The growing scale of innovation in the domain of blockchain and web3 has brought the limelight on DePIN crypto projects. You can come across many projects pioneering the concept of DePIN in web3 that bridge the gap between decentralization and the physical world. The concept of DePIN started gaining recognition in 2023 and has transformed traditional models for developing and maintaining physical infrastructure.
DePIN introduces a new way to create physical infrastructure with decentralized networks and helps network participants gain more control. The decentralized networks utilize a combination of blockchain and tokenization to introduce the concept of decentralized ownership in management of real-world infrastructure. Let us learn how DePIN works and explore its advantages in this post to figure out its transformative impact on infrastructure in web3.
Understanding the Definition of DePIN
DePIN is a new concept that introduces an innovative approach to create and manage real-world infrastructure on decentralized blockchain networks. The Decentralized Physical Infrastructure Networks work by combining traditional model of owning and managing physical infrastructure with the decentralization of blockchain. DePIN networks work with the contribution of physical infrastructure resources by individuals and organizations. The infrastructure resources include electricity, bandwidth, or computing power.
You can notice how the DePIN blockchain association marks a stark distinction from centralized infrastructure that restricts ownership to few corporations. DePIN transforms the utility of infrastructure in web3 by distributing value creation and control. Blockchain protocols help in transparent management of governance and tokens encourage more users to participate in the networks.
The concept of DePIN is similar to that of open-source software albeit for physical systems. It ensures that one company does not control the infrastructure and multiple individuals provide the infrastructure collectively to earn tokens. The new decentralized ownership model lowers barriers and also helps in creating physical infrastructure networks tailored to local requirements.
Build your identity as a certified expert with 101 Blockchains’ Blockchain & Web3 Certifications designed to provide enhanced career prospects.
How Do You Describe the Role of Crypto Tokens in DePIN?
Crypto tokens serve as one of the core elements in the working of decentralized physical infrastructure networks. Any participant contributing resources in DePIN networks will earn crypto tokens for deployment and maintenance of hardware. The term ‘DePIN crypto’ describes the ability of DePIN networks to share value among participants. The crypto tokens rewarded to participants in DePIN networks represent ownership, access to network services and governance rights. As a result, decentralized physical infrastructure networks present better prospects for revolutionizing real-world infrastructure in web3 by encouraging user participation.
Unraveling the Way DePIN Works
The most crucial detail that can help you understand DePIN better is the way it works. You can find the simplest explanation for the working of DePIN in the following steps.
- The first step in functioning of DePIN begins with network participants contributing their resources to the network.
- The resources contributed by network participants become available for access and use to other users in the network.
- Smart contracts on blockchain help in recording and managing all activities that involve sharing of resources.
- Users involved with the network can use the physical infrastructure resources in DePIN networks for different needs and use cases.
- Participants who contribute resources to the network will receive tokens as rewards for supporting the network.
The ideal approach to understand answers to “What is DePIN in web3?” would not only focus on its workflow but also its essential components. DePIN works its magic with a combination of blockchain technology, tokenization, and physical infrastructure to develop a decentralized infrastructure economy. You should learn about each component in DePIN networks to get a better idea of how they work.
The blockchain layer provides the blockchain protocol or distributed ledger for the DePIN network. You can come across different DePIN projects that use blockchain protocols, such as Ethereum or Solana, for decentralization. Network participants can rely on the shared ledger in the blockchain protocol to manage transactions and keep a record of transactions supplied to the network.
Blockchain facilitates decentralization in DePIN networks, which eliminates intermediaries and single points of failure. Smart contracts, which are essential for automatically allocating rewards and validating service agreements, are another critical component in the blockchain layer.
-
Physical Infrastructure Layer
The physical infrastructure layer focuses on real-world infrastructure assets that serve as the core elements of the DePIN network. You can notice the impact of DePIN in web3 infrastructure in the way participants can contribute real-world resources in a decentralized digital network. Participants can contribute bandwidth, energy grids, computing power or storage as resources for physical infrastructure in DePIN networks.
