Filecoin as a DePIN Prototype

The Decentralized Physical Infrastructure Network (DePIN) movement is re-architecting the Internet's physical and digital backbone.

DePIN creates scalable alternatives to centralized computation, storage, and telecommunications networks by leveraging Web3 concepts such as decentralization, cryptoeconomics, open source, and transparency.

DePIN is gaining traction because of large addressable markets in these areas and the ongoing boom in generative artificial intelligence – which has created a surge in demand for related services. Meanwhile, global semiconductor shortages have made it difficult for hardware suppliers to keep up with the uptick in demand. Combined, these trends have accelerated the search for alternative ways to meet pressing infrastructure needs.

Filecoin is one of the broadest-reaching DePIN projects on the planet. Since Mainnet launch in October 2020, Filecoin has become the leading protocol for decentralized storage. More than 3,000 storage provider systems around the world contribute 7.8 exbibytes of raw storage capacity to the network, and 2.1 exbibytes of raw data have been onboarded to the network.

Why DePIN Matters

Today, a handful of corporations control the majority of online storage and computing resources, creating vulnerabilities ranging from data breaches and data access to inefficiencies in pricing and distribution.

DePIN projects create alternatives to centralized models by using cryptoeconomic incentives to motivate individuals to allocate their unused resources and capital to the network. This creates a marketplace for the service that could only be offered previously by a large, centralized provider.

The bet is that DePIN alternatives will eventually be able to provide a similar, if not better, level of service compared to current centralized structures.

The benefits of decentralized networks are that they can provide enhanced security, privacy, and accessibility. These networks are more resilient in that they have no single points of failure or control, and they can offer accessibility benefits for “last mile” users to whom it might not be profitable for a large centralized provider to extend services.

Thus, DePIN’s core objective is one of moving away from closed, proprietary infrastructure controlled by centralized tech giants and toward open ecosystems governed by cryptographic protocols and community collaboration.

DePIN Adoption

What are the hallmark features of a DePIN network? There’s no single source of truth, but a typical DePIN network will include:

• A specific physical or digital resource offered, such as storage, compute, 5G, etc.
• The physical hardware necessary to provide that service (i.e. GPUs, wireless routers, or hotspots)
• A mechanism that incentivizes contributions to the network with token rewards. When deployed properly, these systems are a superpower for bootstrapping early network adoption.
• Suppliers who contribute unused or underutilized resources to the network
• Consumers who use the services provided by the network

Filecoin as a DePIN Prototype

Filecoin isn't just another storage solution; it's effectively a prototype version of the DePIN movement’s broader vision. Here's why:

Globally Decentralized: Filecoin operates with a global network of independent storage providers, eliminating reliance on centralized servers. Storage providers offer up their storage capacity, contributing to a vast, distributed network.

Token Incentives: The network utilizes the FIL token as its economic backbone. Storage providers earn FIL for storing and retrieving data and are subject to slashing in the event of downtime or harmful behavior. This creates a self-sustaining ecosystem where the incentives of all stakeholders are aligned.

Open and Accessible: Anyone can join the Filecoin network, whether as a storage provider, data client, or developer. This fosters an open and inclusive environment, which is crucial for realizing a distributed model for DePIN networks.

Innovation Mindset: The Filecoin community is constantly pushing boundaries, developing new features and functionality that enhance the network's capabilities and security. For example, the Filecoin Virtual Machine was rolled out in 2023 – bringing smart contract programmability and EVM compatibility to the network.

Real-World Impact: At the end of the day, a DePIN network needs actual users to be of any value. There are hundreds of real-world institutions storing data on Filecoin, including universities and research institutions, media properties, non-profit groups, leading Web3 projects like Solana, and more.

The Filecoin network is also uniquely positioned to empower other DePIN networks:

• Retrievals/Content Delivery Networks: Filecoin Saturn, Filecoin Station, and similar projects create decentralized mechanisms for retrieving and distributing data stored on the Filecoin network with lightning-fast data retrievals and minimal latency.
• Compute: Projects like io.net allow individuals to rent out GPU capacity and cloud computing resources, while companies like Expanso are bringing decentralized compute solutions to enterprise.
• Video Infrastructure: Livepeer is an open video infrastructure network for live and on-demand streaming.
• Sensors: WeatherXM is a community-powered weather network that rewards weather station owners and provides accurate weather services to individuals, businesses, and research organizations. The data collected by WeatherXM stations are stored on IPFS, allowing permissionless access.

Path Forward

The need for reliable decentralized infrastructure is becoming clearer every day. The explosive growth of artificial intelligence is pushing the limits of the current physical and digital resources that make up the existing backbone of the internet. Traditional storage models, computation software, and hardware providers are already having a difficult time keeping up with increased demand.

As AI continues to generate data and gobble up compute resources at an increasingly frenzied pace, DePIN networks like Filecoin will become an ever more important layer of the Internet. Adoption and development of these protocols is almost certain to continue given the level of interest in this area shown by the Web3 community right now.