the Decentralization physical infrastructure network (DePin), intelligent decision-making and prediction is one of the core areas of AI application. AI technology can achieve intelligent decision-making and accurate prediction of complex systems through Depth learning, machine learning, and prediction models, improving the autonomy and response speed of the system.

• The Depth Learning and Prediction Model: The Depth learning model can handle complex non-linear relationships and extract potential patterns from large-scale data. For example, by analyzing the operational and sensor data of devices through the Depth learning model, the system can identify potential signs of failure, carry out preventive maintenance in advance, reduce equipment downtime, and improve production efficiency.
• Optimizing and scheduling Algorithm: Optimizing and scheduling Algorithm is another important aspect of AI in the DePin network to achieve intelligent decision-making. By optimizing resource allocation and scheduling schemes, AI can significantly improve system efficiency and reduce operating costs.

Security

• Real-time monitoring and anomaly detection: In the Decentralization physical infrastructure network (DePin), security is a critical factor. AI technology can detect and respond to various potential security threats through real-time monitoring and anomaly detection. Specifically, the AI system can analyze network traffic, device status, and user behavior in real-time to identify abnormal activities. For example, in the Decentralization communication network, AI can monitor the flow of data packets and detect abnormal traffic and malicious attack behavior. Through machine learning and pattern recognition technology, the system can quickly identify and isolate infected Nodes to prevent further spread of the attack.
• Automated Threat Response: AI can not only detect threats, but also take response measures automatically. Traditional security systems often rely on human intervention, while AI-driven security systems can take action immediately after detecting threats, reducing response time. For example, in a Decentralization energy network, if AI detects abnormal activity in a Node, it can automatically disconnect the connection of the Node, start the backup system, and ensure the stable operation of the network. In addition, AI can improve the efficiency and accuracy of threat detection and response through continuous learning and optimization.
• Predictive maintenance and protection: Through data analysis and predictive models, AI can predict potential security threats and equipment failures and take preventive measures in advance. For example, in smart transportation systems, AI can analyze traffic flow and accident data to predict possible high-risk areas for traffic accidents, deploy emergency measures in advance, and reduce the probability of accidents. Similarly, in distributed storage networks, AI can predict the risk of failure of storage nodes, perform maintenance in advance, and ensure the security and availability of data.

How does DePin change AI

Advantages of DePin's Application in AI

1. Resource sharing and optimization: DePin allows sharing of computing, storage, and data resources among different entities. This is particularly important for scenarios where AI training and inference require a large amount of computing resources and data. The decentralized resource sharing mechanism can significantly reduce the operating costs of AI systems and improve resource utilization.
2. Data Privacy and Security: In traditional centralized AI systems, data is often stored centrally on a server, which poses risks of data leakage and privacy issues. DePin ensures data security and privacy through distributed storage and encryption technologies. Data holders can share data with AI models for distributed computing while retaining ownership of the data.
3. Enhanced Reliability and Availability: DePin improves the reliability and availability of AI systems through its decentralized network structure. Even if a Node fails, the system can continue to operate. The infrastructure of Decentralization reduces the risk of single point failures, enhancing the system's resilience and stability.
4. Transparent Incentive Mechanism: The tokenomics of DePin provides a transparent and fair incentive mechanism for transactions between resource providers and users. Participants can earn token rewards by contributing computing resources, storage resources, or data, forming a virtuous cycle.

Potential Application Scenarios of DePin in AI

1. Distributed AI Training: AI model training requires a large amount of computing resources. With DePin, different computing Nodes can collaborate to form a distributed training network, significantly speeding up the training process. For example, a decentralized GPU network can provide training support for Depth learning models.
2. Edge Computing: With the popularity of internet of things (IoT) devices, Edge Computing has become an important direction for AI development. DePin can allocate computing tasks to edge devices close to the data source, improving computing efficiency and response speed. For example, smart home devices can utilize DePin to achieve localized AI inference, enhancing user experience.
3. Data Market: The performance of AI models depends on a large amount of high-quality data. DePin can establish a Decentralization data market, enabling data providers and users to trade data while ensuring privacy. Through Smart Contract, the data trading process is transparent and trustworthy, ensuring the authenticity and integrity of the data.
4. The AI service platform of Decentralization: DePin can serve as infrastructure to support the AI service platform of Decentralization. For example, a decentralized AI image recognition service platform, users can upload images, and the platform will process and return results through distributed computing Nodes. This platform not only improves the reliability of the service, but also incentivizes developers to continuously optimize the Algorithm through a Token mechanism.

