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Decentralized physical infrastructure networks (DePINs) are touted to be a top cryptocurrency investment trend in 2024 for their real-world utility — and their potential to steal market share away from Big Tech counterparts.
In this article, we discuss why DePIN could be a multi-billion dollar industry in the making and how DePIN protocols are competing with established technology companies.
Key Takeaways
- DePINs have the potential to become a multi-billion dollar industry for their real-world utility and potential to steal market share away from Big Tech counterparts.
- The cloud computing market represents one of the main areas where DePIN players are looking to gain market share.
- The cloud computing side of DePIN will look to capture some of the $68 billion (and growing) cloud market revenue.
- DePIN’s value propositions include censorship-resistant, open marketplaces, crypto incentives, privacy-protecting technologies, and cost efficiencies.
Let’s briefly discuss what DePINs are and the services they provide.
DePINs are blockchain protocols that build, maintain, and operate physical hardware infrastructure in an open and decentralized manner.
DePINs are crowd-funded and use crypto-incentives to attract users to contribute capital and real-world assets towards a common objective.
The DePIN industry covers infrastructure for wireless connectivity, compute resources, data storage, artificial intelligence (AI), energy, sensors and more.
Why DePIN Could Be a Multi-Billion Dollar Industry
DePINs have something that is a rare commodity in the cryptocurrency sector – real-world utility.
DePIN services like wireless connectivity and cloud computing have the potential to draw demand from a wide range of industries, including consumer, media, gaming, and proof-of-work (PoW) mining.
More importantly, most DePINs compete with centralized technology firms instead of the influential central banks and financial institutions that decentralized finance (DeFi) is trying to replace.
Instead of recreating the wheel, DePINs build open and decentralized marketplaces for the same services traditional technology firms offer.
Blockchain analytics firm Messari mentioned DePINs as a top crypto investment trend for 2024, with CEO Ryan Selkis adding:
“They [DePINs] feel like they will be less driven by rampant speculation and are all oriented around solutions critical to our industry well beyond finance.”
Cloud computing is one of the main markets that DePIN players are looking to eat away from centralized tech firms.
According to data firm Mordor Intelligence, the cloud computing market size is expected to bring in revenue worth $68 billion in 2024, with Amazon Web Services, Microsoft, Google, Alibaba, and Salesforce as its biggest players. By 2029, the global cloud computing market is expected to grow to $1.44 trillion.
In contrast, Messari data showed that the nascent DePIN industry, comprising over 250 projects, brought in about $8 million in revenue in 2023.
Now if we assume that DePINs attract at least 1% of the global cloud computing revenue by 2029, DePIN revenue from cloud computing will grow exponentially, from $8 million into the multi-billions based on 2029 expectations, despite only eating a tiny portion of the cloud computing revenue pie from centralized tech companies.
Similarly, we see the potential of wireless connectivity DePIN networks that collectively earned $0.8 million in 2023.
Top DePINs to Watch Out For
Here are the top 10 DePINs by market capitalization as of January 26, 2024, according to CoinGecko:
| Project | Market cap | Category |
| Filecoin (FIL) | $2.57 billion | Data storage |
| Render (RNDR) | $1.46 billion | Compute resources |
| Helium (HNT) | $1.02 billion | Wireless connectivity |
| Theta Network (THETA) | $975 million | Content delivery network |
| IOTA (IOTA) | $753 million | Internet-of-things |
| Akash Network (AKASH) | $646 million | Compute resources |
| Arweave (AR) | $578 million | Data storage |
| Siacoin (SC) | $485 million | Data storage |
| Pocket Network (POKT) | $421 million | RPC layer |
DePIN Competition with Traditional Tech Companies
Here are the main reasons why end-users may end up choosing a DePIN for their computing, wireless connectivity, data storage, energy, AI, and services marketplace needs over centralized Big Tech:
- Censorship resistant – DePINs are permissionless environments that do not have a centralized entity that can censor users or shut down services.
- Single points of failure – In June 2023, Amazon Web Services (AWS) experienced global outages that affected the internet operations of several companies in the US. Food delivery apps were unable to fulfill orders, smart home devices were unresponsive, websites refused to load, and users complained about being unable to sign in to several websites. DePINs will not face similar single-point failures as these networks are operated by independent nodes spread across the world.
- Transparency and immutability – DePINs use blockchain ledgers to settle and record transactions. Data stored on public blockchains are accessible to everyone and cannot be altered or deleted.
- Open marketplace – DePINs are impartial and open marketplaces that do not discriminate against small and individual buyers. For instance, the high demand for GPU computing resources has made it difficult for individuals and small corporations to procure high-performance GPUs, which are typically reserved for bigger clients by centralized suppliers.
- Cost-efficiency – Certain DePIN services, like decentralized data storage, offer users cheap alternatives to their traditional counterparts. For example, according to a Messari report, the monthly cost per terabyte offered by DePIN is 70% less than that of centralized providers like Amazon S3.
- Privacy – There is growing distrust over how Big Tech firms use private data they collect from customers. Customers concerned about their personal data being misused can rely on trustless DePIN service providers with built-in privacy-preserving technologies such as ZK Proof.
- Crypto incentives – DePINs use crypto incentives to source infrastructure suppliers and attract end customers. For example, wireless connectivity provider Helium lets customers earn crypto tokens when they share their location data. The crypto rewards not only incentivize an inflow of new users but also help identify areas that require better network coverage and improvement in service quality.
The Bottom Line
At the time of writing, challenging Big Tech is an uphill battle. These companies offer reliable and quality service at a large scale that DePINs simply cannot currently compete with.
A DePIN can take years to nurture supply-side infrastructure that can compete with established market rivals.
But once a DePIN grows and gains momentum, its value proposition in the form of decentralization, immutability, privacy, and low costs may become too good to ignore for end consumers.
