Are DePIN Projects Truly Blockchain-Based?
DePIN, short for Decentralized Physical Infrastructure Network, brings a fresh perspective to the crypto world. It’s often described as the “Internet of Things with a blockchain twist.” DePIN projects aim to manage physical devices that gather and exchange data, such as wireless networks and energy grids. Despite the excitement, there’s skepticism about how much these projects actually depend on blockchain technology.
These networks generate large volumes of data. To handle this, DePIN requires high-throughput blockchain systems. Yet, even the most efficient blockchains can only record a fraction of the data generated. Helium, a notable DePIN project, switched from its own blockchain to Solana in April 2023. Solana offers fast transaction speeds but still falls short for DePIN projects needing real-time computation.
The Onchain vs. Offchain Debate in DePIN
Shuyao Kong, co-founder of MegaETH, argues that most DePIN projects aren’t fully onchain. Ethereum’s Layer 2 solutions claim to process up to 100,000 transactions per second, which may suffice for some DePIN needs. But why do DePIN projects label themselves as blockchain-based?
Many DePIN projects use blockchain more as a marketing tool. Completely onchain applications are often inefficient and expensive. Thus, a hybrid model is common: computations occur offchain, with results recorded onchain.
Offchain Computation: The Backbone of DePIN
Zhe Wang, CEO of DEPHY network, explains that IoT devices fall into two categories: sensors and executors. Sensors gather data without the need for instant transmission, while executors act on commands and require low latency. While sensors can tolerate delays, executors cannot—making offchain computation vital.
For instance, a delay in turning off lights can be inconvenient or dangerous. In contrast, a day’s delay in calculating step counts is acceptable.
Blockchain’s Role in DePIN Projects
Given that offchain computation is preferable for both sensors and executors, what role does blockchain play in DePIN?
Wes Levitt from Theta Labs points out that blockchains help coordinate numerous devices in a trustless manner. While computation is largely offchain, blockchains aid in decentralizing infrastructure by incentivizing participation through token rewards.
In DePIN marketplaces like CUDOS and Akash, users can contribute resources and earn tokens in return. This system creates an economic incentive for participation and fosters a sustainable ecosystem.
Evaluating Blockchain Networks for DePIN
Ethereum is a major blockchain that could support DePIN, but its transaction speed is inadequate. Layer 2 solutions like Base and Arbitrum handle more transactions, yet still face limitations.
New developments may enhance scalability. MegaETH, an upcoming Layer 2 chain, promises 100,000 transactions per second. Sui, another contender, claims to handle up to 300,000 transactions per second. However, real-world performance often falls short of these theoretical limits.
Solana remains a fast layer-1 blockchain, averaging around 3,000 transactions per second. Its upcoming Firedancer client aims for 1 million transactions per second. Still, even this may not suffice for DePIN’s demands.
The Future of DePIN: Balancing Onchain and Offchain
Jeremy Frank from Autonomys Network suggests that no blockchain can currently support true real-time transactions for DePIN. Many projects use “blockchain” as a buzzword to attract investors, but they often split their architecture between onchain and offchain components to enhance scalability.
Future DePIN projects will likely adopt modular architectures tailored to specific needs, whether for real-time processing or data storage. While DePIN stretches blockchain capabilities, success will hinge on balancing onchain and offchain processes effectively.
