October 28 – November 3 (Published November 6th)
PERSPECTIVES by Todd White
28 Crypto Private Financings Raised: ~$161M
Rolling 3-Month-Average: ~$219M
Rolling 52-Week Average: ~$216M
Decentralized Physical Infrastructure Networks, or DePins, seek to reshape traditional models of infrastructure development and resource management with the unique features of blockchain technology. DePins typically incentivize individuals to contribute unused capacity from physical assets – such as mobile routers (Helium), smartphone sensors (Hivemapper), or computing storage (Storj) – through tokenized rewards and onchain administration.
The myriad permutations often involve three elements – (1) physical infrastructure, such as phones or storage devices; (2) middleware to link the physical assets or attributes to a blockchain, similar to the way oracles integrate external data resources for onchain applications; and (3) a blockchain to manage and administer the network, including tracking use and remittance of rewards to incentive participants. The leading L1 chains to date have been Solana and Ethereum.
Conceptually, DePin initiatives are poised to provide valuable infrastructure solutions without the traditional friction and substantial initial capex needed to bring new facilities into operation. In much the way that the rideshare community avoided the cost of purchasing cabs by paying drivers to use their own vehicles, DePins incentivize participants to own and make available physical resources to a network of users.
The potential does seem compelling, although the difficulty in getting the flywheel spinning can be substantial – a classic barrier to any business hoping to scale through the much-coveted but often elusive network effect. According to some recent reports, total revenues across all DePin projects may be a paltry $15 million (yes, million with an “M”) even while funding valuations begin to soar.
One group that may be bucking that trend is Glow Labs, an Ethereum-based solar project that closed a $30 million round this week led by Framework Ventures and Union Square. Glow rewards owners of solar generation capacity with their native GLW tokens in exchange for excess electricity output, coupled with USDC payments to monetize available carbon credits. And it seems to be working – In the past year they have grown from a collection of rooftop solar panels in the U.S. into a growing global network with several large scale solar fields in India.
It’s certainly an interesting application, that could eliminate several thorny problems with distributed solar – not least of which includes the initial cost and lead time needed to bring additional kWh online, as well as the limited lifespan and disposal challenges of distributed storage, both of which hamper the ability to scale current projects for future demand load. There is still much for Glow Labs and others in the DePin space to prove, but the space presents an increasingly intriguing connection for Web3 technologies to address challenges in the physical real world that most of us inhabit.
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