Expanding Access with Decentralized Physical Infrastructure Networks

I. Introduction

Traditional physical infrastructure development has long been dominated by large corporations. The centralization of services like wireless networks, energy grids, and housing can limit competition and innovation, leading to fewer options for consumers. Decentralized Physical Infrastructure Networks (DePINs) aim to bring more options to communities across the country by taking a bottom-up, decentralized approach to building and maintaining essential infrastructure. 

II. DePIN Solutions

a. How it Works

DePIN is based on a model that uses tokens to incentivize users to provide resources such as internet hotspots, road mapping services, or EV charging stations. This model attracts early users, who help build and resource the project in return for tokens. Once products are available that offer more choice at a lower cost, more consumers begin using the product, creating demand. This demand provides more revenue to participants, in turn causing the network to grow. 

Some DePIN protocols provide users with connected hardware devices and accompanying web3 tools. Users then personally operate and maintain the network devices, helping to expand coverage. DePIN platforms can track coverage providers, users, and fees to ensure transparency across the network. This allows providers, verifiers and customers to confirm the network is functioning properly as it grows in size and reach.

Distributed ledger technology (DLT) is essential for DePIN because it facilitates the decentralized coordination and governance of large-scale networks. Through the use of blockchains and smart contracts (software that executes automatically when certain conditions are met), DLT creates an immutable record of the rules and incentives governing these networks. It enables a peer-to-peer system for collectively monitoring compliance and rewarding sustainable, long-term behaviors that support the health of the network as a whole. This approach shifts the focus from short-term profits to long-term growth.  

b. Potential Benefits of DePIN

DePIN projects foster a more dynamic ecosystem by lowering barriers to entry and welcoming widespread participation. As compared to traditional approaches, DePIN networks can be more:     

Cost-Effective. By decentralizing costs across individual operators, DePIN networks can significantly reduce costs. This community-driven approach removes hierarchy and lets infrastructure scale more efficiently, bringing much-needed services to rural areas. These communities have traditionally lacked investment from big companies, who find it hard to justify the investment needed to serve smaller, more remote towns and neighborhoods.   

Resilient. Another benefit of decentralization is increased resilience. By distributing data, control and functionality across multiple individual computers or devices, DePINs remove single points of failure. This resilience extends to issues caused by technical failures and even natural disasters.  

Flexible and Accessible. Anyone can join a DePIN network, and providers enjoy a more direct path to offering resources. This allows more diverse contributors to participate, strengthening the network. This ease of entry draws in a larger provider base than alternatives. DePIN networks can grow across different regions simultaneously, using localized solutions that are tailored to specific needs and incentives.

Self-Sovereign. DePIN networks embrace the onchain model of collective ownership that revolutionizes traditional notions of management. All participants can become co-owners, sharing in the responsibilities as well as the rewards. Identity solutions ensure that personal data is kept private and secure. 

Innovative and Sustainable. Decentralized protocols encourage experimentation and new approaches to old problems, leading to rapid cycles of innovation. Further, by facilitating and promoting renewable energy sources, DePIN projects can lower carbon emissions and lessen environmental impact. 

III. Use Cases 

a. Housing

People everywhere face serious infrastructure challenges relating to affordable housing. In the US, one in five millennials doubt they will ever own a home, mostly due to cost. Globally, Africa is facing a severe housing crisis, and needs over 900 million new housing units by 2050 to accommodate population growth. Decent and affordable housing in cities is in particularly short supply, and insufficient financing for affordable mortgages is a major contributing factor.  

Many new projects are deploying decentralized protocols to address this shortage. Empowa is a blockchain-based fintech company that uses a lease-to-own model and sales of non-fungible tokens (NFTs) and of its native EMP token to facilitate funding for affordable housing projects in countries like Mozambique. Starting with a pilot project that financed homes for 30 families, Empowa seeks to bring transparency to investments, enable global access to housing markets, and help residents build enough credit to qualify for traditional financing over time. 

Miami-based Home Construction Collective is also leveraging blockchain technology to address the shortage of "starter homes" for first-time buyers. The platform fractionalizes real-estate investment, democratizing a process that traditionally has been limited to regional banks and private lenders. Furthermore, by implementing the blockchain protocol Rigor, Home Construction Collective aims to streamline the manufacturing process, reducing costs and making homes more affordable. Finally, the city of Baltimore is launching a pilot blockchain project that will track its inventory of vacant housing using a decentralized digital ledger. The project includes over 13,000 vacant homes, and hopes to make it easier to transfer ownership of the properties and return them to productive use.  

b. Health Care

Obtaining quality health care is another serious challenge for many Americans, particularly in less populated regions of the country. Rural hospital closures force residents to travel greater distances for care -- in some cases up to 40 more miles -- and reduce the availability of doctors, negatively affecting health outcomes. Studies have even found that rural Americans are more likely to die prematurely as health facilities close due to inadequate funding.  

Innovative DePIN projects are improving telehealth options by directly connecting patients with providers and streamlining the sharing of health information. For example, Solve.Care uses blockchain and digital wallets to link doctors, patients, and payers in a health care network that is accessible from any device. Providers connect directly with patients using their “Global Telehealth ID,” which acts as a permanent address on the blockchain where doctors can store their credentials and receive digital payments. Patients can also securely store their records on-chain, confidentially sharing symptoms, accessing referrals, and paying “in one click” using the protocol’s native token. This model has the potential to expand access to care while lowering administrative costs and delays. 

