What are Physical Resource Networks (PRNs)?
PRNs and DRNs are characterized by the hardware, resources, goods, and services they offer, according to a Messari report. By providing cloud-based storage, computing power, and AI resources, DRNs provide the digital networks on which the physical networks can operate.
PRNs provide incentives in the form of crypto tokens to participants to deploy location-dependent real-world physical hardware, such as devices and sensors, to build decentralized energy, data, and communications infrastructure. Users can access, share, and monitor various kinds of technological resources.
Physical Resource Networks (PRNs) are at the intersection of Web3, blockchain networks, artificial intelligence (AI), and the physical hardware that makes it possible to scale applications to users and devices worldwide.
How do Physical Resource Networks (PRNs) Work?
The key feature of PRNs is decentralization, which allows participants to deploy and share spare technological capacity without using centralized platforms. This aims to democratize access to infrastructure, limiting corporate or government control and censorship. PRNs’ hardware is typically consumer-grade, making it affordable and accessible to many participants.
In the sense that they share resources at the peer-to-peer level, Physical Resource Networks are explained as similar to crowdsourcing platforms. But instead of being governed by central networks of corporate servers, they use blockchain technology to pool the resources of individuals together.
Participants can share and profit from the infrastructure capacity they may have to offer. The resources they provide are measured, tracked, and sold at a fair price to users who can benefit from an open market. They are rewarded with cryptocurrency tokens in proportion to their contributions.
All the physical devices in the network are represented on the blockchain, and all transactions involving their use are recorded on the distributed ledger automatically.
There are two types of physical hardware used in PRNs:
- Devices that are designed for the specific application of the PRN.
- Generic devices that can connect to a network as long as they are compatible.
Network-specific devices can provide specialized functionality and data, while generic devices increase accessibility to a wider range of participants.
Physical Resource Network Examples
SolarCoin is an example of a PRN, that aims to support the global energy transition by rewarding solar producers with an energy-referenced cryptocurrency.
Participants who installed solar energy systems can register their installation via their monitoring system or platform and connect an Ethereum-compatible crypto wallet to receive their rewards. The monitoring system sends generation data to the SolarCoin Foundation, which in turn deposits SolarCoins to the supplier’s wallet.
The Helium Network
The Helium Network, which now operates on the Solana blockchain rather than its own blockchain, provides decentralized wireless infrastructure. Users can deploy Helium Hotspots, and configure sensors, devices, and gateways, to form a global wireless low-range wide area network (LoRaWAN) and cellular network.
Hivemapper is a decentralized digital mapping network that collects street-level imagery with purpose-built dashcam devices. Hivemapper runs on the Solana blockchain and rewards contributors who operate dashcams with its HONEY crypto token as an incentive.
Pros and Cons of PRNs
Physical Resource Networks represent an effective application of blockchain technology, but there are challenges to their implementation.
|Decentralizing physical network infrastructure reduces the risk of a single point of failure.
|Connecting and managing distributed physical assets can be complex, requiring expertise in blockchain protocols and resource network management.
|PRNs can use smart contract automation and AI to allocate and manage devices connected to the network to ensure they are distributed in line with their usage.
|PRNs can come up against a blockchain’s scalability limits as they add more devices to the network.
|PRNS increase accessibility and democratization of assets, as many participants can connect single devices, without requiring the large upfront investment needed for one player to deploy a complete network.
|A lack of standardization can create interoperability challenges between PRNs and DRNs.
|PRNs can scale easily in a modular fashion by adding new physical devices to the network, making them responsive to demand.
|While setup costs may be there, there are still maintenance costs for connected devices.
|Cryptography secures access to physical resources and participants’ data.
|Regulatory uncertainty or incompatibility can inhibit the integration with existing systems and other DePINs.
|Blockchain’s transparent nature promotes accountability and trust among network users.
|The deployment of a large number of physical devices connected to blockchain networks can raise concerns about environmental sustainability.
Physical Resource Networks (PRNs) work with Digital Resource Networks (DRN), comprising Decentralized Physical Infrastructure Networks (DePINs). They aim to increase accessibility to network infrastructure beyond large, centralized entities, and help facilitate the buildout of networks for a broader base of users.