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Market Updates

Understanding The DePIN Economics

13 Nov 2024

Introduction

DePIN, or Decentralized Physical Infrastructure Network, incentivizes users to share personal resources to a decentralised network for token rewards, with the goal to establish an expansive infrastructure network that encompasses decentralised storage space, bandwidth, cloud computing, energy, and more. DePIN tokens are integral to network operations, facilitating governance, service payments, and staking, all of which contribute to the network's growth. The token incentive structure could promote a great resource inclusion, leading to improved service coverage and quality. Enhanced services attract more clients, which in turn increases demand and utilization of DePIN's infrastructure. With well-structured tokenomics, the initial challenges of cold start can be effectively addressed, fostering a thriving ecosystem in what is known as the DePIN flywheel.

A well-structured tokenomics model can effectively address the initial challenges of cold start, creating a robust foundation for a thriving ecosystem within the DePIN flywheel.

DePIN Flywheel

In comparison to traditional physical infrastructure, DePIN offers several advantages, including horizontal scalability, community control, and cost-efficient operations. This article will explore the key sectors and projects within the DePIN landscape, including Storage (Filecoin, Arweave), Computing (Render, io.net, Akash, Aethir), AI (Bittensor, Artificial Superintelligence Alliance, Virtual Protocol), and others (Helium, Livepeer, Hivemapper). Finally, we will assess blockchain network that are suited for developing DePIN projects.

Storage

The storage network is derived from the incentive layer of the IPFS protocol and holds the potential to evolve into the data availability layer of modular blockchains. The storage room can be utilized for both cold and hot storage, depending on the specific design of the network. However, many storage projects are still in the nascent stages of ecosystem development, often leading to oversupply in the market.

Filecoin

Filecoin is one of the largest decentralized storage networks, built on top of the peer-to-peer InterPlanetary File System (IPFS) protocol. Unlike traditional storage solutions that rely on specific devices or cloud servers for data access, IPFS enables permanent referencing of content, independent of location. Filecoin adds an incentive layer through its native cryptocurrency, FIL, encouraging reliable storage and access to data. Introduced by Protocol Labs, founded by Juan Benet (the creator of both IPFS and Filecoin), Filecoin is particularly suited for cold storage. As of October 2024, Filecoin has produced approximately 4.28 million blocks and has a network storage capacity of 4.7 exbibytes (EiB). A total of 1,837 data clients have uploaded roughly 2.4 EiB of data. The network currently supports 2,050 active miners who collectively pledge around 149.7 million FIL, representing 7.49% of the total token supply.

Filecoin Historical Events

Filecoin introduced Filecoin Plus to incentivise quality data storage, Station to improve retrieval rate, Saturn for content delivering, Storacha for hot object storage, new Curio Storage operation platform for SPs and etc. Filecoin didn't just stop at improving the network, innovation such as permanent storage solution by Lighthouse, file-sharing tool by Fileverse, backing NFTs for games and music as well as dozen more applications. In addition ,the introduction of the Filecoin Virtual Machine (FVM) has transformed Filecoin into a dual-layer network, combining a data availability (DA) layer with a smart contract layer and giving decentralised applications to build a DeFi ecosystem around their tokens. Partnership with IoTeX to be the preferred storage primitive of its DePIN Layer 1 also lays the foundational bedrock for the future of DePIN boom. With the launching of InterPlanetary Consensus (IPC), it allows dapps to have enhanced scalability and customisation by deploying via "subnet" or Layer-2 on top of Filecoin network.

As of October 2024, over 4,300 contracts have been deployed on FVM, with the TVL reaching an all-time high of 63 million FIL (approximately $273 million) in Q2 2024. However, the development of the Filecoin ecosystem remains heavily focused on the liquid leasing of FIL. Storage utilization on Filecoin is relatively low, at around 30%. Net deposits in the Filecoin network total just over $100 million, with more than 60% concentrated on GLIF, a liquid leasing protocol that facilitates lending and borrowing of FIL to balance supply and demand between FIL holders and miners. Filecoin lacks eyecatching innovation to differentiate themselves apart from other new DePIN stars.