AI + DePin Project

In this section, we will explore several AI-related DePin projects, with a focus on the Decentralized file storage and access platform FIL, the Decentralized GPU Computing Power leasing platform Io.net, and the Decentralized AI model deployment and access platform Bittensor. These three play important roles in data storage and access, Computing Power support for training, and model deployment and usage in the field of AI.

FIL

FIL is a storage network based on decentralization, which achieves distributed data storage worldwide through blockchain technology and a cryptocurrency economic model. Developed by Protocol Labs, FIL aims to create an open and public storage market where users can purchase storage space in the network by paying FIL tokens (FIL) or earn FIL by providing storage services.

Features

1. Decentralized storage: FIL stores data in a decentralized manner, avoiding the centralization drawbacks of traditional cloud storage, such as single point of failure and data censorship risks.
2. Market-driven: The storage market of FIL is determined by supply and demand, and storage prices and service quality are dynamically adjusted through the free market mechanism. Users can choose the optimal storage solution according to their needs.
3. Verifiable Storage: FIL ensures that data is effectively stored and backed up by mechanisms such as Proof-of-Spacetime (PoSt) and Proof of Replication (PoRep).
4. Incentive mechanism: Through Mining and transaction reward mechanism, FIL encourages network participants to provide storage and retrieval services, thereby increasing the network's storage capacity and availability.
5. Scalability: The FIL network supports large-scale data storage and fast access through the introduction of Sharding and other technologies, meeting the demand for the rise of massive data in the future.

Pain points to be solved

1. High cost of data storage: Through the Decentralization storage market of FIL, users can more flexibly choose storage providers to reduce data storage costs.
2. Data security and privacy issues: Decentralization storage and encryption technology ensure the confidentiality and security of data, reducing the risk of data leakage caused by centralized storage.
3. Data Storage Reliability: The Proof-of-Spacetime and Proof of Replication mechanisms provided by FIL ensure the integrity and verifiability of data during the storage process, improving the reliability of data storage.
4. Trust issues with traditional storage platforms: FIL achieves storage transparency through blockchain technology, eliminating the monopoly and manipulation of data by third-party institutions, enhancing user trust in storage services.

Target User

1. Storage provider: By providing idle disk space to access the platform, responding to user storage requests, and earning Tokens. Storage providers need to stake Token, and if they cannot provide valid storage proof, they will be punished and lose part of the stake Token.
2. File Seeker: When a user needs to access a file, seek the location of the file to earn Tokens. File seekers do not need to stake Tokens.
3. Data Storer: Through market mechanism, submit the willing-to-pay price, match with the storer and send the data to the storer. Both parties sign the transaction order and submit it to the blockchain.
4. Data User: Users can retrieve the storage location of a file and receive the data by submitting a unique file identifier and paying the price. The file retriever will respond to the storage request and provide the data.

Token Economy

1. The circulation of FIL Token: FIL is the native cryptocurrency of the FIL network, used for paying storage fees, rewarding miners, and conducting transactions on the network. The circulation of FIL Token maintains the normal operation of the FIL network.
2. Rewards for storage miners and retrieval miners: Storage providers earn FIL tokens by providing storage space and data retrieval services. The rewards for miners are related to the storage space they provide, the frequency of data access, and their contribution to network consensus.
3. network fees: Users need to pay FILToken to purchase storage and retrieval services. The cost is determined by the supply and demand relationship in the storage market, and users can freely choose suitable service providers in the market.
4. Token issuance and inflation: The total supply of FIL is 2 billion, and new FIL Tokens are gradually issued through Mining rewards. As the number of Miners increases, the network's inflation rate will gradually decrease.

