Archaeological DePIN, looking for the "legitimacy" of the track

DePIN’s legitimacy is unlike other cryptos.

In the encryption world, every public chain will pursue legitimacy. Orthodoxy is the initial driving force for development, or the source of “belief”, which can make everything clear and have a reason. The role of “legitimacy” can be fully demonstrated in every process, from concept to practice to application.

If we use this method to find the legitimacy of DePIN, it seems that we cannot find it in Messari’s definition of DePIN. The main reason is that the attributes of “physical computing facilities” in the definition are too broad. However, the good news is that we can still find it in Messari’s definition of DePIN. Finding common logic in diverse project types serves as the legitimacy of DePIN.

In this article, we will try to explore the logical legitimacy of DePIN and deduce the structural development of DePIN. We believe that with the help of “legitimacy”, DePIN will bring some impetus to Crypto that does not originally belong to this field.

DePIN now

Today’s DePIN track combines many old tracks. After Messari proposed the concept, although it was generally defined by the attributes of physical computing facilities, there are too many projects on the market that fall into this category.

The first thing that can be counted is the storage and computing tracks. There are old storage projects such as Filecoin, Storj, and Arweave. The nature of storage projects is special. Most of them can be directly transformed into computing networks to form a form similar to cloud services. In this way, you can see such things as The emergence of 4everland and Sia. At the same time, there are also a number of old projects with computing networks as their main goals, such as iExec, Phala, Akash, etc., and there are also projects that are very sensitive to conceptual transformation, such as THETA, which are directly classified into this track based on the concept of game cloud services.

The second statistic is the Internet of Things projects. Due to their large number and extremely close attributes, they have almost become the mainstream of DePIN, such as old projects such as IOTA, Helium, IoTeX, and Livepeer, as well as new projects such as Helium Mobile and Helium IOT.

The last statistics that can be counted are new AI projects and emerging projects with obvious DePIN characteristics.

AI is one of the hot topics in this cycle, and because it requires a large amount of computing power, it still requires the support of special computing equipment in the construction of the network layer, so it is included in DePIN.

Whether it is storage, computing, Internet of Things, or AI, almost all are integrated into the DePIN track based on attributes. So what are the projects with obvious DePIN characteristics?

These projects emerged in response to market demand. Judging from the attributes, they almost entirely belong to the DePIN track. The more prominent examples are W3bstream launched by IoTeX, DePHY invested by IoTeX, Wicrypt and WiFi Map incubated within the ecosystem, or in applications. Hivemapper, IoTeX Pebble, etc.

Among these related projects, W3bstream and DePHY belong to the “middle” layer, and Wicrypt, WiFi Map, Hivemapper, and IoTeX Pebble belong to the application layer. The logic behind their emergence is that the infrastructure is sufficient from the chain level, the quantity is sufficient, and the device data Regarding the choice of uplink, in addition to building a self-built network, the best choice is direct connection. This requires the industry to solve this market demand and provide more B-side users with the fastest way to enter DePIN. This also leads to the emergence of middleware roles based on the industrial middle layer to provide solutions, tools, etc.

These new projects emerged entirely in response to industry needs, and their attributes belong entirely to DePIN projects.

After querying the information of each project, we can see that among the solutions provided by W3bstream and DePHY, W3bstream focuses on solving the part of the device and the blockchain connection, while DePHY not only solves the part of the connection with the blockchain, but also provides hardware s solution. From the analysis, the main reason is probably that IoTeX has launched standardized hardware products and API tools for accessing various hardware product data. Services such as hardware manufacturing and combination solutions that are more upstream of the supply chain can be obtained by investing in DePHY. Achieve ecological supplementation.

Most of the application-side project examples such as Wicrypt, Wifi Map, Hivemapper, and IoTeX Pebble are model replications of mature cases. For example, IoTeX Pebble is a hardware device designed by IoTeX to solve terminal data protection. It can be applied to many terminal devices to collect data. Among the projects, Wicrypt and Wifi Map are respectively based on the successful experience of wireless networks. The largest previous case was Helium.

Therefore, compared to Messari’s direct attribution of corresponding projects, some changes have taken place in the entire industry. Projects based entirely on the needs of the DePIN industry have emerged, and the industry structure has also changed from “chain + IoT network” to “chain + “Middleware + Application”, this is a change in industry demand, and it also represents that DePIN has reached a more critical stage of development.

In addition, the projects we saw early on were almost all aimed at Crypto. Projects such as Filecoin and Storij only completed the infrastructure part of the communication layer and resource layer, and did not carry out a large amount of development and adaptation for the application side. The overall goal of the network It is to build a cryptocurrency network and use the token economy as the core of its operation. Users build mining machines to mine coins.