FIL is the blood of Filecoin network, which is used for governance rights, storage payment, network gas, SP collateral and network incentive and boasts a $5.35 billion FDV, a low circulating supply of 30% and a high year-on-year inflation rate of 27%. More than 46.5 million FIL was mined from September 2023 to September 2024, while just 1.4 million FIL was burnt during the same period. 70% of the toatl FIL are vested in minting rewards and the remaining 30% of the toatl FIL are vested in Protocol Labs and Filecoin Foundation. In the minting rewards, up to 38.5% of the total FIL tokens are minted based on the network's performance, and 16.5% of the total FIL tokens are released over time with a six-year half-life schedule, meaning that 97% of these tokens will be released within approximately 30 years. From a supply and demand perspective, the supply of FIL is driven by newly minted tokens, which are subject to high inflation, while demand is primarily tied to storage service requirements. However, the ecosystem predominantly caters to miners, aiming to solve issues related to low capital utilization. As a result, the price of FIL is significantly influenced by miners.

Arweave

Arweave is a decentralized network providing permanent data storage and hosting services, secured by an open and decentralized network of miners who store and replicate data in exchange for rewards in the form of the $AR token. Arweave employs an innovative data structure known as Blockweave and a unique consensus mechanism termed Spora (Succinct Proofs of Random Access). This mechanism requires miners to connect each new block to the previous one and a randomly selected historical block, ensuring data scalability, redundancy, and stability. Users pay a one-time fee for permanent storage; however, only a portion of the $AR (16.67%) is paid to miners instantly for initial storage. The remainder (83.33%) is allocated to an endowment fund, which gradually releases the $AR over 200 years. This endowment mechanism incentivizes miners for permanent storage while reducing the circulating supply of $AR, thereby enhancing its value.

Arweave's Monthly Data Uploanded

Arweave’s permanent storage mechanism is particularly suitable for low-capacity but high-value data, such as historical documents and NFTs. As of October 10, 2024, the cost to store 1 GB of data is approximately 0.74868 AR ($13.60 USD), making permanent storage financially feasible for many projects. Additionally, the permaweb—a permanent, decentralized web built on top Arweave—consists of a modular set of interchangeable protocols, positioning Arweave as a potential data availability layer for decentralized applications. For instance, the parallel computing project AO allows numerous processes to be stored and executed on Arweave, with the possibility of airdropping $AO tokens to $AR holders. Despite these advancements, monthly data uploads remain relatively low, at approximately 6.5 TiB (with storage fees totaling around 5,000 AR). Although AO will launch governance token $AO, $AR can't capture the ecosystem value of AO directly.

The $AR token serves multiple functions, including governance rights, fee payments, and mining rewards, with a FDV of $1.18 billion and a circulating ratio of 99%.

Summary

Comparatively, Filecoin is primarily optimized for hot storage, boasting the longest operational history and the largest storage capacity—approximately 7,000 times greater than Arweave. However, the circulating ratio of $FIL is just 30% but the year-on-year inflation rate of $FIL is as high as 27%. The organic demand of $FIL is insufficient and the price of $FIL is mainly influenced by miners. In addition, the development of the Filecoin Virtual Machine (FVM) ecosystem has not met expectations. Besides liquid leasing projects for minting, there is a lack of standout projects within the ecosystem.

In contrast, Arweave is designed for cold storage, almost in full circulation. Under the endowment mechanism, great demand for Arweave service will reduce AR's circulating amount and make Arweave into deflation. While the demand for Arweave is still relatively modest now, its ecosystem demonstrates greater innovation, particularly with projects like AO, which add a compelling dimension to its appeal.

Computing

Compared with the storage track with oversupply, the computing track as a whole shows the characteristics of relatively higher demand, whose demands are concentrated on 3D rendering, AI model training, etc. CPU networks are suited for general computing, while GPU networks are better suited for parallel computing. Although different projects have different business modes and target clients, where organic demand comes is the most consistently important thing.

Render

Render Network is a distributed GPU rendering platform built on Solana, enabling users to either provide or utilize computing power for complex cloud rendering and other computational tasks, facilitated through the use of $RENDER tokens. Within the network, Creators and Node Operators serve as the demand and supply sides of the computing ecosystem respectively. A multi-tiered pricing strategy, which accounts for factors such as speed, cost, security, and node reputation, is employed to efficiently match GPU supply with demand. Render Network is conceived and supported by OTOY, Inc., the parent company and creator of Octane Render—an industry-leading professional rendering solution used by Hollywood studios and artists, which has earned an Academy Award for its contributions to the field.

