Points
- DePin projects are generating $14 million in annual recurring revenue.
- Key sectors include IoT, AI, wireless coverage, and data management.
- Challenges include market fragmentation and competition from Web2 companies.
- DePin projects face high upfront costs and complex regulatory environments.
- Growth opportunities lie in low to middle-income countries and sectors with high computational demands.
Lately, decentralized physical infrastructure networks （DePins） are strongly emerging as a crypto narrative. HashKey Capital, a blockchain investment firm, has spotlighted over 1,000 DePin projects.
Revenue and Sectors
These DePin projects collectively generate an impressive $14 million in annual recurring revenue. They span fields like the Internet of Things （IoT）, artificial intelligence （AI）, wireless coverage, and data management, aiming to democratize technology and bolster competition.
Challenges in the DePin Sector
Market Fragmentation
Despite their potential, DePin projects encounter notable obstacles. A key issue is the proliferation of similar initiatives and competition from established Web2 companies, which threatens to fragment the market and weaken the impact of new DePin entities.
“The fairly nascent DePin sector also makes it arduous to generate demand from retail consumers and Web2 enterprises who lack the awareness and trust in the reliability of the sector,” HashKey Capital wrote.
For instance, in the mapping sector, projects such as Hivemapper and Natix Network compete directly with giants like Google Maps. Moreover, capturing and retaining user interest proves challenging in a market largely unfamiliar with decentralized solutions.
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To overcome these challenges, HashKey Capital recommends that DePin projects diversify their demand streams beyond the Web3 space. They should also focus on user experience as a key differentiator.
High Upfront Costs and Regulatory Challenges
DePin projects also face high upfront costs, complex supply chains, and stringent regulatory environments. In an interview with BeInCrypto, Daniel Wang, co-founder of Aethir, discussed the regulatory challenges of DePin.
“DePin projects face a web of regulatory challenges, encompassing securities regulations, anti-money laundering （AML） compliance, Know-your-customer （KYC） requirements, and data privacy laws. The uncertainty extends to taxation, further complicating matters,” Wang told BeInCrypto.
Wang stressed the need for DePins to remain adaptable and compliant across various legal frameworks, which differ significantly by jurisdiction.
“By advocating for policies that foster innovation while ensuring adherence to local laws, DePins can thrive within a secure and innovative environment,” Wang stated.
Growth Opportunities in DePin Sector
Potential in Low to Middle-Income Countries
Despite these challenges, DePins hold immense potential for transformative impact, particularly in low to middle-income countries. HashKey Capital identifies these regions as key growth areas, driven by their need for affordable and accessible infrastructure solutions. By decentralizing data management and utilizing underutilized resources, DePins can significantly reduce digital infrastructure costs.
For instance, in developing countries of Africa, DePin can empower local communities by enabling individuals and businesses to monetize spare computing and storage capacities.
“DePin enables local communities to participate more fully in the digital economy and opens up new avenues for financial opportunity. Additionally, DePins facilitate the creation of a more efficient and affordable internet infrastructure. By reducing the reliance on individual data centers and promoting decentralized networks, DePins lower costs and improve internet accessibility in underserved areas,” Wang explained.
Sectors with High Computational Demands
Looking ahead, sectors such as AI will significantly grow due to the increasing computational demands of large language models. DePins unify idle resources across a blockchain, addressing potential demand-supply mismatches and optimizing resource utilization.
Moreover, according to Statista, the IoT market is expected to surge to $1.559 trillion by year-end, with a compound annual growth rate of 10.5% from 2024 to 2029. Hence, DePins are well-positioned to capture a substantial market share.
Indeed, by fostering user-owned economies where privacy and data control are prioritized, DePins could redefine technology consumption and governance.
Conclusion: Navigating Opportunities and Challenges
DePin projects present a promising yet challenging landscape. Their potential to democratize technology and provide affordable infrastructure solutions in developing regions is immense. However, they must navigate market fragmentation, high costs, and regulatory hurdles to succeed. By focusing on user experience, compliance, and strategic diversification, DePins can leverage growth opportunities and achieve lasting impact in the digital economy.
解説
- DePin （Decentralized Physical Infrastructure Networks）: These are blockchain-based networks that provide physical infrastructure services such as data storage, computing power, and internet connectivity. They aim to decentralize and democratize access to these resources, making them more affordable and accessible.
- IoT （Internet of Things）: A network of physical objects embedded with sensors, software, and other technologies to connect and exchange data with other devices and systems over the internet.
- AI （Artificial Intelligence）: The simulation of human intelligence in machines that are programmed to think and learn like humans. It includes tasks such as learning, reasoning, problem-solving, and language understanding.
- AML （Anti-Money Laundering）: Laws, regulations, and procedures aimed at preventing criminals from disguising illegally obtained funds as legitimate income.
- KYC （Know Your Customer）: A standard in the financial industry that ensures businesses know and verify the identity of their clients. It helps prevent money laundering, fraud, and other illegal activities.
DePin projects are at the forefront of innovation, offering transformative solutions in digital infrastructure. However, their success hinges on overcoming significant challenges and leveraging strategic growth opportunities. The future of DePins lies in their ability to integrate seamlessly into both Web3 and traditional markets, providing value to diverse user bases.