The telecommunications sector is encountering various challenges such as the necessity for consistent infrastructure upgrades, escalating service expenses, and inadequate coverage in rural regions. Consequently, numerous consumers are exploring alternative solutions that guarantee accessible and dependable connectivity.
DeCentralized Physical Infrastructure Networks (DePINs) have surfaced to address the issues posed by traditional telecommunications corporations. BeInCrypto conversed with industry specialists from Huddle01, Impossible Cloud Network, and Aethir to comprehend how DePINs diminish the accessibility barriers to connectivity by integrating blockchain technology.
The Emergence of DePIN Networks
Conventional telecommunications firms have depended on extensive infrastructure to offer internet access nationwide. Due to their large-scale nature, these projects demand substantial capital.
As a consequence, governments and major corporations have traditionally overseen the management of such resources.
DePINs were conceived to transform this approach by enabling the decentralization of these networks. They utilize distributed ledgers and token incentives to establish and sustain a decentralized and expansive infrastructure.
Providers receive tokens as rewards for continuing to offer services in the real world. The entire process is automated via smart contracts, facilitating hardware interconnectivity, executing intricate transactions, and managing rewards.
“DePINs fundamentally rethink how communication networks operate by leveraging decentralization and community participation. They utilize a network of distributed nodes contributed by the participants so the service can scale dynamically as more participants join. DePINs are also highly economical because they utilize underutilized resources like bandwidth and storage from everyday users,” explained Ayush Ranjan, Co-Founder & CEO at Huddle01.
Market sentiment and overall adoption appear to align with the utility of DePINs.
A Bright Future for Decentralized Telecommunications
According to a report by Messari, DePIN revenue surpassed $500 million in 2024, marking a 100-fold increase from 2022.
DePIN revenue surpassed $500 million in 2024. Source: Messari.
As per the report, the number of active DePIN projects nearly doubled last year. DePIN tokens now constitute 5% of the total cryptocurrency market cap, with over 13 million devices worldwide contributing to DePIN operations daily.
Experts across the industry anticipate this growth trajectory to persist.
“Due to this model, DePIN has the potential to outgrow centralized networks like Google, Microsoft, and Facebook by hundreds, if not thousands, in the next 15 years. It might not be as flashy and exciting as memecoin trading, but it completely changes the game,” predicted Kai Wawrzinek, CEO and Co-Founder of Impossible Cloud Network (ICN), a decentralized multi-service cloud platform.
Presently, the DePIN sector boasts a market capitalization of nearly $23.3 billion and over $2 billion in trading volumes. According to data from CoinGecko, Bittensor, Render, Filecoin, Theta Network, and The Graph are among the projects leading the current ranking.
Top DePIN Coins by Market Capitalization. Source: CoinGecko.
The surge in decentralized telecommunications alternatives mirrors a growing demand for fairer and more inclusive approaches to internet connectivity.
Challenges in Conventional Telecom Models
Driven by the escalating demand for connectivity, the telecom sector is under heightened pressure to innovate. However, current network models, often characterized by vertical integration, struggle to meet this demand.
“Traditional centralized telecom models are expensive, slow to expand, and don’t consistently offer equal access. Within this traditional model, a few major companies control the infrastructure, enabling them to maintain high pricing and often restricting competition. Additionally, expanding coverage necessitates substantial investment and time, ultimately leaving some areas underserved,” said Kyle Okatomo, Chief Technology Officer at Aethir, a decentralized GPU cloud infrastructure project.
This centralized model tends to monopolize service provision and inherently fosters more inequality for areas with smaller populations or limited infrastructure.
“Centralized telecom providers tend to prioritize profitable urban areas, leaving rural and remote regions underserved. This became especially evident during the pandemic when remote schooling peaked, and students in rural areas struggled with connectivity,” Ranjan informed BeInCrypto.
Their concentrated power renders telecom providers more vulnerable to targeted security threats.
“Centralization often means data is stored in one place. This creates a significant single point of failure risk and often leads to breaches – just think of the AT&T hack last year that resulted in leaked data for 73 million customers,” added Wawrzinek.
Owing to these constraints, numerous telecommunications companies are facing heightened competition from DePIN projects.
Empowering Communities through DePINs
For Wawrzinek, the mission behind every DePIN project focused on enhancing telecommunications is straightforward:
“DePIN is about wresting control away from one centralized entity and distributing it among the community – essentially giving power back to the people,” he stated.
The decentralized infrastructure provided by DePINs presents a clear Web3 use case, harnessing various technologies to connect service providers with end users. This decentralization aids in rendering services more cost-effective and swifter.
“DePINs expand internet access by decentralizing and democratizing critical infrastructure, transcending the limitations of discrete traditional centralized models. Said plainly, centralized networks are discrete, whereas decentralized networks can easily and rapidly expand via community-based ownership and contribution. This creates a more flexible, cost-effective, and widely accessible alternative,” Okatomo shared with BeInCrypto.
By empowering communities to establish their own hotspots or internet service providers (ISPs), DePINs facilitate the establishment of small local networks that others can access. Users pay for bandwidth, and providers receive payments directly.