At present, there are enough such networks, including storage networks, distributed cloud computing networks, and distributed AI networks after the rise of AI. From the network layer to the blockchain layer, the patterns are almost the same. Because of the high network requirements, this type of project will still have a design inertia, that is, the added cost will be designed to be very high.

Therefore, in the face of this background, many projects have become the main demand for “establishing DePIN projects” and “using blockchain for traditional smart device projects”. This is also the main demand faced by the industry during its growth stage. Fortunately, The existence of middleware and tool projects is to solve this demand. With the help of these roles, the application layer can release business possibilities.

The simplest understanding is that some projects in the ecosystem must be prepared to meet the needs of new characters entering the track. This is DePIN today.

Archaeological concepts and main logic

At present, DePIN will improve and develop in the trend. To analyze the structure of the overall development, we must start from the macro perspective.

In the previous article, we basically described all the mainstream project types. Based on Mesarri’s summary of the DePIN track, we can find many project types, including computing, storage, AI, IoT, sensors, wireless, GPU, data, cdn, Smart cities, geography, environment and more.

These tracks all meet the definition of physical computing facilities in the DePIN concept. Each business will definitely use hardware devices in the supply chain. These devices will all have computing capabilities. Different hardware device functions and computing capabilities will determine different network functions. Therefore, based on Computing power can deduce the shape of the business and the logic after joining the blockchain.

And when we continue to trace along the concept of physical computing facilities, it is the computing network of the Internet. Previous articles in Wyz Research“How to use technical logic to dismantle global projects”, we have written that the characteristics of the public chain are the same as those of current cloud services, and the model of DePIN is also similar to the model of cloud services.

After the emergence of the Internet, large network nodes, also known as “servers,” supported network operations. In the early days, servers were in the form of physical machines. A large number of physical machines formed subsequent computer rooms, computing centers, supercomputing centers, and regional resource pools.

After the cloud service model was promoted by AWS, the concept of cloud became mainstream. The cloud platform that cooperated with the operation of the computing center continued to add various functions to the platform, so that this method based on cloud platform deployment and integration with other tools became the main method. Develop operational forms.

During this development process, the connection process we can see is:

Computing host (constituting network)—Cloud platform—Developer

After substituting it into the cryptocurrency public chain, it becomes:

Node (constituting the network layer)—Blockchain—Developer

Let’s look at the process of connecting IoT devices under traditional technical conditions:

Device—Routing/Internet—Management Backend/Server

The process after substituting DePIN is:

Computing Equipment—Internet—Blockchain—Developers

or:

Computing equipment—middleware platform—blockchain

Comparing the four processes, the combination model of DePIN and blockchain is consistent with the logic of cloud service network. The only difference is that due to different functions, there will be two different connection methods and usage methods. Among them, it is biased towards providing infrastructure. For example, the old project Filecoin and the new project Render are accessed through devices with special requirements to provide storage and computing power sharing, which are consistent with cloud service functions. In addition, there is a model that provides wireless bandwidth sharing at the far end of the infrastructure (the end of the network topology), such as Helium’s wireless sharing.

The other one is to complete the connection and data communication instead of sharing computing power. For example, the device Peddle designed by IoTeX will become a terminal after connecting to the blockchain, representing a user. Its device no longer shares computing power, but transmits data back to the management end and the chain, releasing other capabilities on the chain. This is another way to access the application layer in addition to infrastructure capabilities.

In these two product logics, computing power sharing and data communication are used respectively, and the corresponding business is also through shared computing power mining and shared data mining.

But from a technical point of view, although both use blockchain as an accounting tool, the cloud service part records the workload, and the data part records the amount of data sharing. The data sharing part will also use the blockchain as an open outlet. I hope Introducing data into the public environment provides more value.

To sum up, DePIN can gain legitimacy from Internet cloud services and IoT working models, and this legitimacy is actually the “legitimacy” of the functional application of public chain networks, that is, sharing resources (computing power) in an open environment , storage, bandwidth, data).

This is the legitimacy of cryptocurrencies’ use of functions beyond the “financial legitimacy” of token-based tokens. This is why Messari stated in the report that DePIN’s revenue will be driven by utility in the future, not just speculation.

Carving a boat to find a sword, extending the structure of DePIN

So what kind of industry structure can meet the industrial needs of DePIN in the future? The answer lies in: we can move outward from cryptocurrency to solve device connection problems, and from the Internet of Things to cryptocurrency to solve chain and functional problems. Once this problem is solved through the project, the industry structure can still be based on the three-layer structure of the basic layer, the middle layer, and the application layer, and the three mainstreams of computing power storage bandwidth sharing, cost-reducing and efficiency-increasing middleware, and diverse smart device applications.