Io.net

Io.net is a distributed GPU computing platform that collects and clusters idle Computing Power to provide market scheduling and temporary supplementation of Computing Power, rather than replacing existing cloud computing resources. The platform allows suppliers to deploy supported hardware for users to rent through simple Docker commands, to meet the needs of task distribution and processing. Io.net aims to provide a cloud computing platform-like effect through the shared mode of distributed Computing Power, while significantly reducing service costs.

Features

1. Easy deployment: Suppliers can easily deploy hardware through Docker commands, and users can conveniently rent hardware clusters through the platform to obtain the required Computing Power.
2. Clustered Computing Power: By clustering idle Computing Power, the platform serves as a scheduling and temporary supplement for market Computing Power, improving the overall utilization of computing resources.
3. Secure Transmission and On-chain Storage: The platform uses end-to-end encryption technology to ensure the security of user data. At the same time, task execution information will be stored on the blockchain, achieving transparent and permanent preservation of logs.
4. Node Health Monitoring: The platform records and publicly discloses the health status of each Node, including offline time, network speed, and task execution, to ensure the stability and reliability of the system.

Pain points to be solved

1. Insufficient Computing Power: With the rise of large models, the market demand for GPU Computing Power required during training has increased dramatically. Io.net fills this Computing Power gap by integrating idle GPU resources from the public.
2. Privacy and Compliance: Large cloud platform service providers such as AWS and Google Cloud have strict KYC requirements for users, while Io.net circumvents compliance issues through Decentralization, allowing users more flexibility in choosing resource usage.
3. Expensive cost: The service price of cloud computing platforms is high, while Io.net significantly reduces costs through shared Computing Power and achieves service quality close to cloud platforms through clustering technology.

Target User

1. Computing Power provider: connect idle GPU to the platform for others to use. Depending on the performance and stability of the provided equipment, Token rewards can be obtained.
2. Computing Power User: Rent a GPU or GPU cluster by consuming Tokens for task submission or large-scale model training.
3. stakers: Stakers support the long-term stable operation of the platform by staking platform Tokens, and earn staking rewards from equipment leasing, which helps improve the ranking of excellent equipment.

Token Economy

1. Token Usage: All transactions on the platform are conducted using the native token $IO to reduce transaction friction in smart contracts. Users and suppliers can make payments using USDC or $IO, but a 2% service fee will be charged for using USDC.
2. The total supply of Tokens: The Maximum Supply is 800 million, with an issuance of 500 million at launch, and the remaining 300 million used for rewarding suppliers and stakers. The Tokens will be gradually released over 20 years, starting at 8% of the total in the first year, decreasing by 1.02% each month.
3. Token burning: A portion of the platform's revenue will be used to repurchase and burn $IO, with funding sources including a 0.25% fee from both sides of the transaction and a 2% service fee charged for payments made using USDC.
4. Token Allocation: Tokens will be allocated to seed round investors, A-round investors, team, ecology and community, as well as supplier rewards.

Bittensor (TAO)

Bittensor is a decentralized peer-to-peer AI model marketplace that aims to facilitate the production and circulation of AI models by enabling different intelligent systems to evaluate and reward each other. Through its distributed architecture, Bittensor creates a marketplace that can continuously produce new models and reward contributors with information value. The platform provides researchers and developers with a platform to deploy AI models and earn profits, while users can access various AI models and functionalities through the platform.

Features

1. Distributed Market: Bittensor has established a Decentralization AI model market, allowing engineers and small AI systems to directly monetize their work, breaking the monopoly of large companies on AI.
2. Standardization and Modularization: The network supports multiple modes (such as text, image, voice), allowing different AI models to interact and share knowledge, and can be extended to more complex multimodal systems.
3. System Ranking: Each Node is ranked based on its contribution in the network. Contribution metrics include the execution effectiveness of Node tasks, evaluations from other Nodes on its output, and its achievements in the network.

