The Key to Building Sustainable DePIN

Many of the smartest people in crypto seem to think that Decentralized Physical Infrastructure Networks (DePIN) will be among the first use cases to make crypto mainstream. They are predicting a tidal wave of growth, similar to NFTs or stablecoins before it.

That’s because DePIN can accomplish simply remarkable feats. By using crypto incentives to align millions of participants, DePIN projects can build net new products that simply weren’t possible before.

Ariel Seidman is the co-founder and CEO of Hivemapper, the fastest-growing mapping community in the world.

In December, Helium Mobile rolled out a $20-a-month unlimited cell plan nationwide powered by community-owned 5G hotspots. Render Network created a robust, permissionless ML cloud during the world’s GPU crisis in less than six months. And, my company, Hivemapper, mapped 10% of the world’s roads in less than a year. These things simply weren’t possible before DePIN crypto-economics.

DePIN is an exciting vision of the future, but for it to be more than a fad new projects must learn from the first movers in the space. The first wave of DePIN projects experimented with tons of different models, made lots of mistakes, and learned from them. Yet these learnings seem to have disappeared down the memory hole. And, absent that context, new DePINs risk creating a boom-and-bust cycle that would leave a black mark on the entire sector.

To help DePIN chart a more sustainable path, I’d like to share some of the most important lessons we’ve learned at Hivemapper along the way. More broadly, for anyone looking to participate in DePINs, these leanings are also critical points to understand when evaluating whether a DePIN project is likely to achieve long-term success.

The Static Rewards Trap

Tokens gamify rewards in such a way that encourages contributors to collectively build a product that’s greater than the sum of its parts. On the other side, usage of the product results in tokens being consumed.

To be sustainable, a DePIN project needs a sound strategy for generating supply, and, perhaps more importantly, genuine demand for the product. Without that, the demand for the token is purely speculative — a memecoin, not a useful infrastructure project that can impact the lives of billions.

With the right tools generating supply is the…