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.
“â€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 ‬â€Ayush‬†Ranjan‬â€,‬†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†Wawrzinek‬â€,‬†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.‬â€
“â€â€¬â€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†Okatomo‬â€, 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.
“‬â€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†breaches‬â€â€“‬†just‬†think‬†of‬†the‬†AT&T‬†hack‬†last‬†year‬†that‬†resulted‬†in‬†leaked‬†data‬†for‬†73‬†million‬†customers,” added Wawrzinek‬â€.
Given these limitations, many telecommunications companies face increased competition from DePIN projects.
Empowering Communities Through DePINs
For Wawrzinek‬â€, 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†community‬â€â€“‬†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†regulators‬â€â€“†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†–‬â€our‬†clients‬†included‬â€â€“‬†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.
“â€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†–‬â€DePIN‬†has‬†wide‬†applications‬†across‬†GPU‬†computing,‬†AI,‬†gaming,‬†you‬†name‬†it.‬†There‬†is‬†still‬†work‬†to‬†be‬†done‬â€â€“ 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†–‬â€not‬†the‬†corporate‬†giants‬â€â€“‬†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.