Alpha opportunities still exist: Comprehensive analysis of DePIN investment logic

! Alpha opportunities are still there, sort out the investment logic of DePIN from scratch

Grayscale showcased the market capitalization situation of leading DePIN projects in its DePIN research report released in early 2025. Since 2022, DePIN and AI have been two major new directions in cryptocurrency investment that have gone hand in hand. However, the DePIN field still seems to lack truly iconic projects. While Helium can be considered a leading project, it existed even before the DePIN concept; Bittensor, Render, and Akash are more often categorized under the AI track.

This situation shows that the DePIN track lacks strong enough leading projects to break through the industry ceiling, so there are still many alpha opportunities in the next 1-3 years. This article will sort out the investment logic of DePIN from scratch, including why DePIN is worth paying attention to, and propose a simple analytical framework. Since DePIN is a comprehensive concept covering multiple sub-tracks, this article will explain the core concepts from an abstract perspective and explain them in combination with specific cases.

Why Pay Attention to DePIN Investment

DePIN is not just a buzzword

First of all, decentralizing the physical world infrastructure is not just a fancy concept or a mere “narrative game”, but a direction with practical feasibility. There are indeed situations in DePIN where decentralization can “unlock” or “optimize” certain scenarios.

Here are two simple examples:

In the field of telecommunications, the main track of DePIN, taking the US market as an example, traditional communication operators ( such as AT&T AND T-Mobile) usually need to invest billions of dollars in spectrum license auctions and base station deployment, and the deployment cost of each macro base station covering a radius of 1-3 kilometers is 20-500,000 US dollars. In a 2022 auction of 5G spectrum in the 3.45GHz band (FCC) by the Federal Communications Commission, an operator invested $9 billion, becoming the most expensive operator. This centralized infrastructure model leads to high prices for communication services.

The decentralized mobile network spreads the initial costs among users through community crowdsourcing, allowing individuals to access the network by purchasing hotspot devices for either $249 or $499, becoming “micro-operators” who are driven by token incentives to spontaneously form networks in the community, significantly reducing the overall investment. The cost for traditional operators to deploy a macro base station is about $200,000, while deploying around 100 hotspot devices ( would result in a total cost of about $50,000 ), achieving a similar coverage range and reducing costs by approximately 75%.

In the field of AI data, traditional AI companies need to pay up to $300 million per year in API fees to social platforms to obtain training data, and crawl data with the help of residential proxies and data center proxies. At the same time, they face increasing copyright and technical restrictions, making it difficult to ensure compliance and diversity of data sources.

A data project solves this problem through distributed web scraping, allowing users to share idle bandwidth by downloading browser extensions, helping to scrape public web data and earn token rewards. This model dramatically reduces the cost of data acquisition for AI companies, while achieving diversity and geographic distribution of data. According to statistics, there are currently about 110 million IP addresses from 190 countries participating in the network, contributing an average of 1,000 terabytes of Internet data per day.

In summary, the fundamental starting point for investing in DePIN is that decentralized physical infrastructure has the opportunity to perform better than traditional methods, and even achieve goals that traditional methods cannot.

as a junction between infrastructure and consumer applications

As the two main lines of cryptocurrency investment, infrastructure and consumer applications each face some challenges.

Infrastructure projects usually have two characteristics: first, strong technical attributes, such as ZK, FHE, MPC and other technical thresholds are high, and there is a disconnect in market cognition; Second, except for a few projects that can directly reach end users, such as Layer 1/2, cross-chain bridges, and staking, most of the infrastructure is essentially enterprise-oriented, such as developer tools, data availability layers, oracles, coprocessors, etc., which are relatively far away from users.

! [Alpha opportunities are still there, sort out the investment logic of DePIN from scratch](https://img.gateio.im/social/moments-04c29fbc15f71420cba349ae59444eb40192837465674839201

This makes it difficult for infrastructure projects to capture users’ minds and results in poor dissemination. Although high-quality infrastructure projects have a certain degree of product-market fit and revenue, allowing them to be self-sufficient through cycles, the lack of mind capture in a market environment where attention is scarce makes it challenging to launch on exchanges later.

On the contrary, consumer applications are directly aimed at end users and have a natural advantage in mind share. However, new concepts can easily be disproven by the market, and they may quickly decline after the hot trend shifts. These types of projects often fall into a cycle of narrative-driven short-term surges followed by disproval and decline, resulting in a short lifecycle. For example, social finance applications and certain social applications.

Growth, mindshare capture, and listing are widely discussed issues in this market cycle. Overall, DePIN can better balance and address the above dilemmas:

1. DePIN is based on the real needs of the physical world, such as energy, wireless networks, etc., and high-quality DePIN projects have a solid product market fit and revenue, which is not easy to falsify and easy to be understood by the market. For example, a decentralized network’s $30 per month unlimited data package is significantly more affordable than the solutions offered by traditional operators.

2. DePIN also meets the user-side usage needs and can effectively occupy the mental space. For example, users can download browser plugins to contribute idle bandwidth, and currently, a certain project has reached 2.5 million terminal users, many of whom are non-native cryptocurrency users. Other sectors such as eSIM, WiFi, and in-vehicle data are similarly connected to users’ daily lives.

DePIN Investment Framework

) Direction Selection

Intuitively, 5G and wireless networks belong to the big market, while in-vehicle data and weather data are small markets. When assessing, it is necessary to examine whether the demand side is a rigid demand ### such as 5G( or the intensity of demand. Due to the huge scale of traditional markets such as 5G, even if DePIN can only capture a small part of it, the market capacity is quite considerable in terms of the volume of the crypto market.

