How DePINs May Disrupt The Trillion-Dollar Telecom Industry
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Decentralized physical infrastructure networks, or “DePINs,” have become a hot topic in the crypto industry, driven by their potential to address real-world challenges in data and energy.
DePIN networks work by integrating with physical infrastructures. Blockchain technology and token incentives are leveraged to ensure more efficient business operations.
According to research firm Messari, “The DePIN addressable market is currently valued at $2.2 trillion and has the potential to reach $3.5 trillion by 2028.”
In DePIN
Tokenization is A feature, not THE feature
Tokenization enables DePIN projects to build out the decentralized infrastructure
The feature is the ability to use and deploy that infrastructure!
Token value capture decreases with increasing network size. And that’s… pic.twitter.com/Ri9hjm1pT2
— Corey | TMI (@_0xNinja_) June 25, 2024
Therefore, it shouldn’t come as a surprise that a number of DePIN projects have emerged. For instance, DePIN for the telecommunications industry is quickly gaining traction.
DePIN Solves Challenges for the Telecom Industry
Data from The Business Research Company shows that the global wireless network infrastructure industry is valued at $3.1 trillion. This number is expected to reach about $3.9 trillion by 2028. Yet unfortunately, the telecommunications industry faces a number of ongoing connectivity and technology challenges.Carlos Lei, CEO and Co-Founder of Uplink, told Cryptonews that the connectivity market today is broken. “With billions of devices in need of proper connectivity and numerous organizations seeking cost-effective and reliable solutions, the traditional methods of infrastructure deployment are financially unsustainable,” Lei said.He added that leading telecommunication companies face significant capital expenditures (CaPEX) in deploying connectivity infrastructure. “This is often without clear projections on when they will achieve a return on investment,” he said. DePIN seeks to solve challenges related to telecom connectivity by taking a decentralized approach. For example, DePIN projects may allow people to buy antennas to set them up to provide network connectivity. This takes power away from centralized network providers, while creating additional coverage. Domenic Carosa, Co-Founder and Chairman of Hivello – a DePIN network aggregator – told Cryptonews that one of the core problems DePINs solve is the reduction of redundancy and inefficiency in infrastructure development. “By decentralizing the ownership and management of telecommunications infrastructure, DePIN can lead to more optimized resource use, lower costs, and improved access in underserved areas,” Carosa said.
A Closer Look at DePIN for The Telecom Industry
While DePIN is relatively new, several projects are already showcasing its potential applications within the telecom industry.
Amir Haleem, CEO at Helium Mobile and Nova Labs, told Cryptonews that Helium Mobile is on a mission to disrupt the wireless telecommunications industry with a decentralized, community-built and owned wireless network, making affordable, unlimited mobile services a reality.
🌐Introducing Helium Mobile Wi-Fi!
Now, your Helium Mobile Hotspot can offer secure, free public Wi-Fi alongside building Helium Network coverage. Perfect for businesses like cafes, restaurants, and retail stores wanting to provide that extra value to customers while being part… pic.twitter.com/25i7lCxnpU
— Helium Mobile ☁️🪿🥚 (@helium_mobile) February 27, 2024
In order to achieve this, Helium Mobile allows individuals to run “mobile hotspots.” Anyone, everywhere is able to become a network operator, creating coverage for themselves and their community.
“Anyone can do this,” Haleem said. “The hotspots need to connect to an ethernet cable, and a power source. It’s a pretty simple set up. There is also a builder app to help onboard the hotspot and manage it. Users also need to set up a wallet app.”
For context, Helium Mobile is enabled by the Helium protocol, which is built on Solana. This is a decentralized network of WiFi hotspots and CBRS nodes owned and deployed by a community that creates coverage for Helium Mobile subscribers.
According to Haleem, the Helium Network calculates data traveling through each Hotspot. Token rewards – known as “Mobile rewards” – are then provided to the operator based on their services.
“In a very real way, individual members of the public own and operate these telecommunication hotspots (which function akin to small cell towers) and obtain rewards that are based directly on their own contribution to network coverage and use,” Haleem explained.
