Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
So far in this cycle, there have been several narratives that have emerged. These include artificial intelligence (AI), real world assets (RWAs) and decentralised physical infrastructure (DePIN) tokens. Unlike meme tokens, these tokens and projects actually relate to solving a problem.
The growing demand for AI has led to the need for computing power outpacing the current supply. AI-related projects, such as Render or Ionet, try to solve this. They connect users in need of hardware, to train AI models, with hardware owners who have unused capacity. Some AI-related tokens, including Render and Ionet, also overlap with the sector of decentralised physical infrastructure (DePIN).
DePIN uses crypto and its incentive mechanisms to improve access to underutilised infrastructure, such as wireless networks or computing power. In Q4 2022, Amazon’s AWS was responsible for 32% of the world’s cloud infrastructure needs. One of the primary benefits of DePIN is in its name – decentralisation. Decentralising these systems and infrastructure reduces the risk of having a single point of failure, or providers censoring access to these resources. This ethos intertwines with crypto’s most embedded security mechanisms.
DePIN also increases the supply of resources by rewarding those who give them. This can be enabled by tapping into unused demand that users didn’t know they had and paying them for it. Crypto makes this significantly easier through the use of wallets and tokens. Users can allow access to their data or hardware and create passive income by connecting their wallet. The project “Grass” is an example of this. Users can connect and sell their unused bandwidth to AI companies. Companies then use it to train AI models by scraping the internet. Hivemapper is another example for Uber or taxi drivers. Hivemapper provides fresh and accurate map data for the use of insurance, training automated cars, logistics, or for governments to assess road conditions. By using a dashcam on their vehicles, drivers can earn another source of income while working.
In a world of exponentially increasing demands, DePIN seems to be one of crypto’s use cases that makes sense. The idea of increasing the efficiency of current systems is also surely in line with the ESG concepts that many governments use to chastise crypto. Venture capitalists are also betting on DePIN, with over $1 billion of investments made in the sector by the end of last year. Let’s see when they will start to pay off.