Why The Token Economy Will Make DePINs A Global Revolution

Exploring DePINs: Token Economy's Role in Decentralized Growth

Over the past year, the blockchain technology community has welcomed several innovations and advancements, none bigger than Decentralized Physical Infrastructure Networks, or DePINs. One of the leading factors for the sustainability and growth of DePINs is the token economic model that projects employ using their native tokens. This article delves into the merits of the token economy across DePINs, including the incentivization aspects, how it drives innovation and how tokens ensure the success of DePIN projects. 

It further discusses the utility of these tokens and how the token economy impacts the growth of a DePIN project. To help the reader understand better, we focus on one of the most groundbreaking innovations in the space, Spheron Network, which allows users to lease and lend their unutilized compute power in exchange for token rewards. 

The Gradual Rise of DePIN Projects’ Token Economy 

DePINs leverage blockchain technology and crypto, providing users with a shared network for infrastructure development and management. The innovation rewards users for lending their infrastructure, deferring the control and ownership of infrastructure to a community rather than a single entity. 

Far from what traditional infrastructure systems offer, DePIN projects distribute decision-making power and economic incentives among the network participants. This is fueled and sustained through a token economy, or DePIN crypto, which facilitates the transactions, rewards incentivization and efficiency of the network. 

The token economy in DePIN projects has become a key feature in growing the ecosystem. Projects such as Filecoin, Helium, Spheron and Neurochain AI have been at the forefront of leading the widespread adoption of the technology which helps advance areas such as wireless networks, energy grids, storage systems or compute services.

According to Coingecko, the DePIN projects account for nearly $20 billion in total market capitalization, if we ignore the two top “infrastructure” platforms – Chainlink and Internet Computer Protocol (ICP) – which offer other services as well. The growth can be attributed to the increasing adoption rates of crypto and the growing number of blockchains offering scalable platforms for efficient DePIN data collection and sharing. 

Merits of The Token Economy In DePIN Projects

The traditional infrastructure model faces its inherent vulnerabilities – expensive setting-up costs, a single point of failure, lack of incentivization, etc. DePIN projects, while still in their infancy, offer innovative solutions to mitigate these risks by leveraging blockchain technology and integrating digital tokens. These solutions range from providing enhanced security, incentivization of the participants, efficiency, scaling and resilience against several cyber threats. 

As mentioned above, DePINs run efficiently due to their token economic model. Simply put, DePIN platforms integrate their native tokens to facilitate their ecosystem, through various utilities of the token. By employing tokens, DePINs incentivize individuals to contribute and build comprehensive, real-world infrastructure networks.

More importantly, most DePINs require a global presence for effective networks to be built across the ecosystem. By leveraging digital tokens, projects can bypass geographical constraints, a subject that has affected the expansion of the traditional infrastructure for the better part of the decade. Fiat poses a challenge in the current infrastructure model as developers from certain countries (especially sanctioned countries) found it difficult to access some services hence stifling development and innovation. 

Top DePIN Tokens economies create a borderless community by enabling seamless, global transactions without the need for an intermediary. This opens up borders for any network participant to contribute to the infrastructure, lease the infrastructure, or get rewarded for their participation. This also allows the projects to scale globally easily as people from different parts of the world can contribute resources to the network. 

Notwithstanding, DePIN tokens also enable participants to engage in decentralized governance activities. This democratizes the control of the network to the community, allowing every participant to propose and vote on initiatives, ensuring that the network evolves in a way that reflects the collective interests and priorities of its members. 

Real-World Application of Tokens Across DePINs

DePIN has widely been theorized as a concept that may take years to properly soar into the limelight. Nonetheless, projects such as Spheron Network is pushing the boundaries, creating ready-to-use solutions in the DePIN ecosystem. 

Spheron is revolutionizing the decentralized infrastructure industry by introducing a novel way for users to utilize under-utilized GPU resources from a vast network of providers worldwide. The Decentralized Compute Network (DCN) platform creates an efficient, secure, and seamless ecosystem by connecting GPU suppliers with high-performance computing users requiring additional computational power for tasks such as machine learning, scientific simulations, and CGI rendering. 

The platform divides the compute power providers into two nodes: Provider Nodes and the recently launched Fizz Nodes. Provider Nodes provide the network with additional computing power from their powerful GPUs, earning rewards as passive income. Alternatively, users can sell their compute power directly on DCN’s on-chain Supply Market. The providers can trade and allocate resources on the platform which offers a transparent economy powered by a native token system and leverages the Arbitrum L3 chain for scalability and efficiency. 

In contrast, Fizz Nodes, which recently launched in October, offers a more accessible way for individuals with less GPU compute power to participate – even with laptops or their CPU. Fizz Nodes provide a more flexible uptime standard, providing compute resources to handle AI workloads on the edge. Fizz Nodes are rewarded according to the amount of compute power they contribute to the network as well as the run uptime. A minimum of 50% uptime every 24 hours is required to earn rewards, with rewards disbursed every 24 hours. 

Similar to Provider Nodes, Fizz Nodes can also lease their compute resources on the Supply Market, and earn directly on the fees paid once the network fees are deducted. 

What Does The Future of DePINs Look Like? 

As DePINs grow and evolve, the next few years paint a promising future for the ecosystem. DePINs allow everyday users to participate in building, maintaining, and profiting from physical infrastructure through decentralized protocols. The growth of DePIN innovation could revolutionize several critical industries reliant on physical resources and networks in the coming years, including energy, wireless connection, data ownership, supply chain, logistics, real estate, infrastructure, transportation, city planning etc. 

Nevertheless, the industry could also face several challenges on the horizon. As is with any blockchain project, the uncertainty revolving around regulation and compliance and scalability and interoperability issues could be a hindrance to global adoption. Finally, effective decentralized governance structures must be put in place to ensure that DePIN projects have democratized decisions without affecting efficiency.