Helium Mobile statistics show that over 14,000 hot spots have been deployed, with user sign-up exceeding 97,000.
DePINs for Telcos Gains Traction
1/ Happy to announce our round, lead by @hiFramework , and to finally be able to announce the world what we're building at @uplink_xyz https://t.co/C6iaVrPd6x
— Carlos Lei Santos (@CarlosLeiSantos) April 11, 2024
DePIN platform Uplink – which just raised a $10 million funding round led by Framework Ventures – is also using decentralization to solve connectivity challenges.
Lei explained that Uplink incentivizes users to deploy connectivity infrastructure in areas where enterprises and consumers require it for their systems.
“This phase is referred to as ‘Stage 1’ or the ‘marketplace stage,’ where individuals are encouraged to provide connectivity for specific players in designated regions,” he said.
Once infrastructure is deployed, Lei noted that Uplink enables telecommunication companies to offload their existing networks.
“This is known as ‘Stage 2’ or the ‘offloading stage,’ he said. “By leveraging the deployed infrastructure, telcos can alleviate the strain on their current networks, ensuring better service and coverage.”
Lei shared that Uplink is currently in discussions with several telcos, and is on the verge of piloting and deploying solutions for its “Stage 2.” The company also plans to launch a token later this year.
Challenges May Hamper Adoption
While the promise of DePIN for the telecom industry is huge, a number of challenges may hamper adoption. For instance, Haleem pointed out that DePIN requires telecom operators to change their infrastructure. Yet this may be problematic, as he noted that many of these enterprises have not switched operations in years. “The concept of building coverage that you and your community can use is an entirely new thing for people and there is a learning curve,” he said. “In addition, as with any other new type of infrastructure, there is a chicken and egg calculus. The network needs to grow for people to use it more, but the people using it more will also help it grow.”This in mind, Haleem noted that a challenge involved with DePIN is scaling networks, while proving to consumers that it’s usable. “Because a decentralized network is built by individual deployers and made up of thousands of individual nodes, it inevitably takes time to build,” he said.
Telefónica and @novalabs_ launch a pilot of @helium mobile #hotspots in Mexico. This project offers an improved service for customers expanding coverage and allowing the offload of mobile data traffic on Helium's wifi network.
⬇️Keep reading ⬇️
— Telefónica (@Telefonica_En) January 24, 2024
Haleem shared that Helium Mobile recently announced a partnership with the Spanish telecommunication company Telefónica.
He believes that this collaboration, along with other upcoming partnerships will increase Helium Mobile’s network usage.
“Ultimately, I think we have the capabilities to create a truly converged network that provides virtually ubiquitous coverage by building out decentralized network infrastructure with these sorts of partnerships,” Haleem remarked.
Incentivization May Not Be Enough
Lei pointed out that another challenge in DePIN is that many organizations believe that incentivizing infrastructure deployment alone is sufficient. However, he noted that the results of this approach are not solving the main problems involved with connectivity. “DePIN companies must guarantee that this infrastructure is deployed in locations where there is genuine demand for connectivity,” Lei said. He added that DePINs must create incentives to ensure that proper signal quality, network stability, and minimum network requirements are met. “Connectivity simply needs infrastructure to be deployed where it is needed with consistent enterprise-grade signal quality,” he said. In order to solve this challenge, Lei shared that Uplink utilizes advanced systems and tools, such as a coverage map, surge mechanism, and reliable 3-Proof system (Proof of Delivery, Proof of Density, and Proof of Liveliness). “These measures ensure that deployed infrastructure meets the required standards and serves areas with actual connectivity needs, thus providing reliable and high-quality network services,” Lei explained. This is an important point to consider. Ariel Seidman, Founder and CEO of DePIN mapping platform Hivemapper, told Cryptonews that it is critical for DePIN projects to design their tokenomics in a way that is sustainable, providing a path to balancing supply and demand. Yet he believes it is even more critical for DePIN networks to focus on building useful products, rather than over indexing on the supply side of the network.“Contributors are crucial customers, but they are only one side of the network,” Seidman said. “We need a few breakout successes in the DePIN category driven by commercialization to show the path forward.”
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