According to Messari’s report statistics, there are more than 650 DePIN projects. In Coingekco’s category statistics, there are about 79 tokens, and in IoTeX’s ecological statistics, there are about 65.

It can be said that there are various old public chains in the entire DePIN track, which means that the L1 market is almost saturated. However, each DePIN project must have its own main network (because it needs to process device communication data and overall status), and the basic chain has already In most cases, it will be transferred to the middle layer and application layer.

This is a clear phenomenon that we have seen. DePIN projects that provide frameworks and solutions are increasing, and the industry will use such projects as tools for standardized replication.

Above we gave examples of the main representatives W3bstream and DePHY. One of the two projects is the launch of IoTeX and the other is IoTeX investment. The goals of both are to reduce costs and quickly replicate the standardized DePIN project.

The entire process that can be completed after the combination of the two is:

1. Solve the design cost problem of computing equipment;

2. Complete the connection between hardware and blockchain;

3. Solve the problem of business integration on the chain.

For the first question, let’s take DePHY’s solution as an example.

When a device joins the network, the device cost requirements range widely for different goals. The solutions are roughly divided into: data communication/secure data communication, bandwidth sharing, storage sharing, and computing power sharing. The cost range of several solutions is in the hundreds. US dollars to tens of thousands of dollars.

For example, when it is only required to connect a smart switch (in a non-safe environment), you only need to use the common access method of the device to connect and collect data. Without other computing requirements, the cost is the lowest category.

When it comes to bandwidth sharing, wireless sharing such as Helium and WifiMap requires specially designed equipment, and the cost reaches hundreds of dollars.

In terms of storage sharing and computing power sharing, for example, the cost of a Filecoin mining machine reaches tens of thousands of dollars, and if you use cloud services or GPUs for a long time, the ongoing costs may be even higher.

High costs mean high barriers to entry. Therefore, for projects entering DePIN, greater growth in the future is likely to be concentrated in the second type of data sharing mentioned above. Currently, in order to provide data sharing, most devices require the installation of nodes to ensure data security. This is the lowest threshold, but it also raises the requirements for the simplest network access devices.

By reviewing DePHY’s open source hardware solutions, we can find that if we use encrypted communication and other methods, or use communication modules such as TEE, we can not only improve the security of data communication for small devices, but also ensure lower costs and the simplest access equipment costs. About $10-15.

The second problem is the part that connects the blockchain.

Projects currently emerging in the industry are already choosing different blockchain networks for direct access, but they also need to face equipment access, data collection, management and subsequent overall status maintenance. Here, an intermediate layer is needed Character intervention.

Both W3bstream and DePHY can implement this part and provide developers with access management of devices. The principle is based on various modular tools and open source tools, such as DID for device management. In terms of device links, both devices are connected through self-built off-chain networks. This part will assume the role of a “relay” to connect the overall status with each public chain to provide support for various businesses. .

Although the two solutions will display multiple networks, they themselves will have some bias towards the public chain. The reason is that the performance of the public chain is also the key to providing the best user experience for DePIN, so it will tend to use higher concurrency capabilities. Public chains, such as Solana.

The third issue, and the final step, is to release the business part on the chain.

In addition to decentralization of control, the biggest advantage of blockchain is openness. DePIN business needs to use cryptocurrency business to unleash its potential on the chain.

We currently see that in addition to token-native businesses, only data services are the best developed in cryptocurrencies. The best scenario is oracles, which provide price data needed for business needs for DeFi or other applications. Data security requirements are high.

In addition to data transmission, the data market that provides data transactions for machine learning business in AI is also the most likely scenario in the future. What we are seeing now, such as federated learning and deep learning, may be closely related to DePIN in the future. Unfortunately, there is still a lack of cases in the business part.

Among the above three parts, it can be determined that the first two parts are complete and can provide standardized process replication for project generation. We have seen many projects born based on this model, such as Pebble’s EnviroBLOQ based on IoTeX, Dimo ​​and Drife based on W3bstream, Starpower and Apus based on DePHY, etc.

Conclusion

Messari has made DePIN a relatively large track through the collection of projects, but the future size is still quite different. Most predictions focus on the industry absorbing real-world value in order to achieve the overall market value growth of the industry.

However, based on the current situation, there is not much growth in the industry at present, which is also the main reason for the low market value. There is indeed a problem of high threshold in the industry. Maybe the cryptocurrency field does not understand the hardware industry, and the hardware industry cannot quickly enter and use it. Blockchain and cryptocurrencies as tools. However, with the help of the middle layer role, growth is expected, and it is not difficult to enter various applications with the help of the middle layer.

In the future, when DePIN brings the “legitimacy” of real-world business into the encryption world, the DePIN project will be able to compete with public chains. This is our greatest expectation for this track.

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