The telecommunications industry faces several challenges, including the need for continuous infrastructure upgrades, rising service costs, and limited coverage in rural areas. As a result, many customers are exploring alternative options that ensure accessible and reliable connectivity.
Decentralized Physical Infrastructure Networks (DePINs) have emerged to remedy the issues posed by traditional telecommunications companies. BeInCrypto spoke with industry experts from Huddle01, Impossible Cloud Network, and Aethir to understand how DePINs lower the access barriers to connectivity by employing blockchain technology.
The Rise of DePIN Networks
Traditional telecommunications industries have relied on large infrastructure to provide internet access nationwide. Because of their large-scale nature, these projects require significant capital.
As a result, governments and large companies have traditionally been in charge of managing such resources.
DePINs were designed to change this approach by allowing for the decentralization of these networks. They leverage distributed ledgers and token incentives to build and maintain a decentralized and far-reaching infrastructure.
Providers receive tokens as rewards for continuing to provide services in the real world. The entire process is automated through smart contracts, allowing hardware interconnectivity, executing complex transactions, and managing rewards.
“DePINs fundamentally rethink how communication networks operate by leveraging decentralization and community participation. They use a network of distributed nodes contributed by the participants so the service can scale dynamically as more participants join. DePINs are also highly economical because they utilize underutilized resources like bandwidth and storage from everyday users,” explained Ayush Ranjan, Co-Founder & CEO at Huddle01.
Market sentiment and overall adoption seem to agree with DePINs’ utility.
A Promising Future for Decentralized Telecommunications
According to a Messari report, DePIN revenue reached over $500 million in 2024, a 100x increase from 2022.
DePIN revenue reached over $500 million in 2024. Source: Messari.
Per the report, the number of active DePIN projects nearly doubled last year. DePIN tokens now represent 5% of the total cryptocurrency market cap, and over 13 million devices worldwide contribute to DePIN operations daily.
Experts across the industry expect this growth to continue.
“Because of this model, DePIN has the potential to outgrow centralized networks like Google, Microsoft and Facebook by 100s, if not 1000x in the next 15 years. It might not be as flashy and exciting as memecoin trading, but it completely changes the game,” predicted Kai Wawrzinek, CEO and Co-Founder of Impossible Cloud Network (ICN), a decentralized multi-service cloud platform.
Today, the DePIN industry boasts a market capitalization of nearly $23.3 billion and over $2 billion in trading volumes. According to CoinGecko data, Bittensor, Render, Filecoin, Theta Network, and The Graph are among the projects leading the current ranking.
Top DePIN Coins by Market Capitalization. Source: CoinGecko.
The increase in decentralized telecommunications options reflects a greater need for fairer and more inclusive approaches to internet connectivity.
Challenges in Traditional Telecom Models
Driven by the ever-increasing demand for connectivity, the telecom industry faces heightened pressure to innovate. However, current network models, often characterized by vertical integration, struggle to meet this demand.
“Traditional centralized telecom models are expensive, slow to expand, and don’t consistently offer equal access. Within this traditional model, a few major companies control the infrastructure, which allows them to keep pricing high and often limits competition. Additionally, expanding coverage requires significant investment and time, ultimately leaving some areas underserved,” said Kyle Okatomo, Chief Technology Officer at Aethir, a decentralized GPU cloud infrastructure project.
This centralized model tends to monopolize service provision and inherently generates more inequality for areas with smaller populations or limited infrastructure.
“Centralized telecom providers tend to prioritize profitable urban areas, leaving rural and remote regions underserved. This became especially apparent during the pandemic when remote schooling peaked, and students in rural areas struggled with connectivity,” Ranjan told BeInCrypto.
Their concentrated power makes telecom providers more susceptible to targeted security attacks.
“Centralization often means data is stored in one place. This creates a huge single point of failure risk and often leads to breaches– just think of the AT&T hack last year that resulted in leaked data for 73 million customers,” added Wawrzinek.
Given these limitations, many telecommunications companies face increased competition from DePIN projects.
Empowering Communities Through DePINs
For Wawrzinek, the mission behind every DePIN project focusing on telecommunications improvement is simple:
“DePIN is about taking control away from one centralized entity and distributing it among the community– literally giving power back to the people,” he said.
The decentralized infrastructure provided by DePINs offers a clear Web3 use case, utilizing various technologies to connect service providers with end users. This decentralization helps make services more cost-effective and faster.
“DePINs expand internet access by decentralizing and democratizing critical infrastructure, moving beyond the limitations of discrete traditional centralized models. Said plainly, centralized networks are discrete, whereas decentralized networks can easily and quickly expand via community-based ownership and contribution. This creates a more flexible, cost-effective, and widely accessible alternative,” Okatomo told BeInCrypto.
By empowering communities to set up their own hotspots or internet service providers (ISPs), DePINs facilitate the creation of small local networks that others can access. Users pay for bandwidth, and providers receive payments directly.
