The growing scale of innovation in blockchain and web3 has put the spotlight on DePIN crypto projects. You can come across many projects pioneering the DePIN concept in web3 that bridge the gap between decentralization and the physical world. The DePIN concept began to gain recognition in 2023 and has transformed traditional models of physical infrastructure development and maintenance.
DePIN introduces a new way to create physical infrastructure with decentralized networks and helps network participants gain more control. Decentralized networks use a combination of blockchain and tokenization to introduce the concept of decentralized ownership into real-world infrastructure management. Let’s learn how DePIN works and explore its benefits in this article to understand its transformative impact on Web3 infrastructure.
Understanding the definition of DePIN
DePIN is a new concept that introduces an innovative approach to creating and managing real-world infrastructure on decentralized blockchain networks. Decentralized physical infrastructure networks work by combining the traditional model of owning and managing physical infrastructure with the decentralization of blockchain. DePIN networks operate with the contribution of physical infrastructure resources by individuals and organizations. Infrastructure resources include electricity, bandwidth, or computing power.
You can notice how the DePIN blockchain association marks a clear distinction from centralized infrastructure that restricts ownership to a few companies. DePIN transforms the utility of infrastructure into web3 by distributing value creation and control. Blockchain protocols contribute to transparent governance management and tokens encourage more users to participate in networks.
The concept of DePIN is similar to open source software, but for physical systems. This ensures that one company does not control the infrastructure and that multiple individuals collectively provide the infrastructure to earn tokens. The new decentralized ownership model reduces barriers and also helps create physical infrastructure networks tailored to local requirements.
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How do you describe the role of crypto tokens in DePIN?
Cryptographic tokens are one of the essential elements for the functioning of decentralized physical infrastructure networks. Any participant contributing resources to DePIN networks will earn cryptographic tokens for hardware deployment and maintenance. The term “crypto DePIN” describes the ability of DePIN networks to share value among participants. Cryptographic tokens rewarded by participants in DePIN networks represent ownership, access to network services, and governance rights. As a result, decentralized physical infrastructure networks offer better prospects for revolutionizing real-world infrastructure in Web3 by encouraging user participation.
Decipher how DePIN works
The most crucial detail that can help you understand DePIN better is how it works. You can find the simplest explanation of how DePIN works in the following steps.
- The first stage of DePIN operation begins when network participants contribute their resources to the network.
- Resources contributed by network participants become available for access and use by other network users.
- Smart contracts on the blockchain help record and manage all activities involving resource sharing.
- Users involved in the network can use the resources of the physical infrastructure of DePIN networks for different needs and use cases.
- Participants who contribute network resources will receive tokens as a reward for their support of the network.
The ideal approach to understand the answers to the question “What is DePIN in web3?” » would focus not only on its workflow but also on its essential components. DePIN works its magic by combining blockchain technology, tokenization and physical infrastructure to develop a decentralized infrastructure economy. You should learn about each component of DePIN networks to get a better idea of how they work.
The blockchain layer provides the blockchain or distributed ledger protocol 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 blockchain protocol’s shared ledger to manage transactions and keep a record of transactions provided to the network.
Blockchain facilitates decentralization in DePIN networks, eliminating intermediaries and single points of failure. Another essential part of the blockchain layer is smart contracts, essential for the automatic allocation of rewards and validation of service contracts.
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Physical infrastructure layer
The physical infrastructure layer focuses on the real-world infrastructure assets that constitute the core elements of the DePIN network. You can notice DePIN’s impact on web3 infrastructure in the way participants can contribute real-world resources into a decentralized digital network. Participants can contribute bandwidth, energy networks, computing power, or storage as resources for the physical infrastructure of DePIN networks.
Off-chain networks are also a critical part of the physical infrastructure layer. The main focus of off-chain networks revolves around managing the transfer of physical resources with the blockchain protocol managing the validation and tracking of resources.
The tokenization layer in DePIN networks primarily focuses on creating tokens demonstrating ownership of resources. It also allows users to be fairly rewarded for their involvement in the network. The tokenization layer ensures that participants obtain cryptographic tokens in exchange for the resources they provide to the network.
The usefulness of tokens is not limited to rewarding contributors for their resources. Cryptographic tokens in a DePIN network can be used to pay for services on the network and exercise voting rights in network governance. Contributors can earn tokens based on the value of the resources they contribute, creating an independent economy.
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Discover the transformative potential of DePIN
The global DePIN market could reach a total capitalization of nearly $3.5 trillion by 2028 (Source). According to a report released in July 2025, DePIN projects have attracted more than $744 million in venture capital funding since the start of 2024 (Source). The growth of the DePIN market and the increase in funding for DePIN projects prove that it is not just a trending concept in Web3. On the contrary, DePIN has managed to overcome various inefficiencies associated with traditional infrastructure models with the following advantages.
1. Improve transparency and build trust
The DePIN blockchain layer is responsible for tracking each contribution and transaction on the network. All network participants have a shared ledger that provides open, tamper-proof records of everything that happens on the network. Public availability of data regarding resource contributions and transactions helps build participant trust. It also promotes confidence in verifying rules and payments.
2. More Room for Scalability
DePIN networks lower the barriers to entry, allowing anyone to join the network by contributing resources without delay. The lack of intermediaries provides better opportunities to expand the network without waiting for approval from gatekeepers. As a result, physical infrastructure can grow at a faster rate, which is a promising point for developing regions.
3. Better reach for inclusion
The next crucial advantage of DePIN is how it removes dependence on large companies for infrastructure. DePIN can help individuals and small groups in rural communities develop and manage infrastructure for vital services. This creates new opportunities to ensure rural areas have access to vital services, such as electricity or internet connectivity.
4. Ownership and governance of community infrastructure
DePIN networks offer tokens to network participants that help them prove ownership of the resources they contribute to the network. DePIN crypto tokens also provide participants with governance rights. As a result, network participants can propose changes, exercise their right to vote, and implement new changes based on community needs. This highlights a significant shift in decision-making powers from leaders to the community. Community ownership and governance also allows DePIN networks to adapt more quickly to user needs without lacking accountability.
5. Security and Cost Effectiveness Improvements
Investors and researchers also believe in DePIN’s potential to revolutionize Web3 infrastructure through the benefits of enhanced security and reduced costs. Blockchain decentralization ensures that DePIN networks do not fail to provide services when certain nodes go down. Without a single actor or entity controlling everything, DePIN networks are not vulnerable to attacks or outages. Additionally, DePIN also reduces the total operational costs of physical infrastructure compared to centralized models through efficient distribution of resources and rewards for contributors.
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Final Thoughts
The concept of DePIN has been compared to DeFi in many ways, particularly for its ability to revolutionize traditional models. Just as DeFi changed the way the world views financial services, DePIN aims to provide a new perspective on the ownership and management of physical infrastructure. The importance of DePIN in the Web3 revolution is evident in the multiple advantages it offers over traditional models used in real-world infrastructure. Researchers believe in DePIN’s potential to revolutionize Web3 infrastructure 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.