In its recent report, Messari underscored how DePIN projects like Helium Mobile, DAWN, and WiFi Map use tokenized models to simplify and enhance internet connectivity.
“Helium allows users to run nodes to provide decentralized wireless access and earn tokens in return, DAWN on Solana transforms users into localized ISPs, and WiFi Map rewards global WiFi sharing,” Wawrzinek elaborated.
These models encourage active involvement from service providers and consumers, as everyone collaborates to ensure the infrastructure functions effectively.
“By contributing, they essentially own a part of the network. Unlike traditional systems where ownership typically demands payment, DePINs operate on a model where ownership is earned through contributions, with earning becoming a byproduct of participation,” Ranjan added.
Collaborative efforts with policymakers will be imperative to bolster the continuous growth of the DePIN sector.
Addressing Regulation in the DePIN Sector
As DePIN projects progress, they have begun garnering institutional recognition for their potential. Last November, the Harvard Business School opted to integrate Helium Mobile’s DePIN strategy into its strategy curriculum.
While DePIN networks gain more acceptance, the issue of regulation within the sector is becoming increasingly crucial.
“Clear regulations that promote investment and security can help foster growth within the DePIN ecosystem. They should also ensure that network flexibility remains intact while addressing concerns from both enterprises and consumers. Additionally, promoting collaboration across sectors along with independent, controlled testing aids regulators in developing informed policies while proactively managing risk to build trust and stability within the community,” Okatomo informed BeInCrypto.
Several industry experts in the United States emphasized the significance of evading one-sided discussions and adopting an open-minded approach to foster effective communication between regulators and DePIN leaders.
Three days prior to stepping down, former US Securities and Exchange Commission (SEC) Chair Gary Gensler filed a lawsuit against Nova Labs, the developers behind the Helium Network.
The lawsuit alleges that Nova Labs deceived its customers while breaching federal securities and regulations. The accusations center on the company’s hotspot devices, which they have been vending since 2019.
“Regulation is crucial for DePIN, but it needs to be thoughtfully implemented. For instance, the SEC’s recent lawsuit against Helium is just not productive. Regulators need to comprehend DePIN business models and not simply vilify anything related to crypto. We do require clear regulations surrounding tokenomics, data privacy, infrastructure deployment…we don’t need year-long lawsuits that halt all innovation. I advocate for an open dialogue between DePIN and regulators – and, indeed, I believe we can’t progress without it. However, until now, it has been a one-sided conversation, and that necessitates change,” Wawrzinek informed BeInCrypto.
Alongside enhancing dialogue with regulators, DePIN experts also aim to concentrate on other areas for improvement.
Overcoming Challenges in DePIN Adoption and Expansion
Pioneers in the DePIN industry stress the necessity for enhanced educational resources to responsibly enlighten society on DePIN use cases and propel broader adoption.
“The technical aspects of DePIN can be intimidating for new users, which can render onboarding confusing,” shared Ranjan.
In this regard, Wawrzinek added:
“A bigger challenge perhaps pertains to the overall understanding and perception of web3 and crypto. There still exists a certain level of mistrust and a deficiency in education, but numerous web2 companies – our clients included – aren’t particularly keen on directly engaging with crypto.”
The absence of comprehensive regulations surrounding DePIN could also impact their stability.
“DePINs operate in a decentralized environment, often leading to unclear or nonexistent regulations. This lack of oversight can bear significant consequences for the security and stability of DePIN networks, particularly in heavily regulated sectors like electricity and telecommunications,” Ranjan informed BeInCrypto.
He additionally highlighted scalability and efficiency as two facets that must be vigilantly monitored alongside DePIN expansion.
“As DePIN networks expand, the volume of transactions increases, potentially overwhelming current blockchain infrastructures and leading to performance issues,” he remarked.
Some projects like Huddle01 have explored and deployed Layer-3 blockchain solutions to amplify scalability.
By addressing these constraints while leveraging the advantages of DePINs, widespread adoption could be propelled, creating robust competition for established telecommunications giants.
DePIN Beyond Telecommunications
The prospects of DePINs appear exceedingly promising, and the prevalence of these networks extends beyond the telecommunications industry. Numerous established projects tackle other challenges related to energy grids, supply chain logistics, and identity solutions.
Some have commenced utilizing artificial intelligence to enhance operational efficiency, while the use cases have expanded to encompass game developers, marketing agencies, and retailers.
“DePIN has the potential to supplant existing systems and notably enhance them. It’s not solely about the internet – DePIN has broad applications across GPU computing, AI, gaming, you name it. There is still work to be done – particularly concerning interoperability, without which DePIN projects operate in silos. However, if we get this right, we attain a decentralized ecosystem where individuals benefit – not the corporate giants – and it’s the corporations that will need to adapt. I eagerly anticipate witnessing that future,” Wawrzinek concluded.
If DePINs can surmount their present obstacles, they could usher in a new epoch of decentralized innovation with benefits that extend far beyond telecommunications.