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) Product Assessment

According to the research report, the DePIN model is particularly suitable for industries with high capital requirements, high entry barriers, obvious monopoly patterns, and underutilization of resources. Evaluating product-market fit mainly focuses on two points:

On the supply side, does DePIN achieve functionality that traditional methods cannot, or have significant advantages over existing solutions in terms of cost, efficiency, etc., such as in a certain map collection project within the map data track? Traditional map collection has three major problems:

• Relying on professional fleets and manual labeling, the costs are high and scalability is poor.
• Mainstream Street View services have a long update cycle and low coverage in remote areas
• Centralized map service providers monopolize data pricing power

Decentralized map services collect data from users during their daily driving by selling dash cams, integrating data collection into everyday activities through a crowdsourcing model. Token incentives guide users to prioritize allocating resources to high-demand areas.

On the demand side, the products provided by DePIN must have real market demand, preferably with a strong willingness to pay. Taking map services as an example, map data can be sold to companies in autonomous driving, logistics, insurance, and municipal departments, and the key demand has been validated.

Hardware Considerations

Regarding hardware, the timeline can be summarized as “manufacturing—sales—distribution—maintenance”.

#Manufacturing
Is the project party designing and manufacturing hardware on their own, or are they utilizing existing hardware? For example, a certain wireless network project provides both its own hotspots and supports the integration of existing WiFi networks. Computing and storage-related DePIN projects can directly use existing graphics cards and hard drives.

#Sales
Transparent pricing means that users will calculate the payback period based on potential returns. A household mobile hotspot is priced at $249, and a vehicle-mounted data collector is priced at $1,331.

#Distribution
How to handle distribution involves many uncertain factors: logistics timeliness, transportation costs, and the cycle from presale to delivery, etc. For projects targeting the global market, improper distribution design can significantly slow down project progress.

#Maintenance How do users need to maintain their hardware? Some equipment may be subject to depreciation or wear and tear. The simplest example is a browser extension, where users only need to download and install it without any other action; Or, like some hotspot devices, they can run continuously with a simple installation. Involving technologies such as solar power can be more complex.

In summary, the simplest model is to directly use the existing network bandwidth, without manufacturing and distribution, users have no threshold to participate, and there is no need for sales, which helps the project to quickly expand the network in the early stage.

Each direction of the project has different hardware requirements, but the hardware is related to the degree of friction in the initial adoption. The less friction in the early stages of the project, the better, and as the project matures, moderate friction can enhance user retention and bonding. Start-up teams need to control the selection of hardware paths and resource investment, and move forward gradually rather than overnight.

Imagine, if each link in the “manufacturing - sales - distribution - maintenance” process is fraught with difficulties, then unless there are strong and highly certain incentives, why would users want to participate?

Token Economy Design

The token mechanism is the most challenging part of the DePIN project. Unlike other domains, DePIN needs to incentivize network participants at an early stage, so it often needs to launch a token early in the project. This topic deserves a separate case study, which will not be expanded on in this article.

Team Composition

In an ideal team configuration, the founder needs at least one person with each of the following backgrounds: first, someone with extensive work experience in traditional companies in the field, responsible for the implementation of technology and products; second, a native talent in cryptocurrency who understands token economics and community building, able to distinguish between the preferences and mental model differences of crypto users and non-crypto users.

( Other Factors

Regulatory issues cannot be ignored, for example, collecting road images and data in certain countries and regions may involve sensitive issues.

Summary

Cryptocurrencies have yet to see a true “breakthrough” application in the current cycle, and we still seem far from large-scale user adoption. While many crypto applications offer short-term incentives to attract users, these are difficult to sustain. However, the economic benefits derived from DePIN at the foundational level may replace traditional infrastructure on the user side, achieving sustainability and large-scale adoption of applications.

![The Alpha opportunity is still there, starting from scratch to sort out the investment logic of DePIN])https://img.gateio.im/social/moments-b54a427186f2fa1d2d5a0b7e03bfabe6###

Although the combination of DePIN and reality makes it have a long development cycle, there have been successful cases that show the dawn of the industry: a decentralized mobile network cooperates with a traditional telecom giant, and user equipment can seamlessly switch to the national 5G network to ensure signal continuity. Earlier this year, the project announced the deployment of hotspots in Mexico City and Oaxaca with global telecom giants to begin its South American expansion plans. The telecom company’s Mexican subsidiary has about 2.3 million subscribers, and the partnership connects these subscribers directly to a decentralized 5G network.

In addition to the above discussions, DePIN has two unique advantages:

1. Compared with traditional monopolistic large enterprises, DePIN deployment is more flexible, and the token model can align incentives within the ecosystem. The traditional telecom industry is usually dominated by a few giants and lacks the impetus to innovate. In rural areas, for example, traditional operators lack the motivation to deploy due to low return on investment and long cycle times due to dispersed populations. With a reasonable token economy design, the network can be encouraged to deploy in areas with few hot spots. The same logic follows for decentralized map services to provide higher incentives in data-scarce regions.

2. DePIN can bring positive externalities. Cases such as AI companies purchasing internet data, autonomous driving companies acquiring street-level map data, and low-cost data plans demonstrate that DePIN can transcend the cryptocurrency field, creating value for real life and other industries, and feeding back into the entire ecosystem through token economics. In other words, the DePIN token is backed by real value rather than a Ponzi scheme.

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Of course, DePIN also faces many uncertainties, such as the uncertainty of time cycles brought about by hardware operations, regulatory risks, due diligence risks, and so on.

In summary, DePIN is the investment track we will focus on in 2025, and we will continue to produce more research results related to DePIN in the future.