The trustworthiness. Nodes with higher ranking will receive more network weight and rewards, incentivizing Nodes to continuously provide high-quality services in the Decentralization market. This ranking mechanism not only ensures the fairness of the system, but also improves the overall computational efficiency and model quality of the network.

Pain points to be solved

1. Centralization of intelligent production: Currently, the AI ecosystem is concentrated in a few large companies, making it difficult for independent developers to monetize. Bittensor provides independent developers and small AI systems with the opportunity to profit directly through a peer-to-peer Decentralization market.
2. Low utilization of computing resources: Traditional AI model training relies on a single task and cannot fully utilize diverse intelligent systems. Bittensor allows different types of intelligent systems to collaborate with each other, improving the utilization efficiency of computing resources.

Target User

1. Node Operator: Connects Computing Power and models to the Bittensor network, and earns Token rewards by participating in task processing and model training. Node Operators can be independent developers, small AI companies, or even individual researchers, who improve their rankings and profits in the network by providing high-quality computing resources and models.
2. AI model users: users who require AI computing resources and model services can rent computing power and intelligent models in the Bittensor network by paying with Tokens. Users can be enterprises, research institutions or individual developers who use high-quality models in the network to complete specific tasks, such as data analysis, model inference, etc.
3. Stakers: Users holding BittensorToken support the stable operation of the network through stake and receive stake rewards. Stakers not only benefit from the network's inflation, but also indirectly affect the overall computing efficiency and revenue distribution of the network by improving the ranking of the Nodes they support through stake.

Token Economy

1. Token usage: All transactions and incentives within the Bittensor network are conducted through the native Token, reducing friction in the transaction process. Users can use the Token to pay for computational resources and model services, while Node operators earn Tokens by providing services.
2. Token Generation: 1 TAOToken is generated every 12 seconds in a Block, and it is distributed based on the performance of the subnet and the Nodes within it. The allocation ratio of Tokens is as follows: 18% is allocated to the subnet owners, and subnet Miners and validators each receive 41%. The maximum supply of Tokens is 21 million.

Challenges and Conclusions Faced by DePin

As an emerging network architecture, DePIN realizes the Decentralization management of physical infrastructure by combining blockchain technology. This innovation not only solves the problems of data privacy, service interruptions, and high scalability costs faced by traditional infrastructure, but also empowers network participants with more control and participation through Token incentive mechanisms and self-organization models. Despite demonstrating strong potential, DePIN still faces some challenges.

1. Scalability: DePIN's scalability issue stems from its dependence on the decentralization feature of blockchain technology. As the number of users and network size increases, the volume on the blockchain network will also increase, especially with the connection of DePIN applications to the physical world, which requires higher information transmission requirements. This can lead to longer transaction confirmation times and increased money laundering, thereby affecting the overall efficiency and user experience of the network.
2. Interoperability: The DePIN ecosystem is built on multiple Blockchains, which requires DePIN applications to support homogeneous or heterogeneous state transitions and achieve seamless interoperability with other Blockchain networks. However, current interoperability solutions are often limited to specific Blockchain ecosystems or come with high Cross-Chain Interaction costs, making it difficult to fully meet the needs of DePIN.
3. Regulatory Compliance: As part of the Web 3.0 ecosystem, DePIN faces multiple regulatory challenges. Its Decentralization and Anonymity features make it difficult for regulatory agencies to monitor fund flows, which may lead to an increase in illegal fundraising, pyramid schemes, and Money Laundering activities. In addition, in terms of tax regulation, the anonymity of accounts makes it difficult for governments to collect the evidence needed for taxation, which poses a challenge to the existing tax system.

In the future, the development of DePIN will depend on the resolution of these key issues, and is expected to play an important role in a wide range of application scenarios, reshaping the operational mode of physical infrastructure.