‘DePIN’ Is Venture Capitalists’ Latest Crypto Obsession. Can It Match the Hype? [Video]

DePIN involves taking real-world infrastructure like a wireless network and running it with a blockchain-powered system. VCs are salivating, but there aren’t many customers yet.
Venture capitalists have pumped billions into the DePIN sector already, with some dedicating entire funds to DePIN protocols.
Although DePIN projects currently have a combined market capitalization of tens of billions of dollars, the industry faces one of the oldest challenges in crypto: relatively few customers.
Analysts point out that DePIN projects that have serious potential are ones where demand for the underlying service is clearly identifiable, meaning that the customers already exist.
So much of the cryptocurrency industry lives in the ether, figuratively or literally: data moving around blockchains, lines moving up or down on price graphs and other largely intangible things.
But a hot emerging trend that has venture capitalists salivating promises a direct tie to the real world: running infrastructure with blockchains. Projects like the Helium protocol, which drives a wireless network with a token-powered ecosystem, or Filecoin’s data-storage platform.
The not-so-catchy term for all this is decentralized physical infrastructure networks, which usually gets shortened as DePIN. A catchy amount of money has already been invested, a sign venture capital firms see potential. According to a Crypto.com report, the top DePIN projects have raised more than $1 billion combined.
“We believe DePIN is a category that has the potential to host a killer app with a billion users,” Pranav Kanade, a portfolio manager of VanEck’s digital assets alpha fund, said in an interview. “These users would be using public blockchains without necessarily realizing they are interacting with a crypto product.”
Yet for all the obvious interest from the VC community, DePIN faces one of the oldest challenges in crypto: relatively few customers.
DePIN projects collectively have tokens worth tens of billions of dollars. But how much revenue are they, as a group, generating? Something like $15 million a year, said Rob Hadick, a general partner at Dragonfly, a crypto venture capital fund. “Most of the protocols aren’t constrained by supply, but by a lack of demand,” he said in an interview.
Nonetheless, DePIN is quickly shooting up the list of crypto buzzwords.
What is DePIN?.
DePIN projects are blockchain-based and operate physical hardware infrastructure in a decentralized way. They often use token reward systems to incentivize users to help build out their networks. The sector covers a wide range of areas including wireless connectivity, data collection, computing and data storage to name a few.
Traditionally, infrastructure like a wireless network is completely centralized; giants like AT&T, Deutsche Telekom or China Mobile are in full control of their telephone networks and their customers pay a fee to use their service, and that’s as far as users’ clout goes.
Helium’s DePIN-driven network, on the other hand, is decentralized; members of the public can set up hotspots and get rewarded with HNT tokens for helping run the wireless network. Other DePIN projects have similar community-driven systems.
The total market capitalization of all DePIN tokens exceeded $25 billion as of February, according to Crypto.com research. Computing, storage and artificial intelligence accounted for the majority…
https://www.coindesk.com/markets/2024/04/16/depin-is-venture-capitalists-latest-crypto-obsession-can-it-match-the-hype/
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