Guest Post: DePIN Project Deep Dive

This is an excerpt from a guest post I wrote for DIMO, a DePIN project powering connected car applications and services. Click here to read the full article on HackerNoon.

It’s no secret that our world has transformed rapidly over the past few decades. What hasn’t changed is the domination of industries by a select few entities. In fact, you could argue it’s getting worse by the year, with power clusters ultimately leading to stifled innovation and dampened competition in their respective markets.

Decentralized physical infrastructure networks (DePINs) offer an exciting alternative to this paradigm, with projects such as DIMO leading the charge with open-source solutions to traditionally walled-off areas.

Before we dive into the benefits of decentralized problem-solving, we first need to understand the scale of dominance these companies and institutions have over their market peers.

With the arrival of high-speed internet and widespread digital connectivity, our way of working has changed drastically. Yet despite this shift to modern methodologies, age-old power dynamics remain firmly in place.

Take rideshare companies, for example. Their inception was meant to liberate and empower car owners, giving them the freedom to monetize their vehicles and become their own bosses. What actually happened is that cab fares bypassed local taxi businesses, creating a handful of new centralized tech giants.

The rideshare case is but one example of an entrenched industry. There are plenty more we can pick and choose from:

Critical telecom services are relied upon by countless people and businesses, yet only a small number of companies tend to operate the underlying infrastructure. AT&T and Vodafone alone account for 5 of the top 10 acquisitions in this sector, with the latter’s $183B acquisition of Mannesman holding the record for highest value acquisition across all industries.

The energy sector is awash with deeply entrenched companies. Saudi Aramco’s $2T market cap lands it 4th place in a list predominantly occupied by software and tech companies. China’s Sinopec reported revenue of $453B in 2023. The largest energy providers all too often operate as regulated monopolies in their regions and can be closely tied to their respective governments.

The infrastructure required for cloud storage is increasingly dominated by a handful of players, companies that effectively secure huge portions of internet information. In 2022, it was estimated that 65% of cloud infrastructure spending was directed towards Microsoft Azure, Google Cloud, and Amazon Web Services, the latter accounting for a whopping 32% market share.

Regardless of the industry at hand, there’s a single constant that repeats throughout each business model. Data is becoming increasingly siloed, hoarded, and feasted upon by the likes of Amazon, Google, and Facebook.

Data is akin to digital oil, a valuable resource for any company in the modern economy. However, as shown through several high-profile leaks and hacks and even Uber’s recent €10M EU fine, the handling of personal data is not always a large company’s highest priority.

The classic adage is truer now than ever before: If you’re not paying for the product, you are the product.

The worst part is you’re probably paying and being used at the same time.

The sheer size of the behemoths that rule such entrenched industries makes it hard for new services to compete and claw back market share. They effectively build moats of money around their positions that competitors simply don’t have access to.

But their size can be a hindrance, as running such operations tends to be incredibly expensive. And like a giant ship wishing to change its course, switching tactics as a large company can be slow and energy-intensive. It’s no wonder we see constant mergers and acquisitions across all large industries.

To put it in perspective, if you had the brightest idea to solve a pressing real-world issue, you’d still need millions, if not billions, in up-front capital. Once you’re operational, the amount of expenses you’d need to run your business will eat into your revenue aggressively. Then, it takes a long time to innovate and react to industry changes, with complex mergers and acquisitions presenting themselves as solutions to moving quickly. And all this at the risk of becoming a giant, centralized, single point of failure.

Deeply entrenched and centralized systems, as powerful and almighty as they are, might not be the best solution to solving real-world issues in our rapidly changing world.

DePINs propose an innovative approach to problem-solving at scale thanks to their novel operational and monetary strategies. It’s how projects such as DIMO have grown to reach tens of thousands of contributors, irrespective of their physical locations or financial means.

In their most simplest form, DePINs enable contributors from across the world to align intentions and focus on solving real-world issues with transparent monetary incentives to guarantee their professionalism and their equipment’s uptime. It’s a fascinating bottom-up approach to tackle problems within industries that are seemingly out of reach.

DePINs go the extra mile, arriving exactly where they need to be, not because a board of directors signs for it but because the very people who need the solution do the right thing for what matters most to them. DePIN empowers those who bring opportunities and solutions to their local environments.

When built correctly, DePINs become efficient and flexible:

The single point of failure risk is washed away through the decentralization of capital, hardware, and governance.

Valuable data can be secured cryptographically and stored in a redundant, distributed manner.

Their lack of corporate bureaucracy enables rapid innovation and faster reactions to industry developments.

The capital expenditure required to fund the deployment of new infrastructure is shared between a wide range of community members.

The eventual success of the project is directly and transparently shared between all project contributors.

DePINs coordinate global communities of people with shared interests, unlocking new pathways into deeply entrenched industries. Initial reports highlight the opportunity for a $3.5T industry based on the DePIN model. Analytics firm Messari takes their outlook a step further, suggesting a flywheel effect enabling $10T to $100T in GDP add-on within the coming two decades.

The list of potential use cases that are primed for innovation is vast, and several notable DePIN projects are steaming ahead with their innovative progress.

From mobile-first applications to small-form-factor sensor equipment, rooftop antenna installations, and decentralized computing solutions, the physical attributes on the supply side of these networks are as vast as the problems they aim to solve.

GEODNET is aiming to build the world’s largest decentralized real-time kinematic (RTK) network. In doing so, they can vastly improve the quality of satellite geo-positioning, providing the centimeter-level accuracy required for our modern appliances and industrial applications.

Rural internet connectivity is a significant problem often overlooked by large telecom players, despite its omission, leaving regions at severe economic disadvantages. Wicrypt is tackling the issue of last-mile connectivity with its peer-to-peer bandwidth-sharing solution.

PowerPod is incentivizing the further adoption of electric vehicles through its decentralized network of EV charging stations. Station owners can monetize their equipment and get rewarded for renting out their chargers to other car owners.

The growing VPN market shows a hunger for online privacy, but in practice, this simply transfers data from one centralized service to another. ATOR Protocol is tackling internet privacy by building a cryptographically secure decentralized routing layer for anyone to use.

NATIX is pioneering an AI-powered, crowdsourced digital twin of the world. Data collected from smart cameras is ushering in a new wave of sophisticated smart city and mobility applications.

These are but a few specific examples of the progress being made across various sectors in the DePIN space, with each one tailored to a different user persona. However, there is one industry that appears to be universal amongst all geographies and demographics: the automotive sector.