In its latest report, Messari highlighted how DePIN projects like Helium Mobile, DAWN, and WiFi Map use tokenized models to simplify and improve internet connectivity.
“Helium allows users to run nodes to provide decentralized wireless access and earn tokens in return, DAWN on Solana turns users into localized ISPs, and WiFi Map rewards global WiFi sharing,” Wawrzinek explained.
These models encourage active participation from service providers and consumers, as everyone collaborates to ensure the infrastructure functions effectively.
“By contributing, they essentially own a part of the network. Unlike traditional systems where ownership typically requires payment, DePINs operate on a model where ownership is earned through contributions, with earning becoming a byproduct of participation,” Ranjan added.
Coordinated efforts with policymakers will be required to support the continued growth of the DePIN sector.
Addressing Regulation in the DePIN Sector
As DePIN projects continue to develop, they have begun to draw institutional recognition for their potential. Last November, the Harvard Business School decided to teach Helium Mobile’s DePIN strategy as part of its strategy curriculum.
While DePIN networks gain more acceptance, the issue of regulation within the sector is becoming increasingly important.
“Clear regulations that encourage investment and security can help foster growth within the DePIN ecosystem. They should also ensure that network flexibility remains intact while addressing concerns from both enterprises and consumers. Additionally, promoting collaboration across sectors along with independent, controlled testing helps regulators develop informed policies while proactively managing risk to build trust and stability within the community,” Okatomo told BeInCrypto.
Some industry experts in the United States emphasized the importance of avoiding one-sided discussions and adopting an open-minded approach to foster effective communication between regulators and DePIN leaders.
Three days before leaving office, former US Securities and Exchange Commission (SEC) Chair Gary Gensler sued Nova Labs, the developers behind the Helium Network.
The lawsuit claims Nova Labs defrauded its customers while breaching federal securities and regulations. The allegations focus on the company’s hotspot devices, which they have sold since 2019.
“Regulation is important for DePIN, but it needs to be thoughtfully implemented. For example, the SEC’s recent lawsuit against Helium is just not productive. Regulators need to understand DePIN business models and not just demonize anything to do with crypto. We do need clear regulations around tokenomics, data privacy, infrastructure deployment…we don’t need year-long lawsuits that make all innovation grind to a standstill. I’m all for an open dialogue between DePIN and regulators– and, in fact, I don’t believe we can grow without it. But, until now, it’s been a one-sided conversation, and that needs to change,” Wawrzinek told BeInCrypto.
In addition to improving dialogue with regulators, DePIN experts also plan to focus on other areas for improvement.
Overcoming Challenges in DePIN Adoption and Expansion
Leaders in the DePIN industry underscore the need for improved educational resources to responsibly educate society on DePIN use cases and drive broader adoption.
“The technical aspects of DePIN can be daunting for new users, which can make onboarding confusing,” said Ranjan.
To that point, Wawrzinek added:
“A bigger challenge is, perhaps, to do with the overall understanding and perception of web3 and crypto. There’s still a certain level of mistrust and a lack of education, but also many web2 companies –our clients included– don’t really want to get involved with crypto directly.”
The fact that limited regulations currently exist surrounding DePIN can also affect their stability.
“DePINs operate in a decentralized environment, often leading to unclear or nonexistent regulations. This lack of oversight can have major consequences for the security and stability of DePIN networks, especially in heavily regulated industries like electricity and telecommunications,” Ranjan told BeInCrypto.
He also pointed to scalability and efficiency as two aspects that must be closely monitored alongside DePIN expansion.
“As DePIN networks grow, the volume of transactions increases, potentially overwhelming current blockchain infrastructures and leading to performance issues,” he said.
Some projects like Huddle01 have explored and deployed Layer-3 blockchain solutions to enhance scalability.
Addressing these limitations while leveraging DePINs’ advantages could drive widespread adoption and create strong competition for established telecommunications giants.
DePIN Beyond Telecommunications
DePINs’ prospects seem very bright, and the presence of these networks extends far beyond the telecommunications industry. Several established projects tackle other issues related to energy grids, supply chain logistics, and identity solutions.
Some have started to employ artificial intelligence to improve operational efficiency, while use cases have extended to game developers, marketing agencies, and retailers.
“DePIN has the potential to replace existing systems and make them far better. It’s not just the internet –DePIN has wide applications across GPU computing, AI, gaming, you name it. There is still work to be done– especially when it comes to interoperability, without which DePIN projects are just operating in silos. But, if we do this right, we get a decentralized ecosystem where the individuals benefit –not the corporate giants– and it’s the corporations that will need to adapt. I really look forward to seeing that future,” Wawrzinek concluded.
If DePINs can overcome their current hurdles, they could usher in a new era of decentralized innovation with benefits that extend far beyond telecommunications.