Most DePIN projects barely even use blockchain: True or false?

DePIN — short for Decentralized Physical Infrastructure Network — is one of the hottest new narratives in crypto. However, the extent to which current DePIN projects actually rely on blockchain networks is an open question.

Dubbed the “Internet of Things (IoT) with a blockchain twist,” DePIN projects connect and manage physical devices that collect and exchange data, like wireless networks, energy grids or storage systems.

These networks produce huge amounts of data, so connecting DePIN via blockchain requires high-throughput chains — and even then, blockchains can only record a small component of the data.

Helium, one of the best-known DePIN projects that connect wireless networks, ditched its own chain to move to Solana in April 2023, which is one of the fastest options currently available. However, even Solana’s efficiency falls short for DePIN projects that demand real-time computation capabilities.

Are DePIN projects really onchain?

“Existing DePIN use cases are, in fact, not fully onchain,” Shuyao Kong, co-founder of the soon-to-launch MegaETH, tells Magazine. The Ethereum L2 aims to process 100,000 transactions per second which may be enough for some DePIN projects.

So are DePIN projects just labeling themselves with “blockchain” as a marketing ploy to attract venture capitalists?

Some might be. But the bigger issue is that at present, fully onchain DePIN applications are inefficient and costly. So projects employ a hybrid structure, conducting offchain computation and recording results onchain.

A hype cycle’s X+crypto formula. (Qiao Wang,305 Capital)

Kong said on a recent podcast that a Solana co-founder had approached her about a fitness tracker that needed real-time biometric data computations, which Solana can’t do. Kong claims forthcoming Ethereum L2 MegaETH will have that capacity.