Off-chain networks also serve as a critical component in the physical infrastructure layer. The primary goal of off-chain networks revolves around managing the handover of physical resources with the blockchain protocol handling validation and resource tracking.
The tokenization layer in DePIN networks primarily focuses on creation of tokens that demonstrate resource ownership. It also facilitates fair rewards to user for their involvement in the network. The tokenization layer ensures that participants get crypto tokens in return for the resources they supply to the network.
The utility of the tokens is not limited to rewarding contributors for their resources. Crypto tokens in a DePIN network can be used to pay for services in the network and exercise voting rights in governance of the network. Contributors can earn tokens on the basis of value of the resources they contribute, thereby creating an independent economy.
Want to learn the fundamentals of tokenization? Enroll now in the Tokenization Fundamentals Course
Discovering the Transformative Potential of DePIN
The global DePIN market may achieve a total capitalization of almost $3.5 trillion by 2028 (Source). According to a report published in July 2025, DePIN projects have attracted more than $744 million in venture capital funding since early 2024 (Source). The growth of the DePIN market and increase in funding for DePIN projects prove that it is not just a trending concept in web3. On the contrary, DePIN has successfully challenged various inefficiencies associated with traditional infrastructure models with the following benefits.
1. Enhancing Transparency and Building Trust
The DePIN blockchain layer takes care of tracking every contribution and transaction in the network. All network participants get a shared ledger which offers open and tamper-proof records of everything happening in the network. Public availability of data regarding resource contributions and transactions helps in boosting participant confidence. It also fosters trust in verification of rules and payments.
2. More Room for Scalability
DePIN networks reduce barriers to entry, thereby allowing anyone to join the network by contributing resources without delays. The lack of intermediaries provides better opportunities for expanding the network without waiting for approval from gatekeepers. As a result, physical infrastructure can grow at a faster rate, which is a promising highlight for developing regions.
3. Better Scope for Inclusion
The next crucial advantage of DePIN points at the way it removes dependence on big corporations for infrastructure. DePIN can help individuals and small groups in rural communities develop and manage infrastructure for vital services. It creates new opportunities to ensure that rural regions gain access to vital services, such as electricity or internet connectivity.
4. Community Infrastructure Ownership and Governance
DePIN networks offer tokens to network participants that help them prove ownership of the resources they contribute to the network. The DePIN crypto tokens also empower participants with governance right. As a result, network participants can propose changes, exercise voting rights, and implement new changes according to community needs. It showcases a significant shift in decision-making powers from executives to the community. Community ownership and governance also empowers DePIN networks to adapt faster to user needs without missing accountability.
5. Improvements in Security and Cost Efficiency
Investors and researchers also believe in the potential of DePIN to revolutionize infrastructure in web3 due to the benefits of enhanced security and cost reduction. The decentralization of blockchain ensures that DePIN networks don’t fail to deliver services when some nodes fail. Without a single actor or entity controlling everything, DePIN networks are not vulnerable to attacks or outages. On top of it, DePIN also reduces total operational costs of physical infrastructure in comparison to centralized models through effective distribution of resources and rewards for contributors.
Start learning about cryptocurrencies with world’s first Cryptocurrency Skill Path with quality resources tailored by industry experts!
Final Thoughts
The concept of DePIN has been compared to DeFi in many ways, especially for the ability to revolutionize traditional models. Just like DeFi changed how the world viewed financial services, DePIN aims to offer a new perspective on ownership and management of physical infrastructure. The significance of DePIN in web3 revolution is evident in the multiple benefits it has to offer over the traditional models used in real-world infrastructure. Researchers believe in the potential of DePIN to revolutionize infrastructure in web3 by bridging the gap between physical infrastructure and the digital world. Learn more about DePIN use cases and real-world examples of successful DePIN projects now.
