DePIN

TL;DR

DePIN deploys and orchestrates physical infrastructure in a decentralized way by incentivizing many node operators with on‑chain ownership and rewards.

Companies

Compound portfolio company Plural Energy

Helium, Hivemapper, Livepeer

Overview

Read Compound’s deep dive on the topic. But below are the high-level takeaways.

When applied to the right problem and by thoughtfully implementing crypto incentives, DePIN can enable:

• Greater resource utilization
• Better transparency
• Democratized build-out and ownership of infra
• Fewer single points of failure
• More efficiency

We argue that DePIN specifically excels when at least one of the following is true:

• Scaling infrastructure for a single provider is costly or cumbersome
• There’s opportunity to create greater efficiency matching supply & demand
• You can accelerate a cheaper end-state as previously underutilized assets are brought closer to full capacity
• Abundant idle supply to activate (dashcams, hotspots, GPUs)

As with every type of network, there are two main areas of focus: the demand side and the supply side. Suffice it to say, the demand side is (almost) always the more difficult of the two to prove out. The simplest explanation for this is that the token incentive model maps easiest to the supply side. If you’re already driving a car or have some underutilized GPUs, it’s very easy for you to add a dash-cam or offer out your idle compute. There’s little friction on this side.

But when it comes to demand, the product or platform needs to actually deliver real value to paying customers. Otherwise, demand never materializes or manifests itself as mercenary capital. Taking some practical examples, the demand side for Helium Mobile is individuals looking for a better cellular plan. In the context of Hivemapper, the supply side is individuals earning tokens for providing detailed mapping data. Importantly, these are both easy to understand.

You can’t discuss supply and demand without expanding on a core piece underpinning all of this DePIN activity: token incentives. In a report from this summer, 1kx outlined the cost structures for a variety of DePIN projects and examined the sustainability of these systems. The key takeaway is that to align reward distributions with operational costs & demand growth is difficult, let alone create a generalized model for every DePIN project.

One point we think is overlooked a lot of the time is what network effects actually mean.

There are a few differences in the models, but for the most part, a DePIN project's cost structure comes from a) determining how much it costs a node operator to participate, b) determining the efficiency of a network’s nodes, and c) examining differences between projects’ accounting mechanisms.

The main areas it’s been applied to are:

• Telecom & Connectivity
• Energy
• Compute, Storage & Bandwidth
• Decentralized AI
• Data Capture & Management
• Services

Several DePIN projects have demonstrated real-world success and market traction. Helium has built the most prominent example with over 1 million IoT hotspots and ~282,000 mobile subscribers, offering $20/month unlimited plans compared to traditional carriers' $60-90 rates while securing partnerships with major telecom companies like Telefonica for mobile data offloading. Hivemapper has mapped over 14.7 million unique kilometers using dash cam-equipped vehicles, creating fresher mapping data than Google's 1-3 year old imagery. Livepeer has processed 427 million minutes of video transcoding at 50x cheaper costs than traditional providers, while Filecoin manages over 5 exabytes of storage capacity with 3,000+ storage providers.

Further Reading

https://www.compound.vc/writing/depin#article-content

Compound investment theses:

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https://www.michaeldempsey.me/blog/2025/10/03/sequencing-vs-equal-odds-applied-research/

Value Capture — 3

• Value capture here generally comes once the network is meaningful enough (i.e. scale). Most of this will be dependent on the ability to source the demand side of the equation which means the product/service has to be at a minimum at parity with existing centralized solutions.

Moat — 4

• Once the network reaches escape velocity then the value prop becomes much more tangible and far less theoretical. Oftentimes cost is a strong case for DePIN networks but this advantage (if it really exists) can quickly erode as the cost curve of adjacent technologies comes down.