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Author: Outlier Ventures; Translation: 0xjs@Bitchain Vision
Note: On March 19, 2024, the well-known crypto venture capital Outlier Ventures published the DePIN investment theme and announced the opening of the DePIN base camp accelerator application. The application ends in April 2024, starts in May and lasts for 12 weeks.This article is an overview of “DePIN Investment Theme”.
DePIN has achieved early success in digital infrastructure including storage and connectivity.We believe that through the decentralized coordination of physical infrastructure and resources, more business models will be disrupted.The next wave of DePIN will revolve around increasingly built data and services on dedicated blockchains and custom SDKs.
This study aims to give founders and investors a comprehensive understanding of DePIN, and we expect this area to have a significant impact on multiple industries.
Unlock the decentralized platform
The business model of operating a physical infrastructure consists of two parts.
First of all, the “platform”, that is, the infrastructure layer that coordinates economic activities between physical resources or nodes.
The second is “service”, refers to economic services or products generated by the coordinated nature of these resources.
Traditionally, the platforms that build these businesses are organized in a centralized manner due to the complexity of creating and maintaining these platforms.Blockchain technology has changed this.Through technological innovation, the platform can leverage the trustlessness and automation of blockchain to achieve decentralization.Replacing a centralized and coordinated platform with decentralized alternatives eliminates costs and creates a more direct route from resources to users.
All of this leads to the optimization of existing services and makes entirely new service categories economically viable, which was previously impossible due to the high cost and inefficiency associated with centralized platforms.This breakthrough forms the basis of Web3, which is called Decentralized Physical Infrastructure (DePIN) when dealing with physical resources.
New Frontiers
Applications built with DePIN are expanding from the scope of traditional physical infrastructure to verticals such as data collection, artificial intelligence infrastructure and platform economy.
We see that there are two driving factors behind this.
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The use of physical infrastructure is changing – shifting to data networks DePIN,Data Network DePIN is transforming the use of physical infrastructure into moving beyond traditional roles from digital services to data extraction.By creating a network of decentralized nodes, the host can provide a way to extract valuable data.In the process, DePIN is redefining the value proposition of the infrastructure, integrating connectivity with data generation.
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The definition of physical infrastructure is changing – shifting to service networks, (critical) definition of physical infrastructure is moving beyond traditional physical structures.In the past decade, society’s economic dependence on service networks has increased (social such as Facebook, services such as Uber, etc.).These networks have historically relied on centralized entities that coordinate socio-economic activities.DePIN is shifting from digital infrastructure to service networks.
Why now?
In addition to the obvious technological improvements of blockchain-based systems, we believe there isFive key drivers drive DePIN adoption in demand and supply.
1.Cost curve——The cost curves of computing and hardware have dropped significantly, making small-scale node operations economically feasible.
2.Availability——The front-end that supports AI is falling into the hands of consumers, improving decision-making and management of DePIN and tokens.
3.Privacy and security——Since generative AI spread among billions of users around the world, concerns about the privacy and security of data and services have increased dramatically, leading more users to explore alternative solutions.
4.Data generation——Powered by the AI and open source movements, data generation across network nodes has increased.
5.Practical tokens——Token economics lays the foundation for the incentive structure behind DePIN.After several cycles, we believe that the expertise to create a practical token structure is mature enough to allow many DePINs to be launched successfully.
If you need to refer to the full text of the report “DePIN and The Platform Economy”, link: https://outlierventures.io/wp-content/uploads/2024/03/DePIN-OV-Thesis.pdf
