DePIN Investment Logic Analysis: Alpha Opportunities Still Exist

DePIN, as an emerging track, has been one of the two major hot directions in crypto investment alongside AI since 2022. However, compared to the AI field, it seems that there has not yet been a truly iconic project in DePIN. This suggests that there may still be some Alpha opportunities in the DePIN track in the next 1-3 years.

This article will start from scratch to sort out the investment logic of DePIN, including why DePIN is worth paying attention to, as well as proposing a simple analytical framework. Since DePIN covers multiple sub-tracks, this article will explain the concept from a relatively abstract perspective while also providing some specific examples.

Why Pay Attention to DePIN Investment

DePIN is not just a buzzword.

Decentralizing the infrastructure of the physical world is not just a hollow concept, but a direction with practical implementation possibilities. In DePIN, there are indeed opportunities for decentralization to "achieve" or "optimize" certain scenarios.

Taking the telecommunications sector as an example, traditional operators need to invest huge amounts of money in spectrum auctions and base station deployment. However, DePIN projects like Helium Mobile distribute the initial costs among users through community crowdsourcing, allowing individuals to simply purchase reasonably priced hotspot devices to connect to the network and become "micro-operators." This model can significantly reduce the total cost of network deployment.

In the field of AI data, traditional AI companies face high costs in acquiring training data. Projects like Grass and other DePIN initiatives allow users to share idle bandwidth through a distributed web crawler to help scrape publicly available web data, significantly reducing the data acquisition costs for AI companies while achieving data diversity and geographical distribution.

as a junction between infrastructure and consumer applications

As the two main lines of cryptocurrency investment, infrastructure projects and consumer applications each have their advantages and disadvantages. Infrastructure projects have a high technical threshold, but are often far from end users and have poor dissemination. Consumer applications are directly aimed at users, making them easy to attract attention, but they can also be easily discredited by the market and have a short lifecycle.

In contrast, DePIN can better balance the advantages of these two directions:

1. DePIN is built on the real demand of the physical world, with quality projects having a solid product-market fit and revenue, making them difficult to falsify and easy for the market to understand.

2. DePIN also has user-side usage demands, which can attract user attention. For example, Grass has already reached 2.5 million end-users, many of whom are non-crypto native users.

DePIN Investment Framework

Direction

Evaluate from the perspective of market scale and demand intensity. For example, 5G and wireless networks are large markets and are considered essential; while in-vehicle data and weather data belong to relatively small markets. Even if DePIN can only capture a small portion of the traditional large market, it is still quite considerable under the scale of the cryptocurrency market.

product

The DePIN model is particularly suitable for industries with high capital requirements, high barriers to entry, obvious monopolistic patterns, and underutilization of resources. The assessment of product-market fit mainly focuses on two points:

Supply side: Has DePIN achieved functionalities that were previously unattainable, or does it have significant advantages over existing solutions in terms of cost, efficiency, etc. (.

Demand side: The products provided by DePIN must have real market demand, preferably with a strong willingness to pay.

Regarding hardware, it is necessary to consider the complete timeline of "manufacturing-sales-distribution-maintenance." In the early stages of the project, efforts should be made to reduce user participation friction as much as possible, and as the project matures, some friction can be gradually increased to improve retention.

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) token economy

Token mechanism design is the most challenging aspect of DePIN projects. Unlike other fields, DePIN requires incentivizing all participants in the network early on, which necessitates the launch of tokens in the early stages of the project.

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) Team

In team configuration, founders need at least two types of backgrounds: one is rich experience in traditional companies in the field, responsible for technology and product implementation; the other is native to crypto, familiar with token economics and community building, and understands the preference differences between crypto users and non-crypto users.

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) other

Regulatory issues also need to be considered, for example, collecting road images and data may be sensitive in certain areas.

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Summary

Although the DePIN development cycle is relatively long, some positive signals have already emerged. For example, Helium Mobile has partnered with T-Mobile to achieve seamless switching of user devices between Helium community hotspots and T-Mobile's nationwide 5G network. Helium has also partnered with Telefónica to begin expanding in South America.

DePIN has two unique advantages over traditional monopolistic enterprises:

1. More flexible deployment methods and means, the token model can align incentives within the ecosystem.

2. There is a chance to bring positive externalities, create value for real life and other industries, and feed back the entire ecosystem through the token economy.

However, DePIN also faces some uncertainties, such as time cycle uncertainties caused by hardware operations, regulatory risks, due diligence risks, and so on.

Overall, DePIN is one of the key sectors to watch in 2025.

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