Similarly, HealthBlocks is building a personalized digital health experience that allows users to generate, store and share their health data using blockchain and tokenized incentives. By storing their health profiles in a decentralized ID wallet, users can truly own their own data and decide when and where to share it. 

c. Broadband Internet

In the past few years, almost a quarter of those in rural areas and on tribal lands lacked access to broadband internet, and during the pandemic, most rural students lacked access to the high-speed internet they needed to study remotely. Studies have connected low levels of broadband adoption in a given county to “declines in the number of firms and total employment numbers,” while high levels of adoption improved employment and income growth.

Several DePIN projects are addressing this problem. The Helium Network uses a low-power wireless technology to provide affordable wireless connectivity around the world. The network’s blockchain-based rewards system incentivizes users to build out network infrastructure, which expands internet access to underserved areas at a lower cost than traditional networks. This process has already helped lower operating costs for companies by extending the reach of wireless networks. World Mobile has also pioneered the delivery of wireless connectivity to remote areas that big companies typically ignore. Using renewable solar power, the protocol used existing fiber and unlicensed spectrum to reach a village in Tanzania, with villagers owning part of the network and earning rewards. This access allowed local residents to reach services like banking, loans, education and low-cost calls for the first time. 

d. Energy 

Communities also face challenges in accessing greener and more efficient energy, and researchers have found that “[t]here is huge unmet demand for renewable energy.” The renewable energy industry faces stiff competition from the incumbent energy providers, which benefit from established infrastructure that allows them to charge less for their services from the start. 

DePIN technology can help address these challenges and bring transparency to renewable energy production and use. Specifically, decentralized energy protocols capitalize on blockchain’s efficiency in allocating assets and automating necessary certifications. For example, a pilot project by Iberdrola group uses blockchain to guarantee in real time that energy supplied and consumed is renewable, linking wind and hydro-powered energy plants to specific offices and buildings. By allowing customers to trace the source of the energy they are consuming, the project increases transparency and encourages renewable use. 

Suncontract is another blockchain-based platform that helps facilitate access to renewables. The company directly connects energy producers and consumers on its platform, eliminating intermediaries and promoting transparency and efficiency in the marketplace. The company recently launched an NFT marketplace that lets users purchase and trade tokenized solar panels, allowing users to benefit from renewable energy generation and earn SNC tokens. 

e. Climate

Finally, the effects of existing transportation and energy infrastructure continue to harm the environment. The U.S. EPA has long documented the increased risk of cancer, stroke, and other serious health effects from exposure to industrial pollutants. And the long-term public health risks of noise pollution include hearing loss, cardiovascular disease, and mental health impairment. In fact, a study by the National Health Service stressed the need to map noise hotspots to better understand and mitigate their negative effects. Further, while the number of electric vehicles in the U.S. may grow to almost 30 million by 2030, the ability to build a national charging network will ultimately determine their viability, and securing the necessary investment has been challenging.  

Decentralized networks are taking on these environmental challenges. One startup, Silencio, rewards users for providing hyper-local noise pollution data through its mobile app. By allowing users to share sound level readings and earn rewards for their contributions, Silencio hopes to become the largest citizen science project in the world to combat noise pollution. Similarly, PlanetWatch is building a global network of air quality sensors based on users who contribute air quality data and are rewarded with utility tokens. The goal is to collect, validate and analyze air quality readings that can help monitor air pollution at a global scale. Finally, PowerPod uses blockchain technology and token rewards to seamlessly connect drivers of electric vehicles to owners that have existing EV chargers. The project is also developing chargers and adaptors that will use decentralized identities to securely store data and facilitate transactions.

f. Challenges to Further Adoption 

DePIN faces several obstacles to widespread adoption. Scalability, for instance, is a significant challenge, as maintaining performance and speed becomes more complex as networks increase in size. Other challenges around security, interoperability, and regulation also need to be addressed, although solutions like off-chain settlement and hybrid models are meeting these challenges. As with any digital infrastructure, DePIN faces security threats that require robust cybersecurity measures like encryption and secure authentication to protect against data breaches. Finally, regulators will need to determine liability frameworks and standards for safety and service quality, as well as addressing questions about tax, privacy, and data ownership. 

IV. Conclusion

DePIN solutions present an innovative approach to building and maintaining critical infrastructure that is more open, inclusive and sustainable. By leveraging collective resources and harnessing the power of decentralized networks, DePIN aims to address many of the shortcomings of today's centralized systems, including a lack of competition, high costs and single points of failure. While significant technical and adoption challenges remain, open collaboration, innovative designs, economic incentives and automation can help overcome these hurdles over time. 

As decentralized technologies continue to mature, DePINs may play an increasingly important role in providing universal access to services like connectivity, energy and transportation. Overall, DePINs represent an exciting frontier that could transform how physical infrastructure is developed and managed for the benefit of all. Further progress in this area depends on continued innovation, experimentation and cooperation across in both technology and policy.  

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