Relying on OTOY's powerful 3D rendering techniclals and good relationship with great tech companies, Render has true and diverse application scenarios: First, Octane Render's customers can directly access Render through subscription accounts, and all tasks that can be GPU-rendered with Octane Render can be rendered on Render Network, which constructs the most basic and solid demands. Secondly, Octane X can be applied to Apple's powerful M series chips which are used on iPad and Mac. In the future, Octane X also has the possibility to expand to Vision Pro, whose mass adoption may turn Render's decentralized GPUs into computing source supplement for spatial computing. Third, partnerships with Stability AI and Endeavor makes optimized Stability AI’s models can run at cost on the Render Network’s peer-to-peer pool of consumer GPUs, and integration into FEDML (an open-source framework for federated learning), Beam (a gaming network), io.net(another decentralized GPU network) also has the similar effect. In September 2024, the proposal of integrating Nosana (a decentralized AI inference network whose mainnet will be launched in January 2025) as Render's next compute client was approved and on the roadmap. Render Nodes can finish compute jobs from Nosana and post the result back to Nasana, which will furtherly increase Render Network's demand.

$RENDER is the governance token with fees payment, computing incentives and governance rights, boasting a $2.81 billion FDV and a circulating ratio of 74%. After switching to burn-and-mint equilibrium(BME) mode, $Render can be considered as a commodity asset: Burn amount depends on the demands of Render Network and mint amount will be adjusted as per the growth requirements of the network, which means strong demand of Render Network will make $Render become a deflationary asset and increase its price. But between January 8, 2024, and September 10, 2024, the burn amount as a percentage of emissions stands at only 3.83%, with the total burn amount relative to the total supply at a mere 0.02%. This suggests that $Render is still experiencing inflationary pressure and that its adoption in practical applications remains insufficient.

BME of Render

io.net

io.net is a decentralized GPU network built on Solana, designed to aggregate idle computing resources from data centers, miners, crypto projects (such as Render Network and Filecoin), and individual consumers to meet the growing demand for computational tasks, particularly in the fields of AI and machine learning (AI/ML). The network operates using the $IO token, which facilitates payments and incentivizes participants. The founding team, with a background in developing institutional-grade quantitative trading systems for both the U.S. stock market and the cryptocurrency market, leveraged its expertise to secure $30 million in Series A funding. The round was led by Hack VC, with participation from Multicoin Capital, Solana Ventures, OKX Ventures, Aptos Labs, and others.

io.net utilizes decentralized clustering frameworks such as Ray and Kubernetes, which enhance control over more than 300,000 verified GPUs, providing users with flexible access to GPU resources. The platform allows for the rapid deployment of clusters within 90 seconds at a fraction of the cost of traditional cloud providers, such as AWS, offering savings of 20–30%. Furthermore, io.net employs a multi-layered, cohesive structure and Reverse Tunnels technology to ensure scalability, reliability, and secure access to remote computing resources. Notably, io.net abstracts the GPU lending and management process through three primary components—IO Worker, Explorer, and Cloud—simplifying the user experience.

However, the network currently faces challenges in utilization rates, with only 2% of its clusters being fully operational. The majority of actual computing tasks are concentrated on high-performance GPUs, such as the Nvidia H100 and A100 models, while consumer-grade GPUs like the RTX 4090 experience little to no workload. This discrepancy is primarily due to insufficient upload and download bandwidth. Despite some high-end configurations reaching 10 Gbps, this bandwidth remains 2-3 orders of magnitude lower than what is required for large language model (LLM) training. As a result, consumer-grade GPUs are mainly limited to small-scale distributed training or other tasks which don't have high requirements for parallel computing. In fact, high performance GPUs are often also configured high bandwidth (For example, RTX 4090 has a high bandwidth with 1Tbps) to maximize the potential of computing power, and data centers even connect GPUs through specific hardware connections to achieve high bandwidth, which is almost impossible for decentralized GPUs. Additionally, issues such as instability (with many failures occurring on consumer-grade devices, primarily Nvidia RTX and Apple M-series) and the low proportion of $IO rewards allocated to consumer-grade devices further hinder broader adoption.

$IO is the governance token with governance rights, fees payment, computing incentives, value accrual and staking revenue, boasting a $1.50 billion FDV but just a circulating ratio of 15%. 37.5% of $IO will be emitted and paid to Suppliers and their Stakers as Rewards, which follow a disinflationary model and are released to Suppliers and their Stakers hourly for 20 years. Revenues generated by io.net will be used to repurchase and burn $IO. Nodes and $IO holders can stake their $IO to ensure the integrity of the network and earn rewards. The inflation rate will be 7.03% in 2025 and decreases by about 12% per year until 2044.

IO's Tokenomics

Akash

Akash is a Tendermint-based blockchain built using the Cosmos SDK, providing decentralized cloud computing(CPU and GPU) marketplace. The Akash Network comprises four key components: Akash Providers (Supplier), Akash Network (Platform), Akash Tenants (Demander) and $AKT(money and equity). The typical leasing process is as follows: Akash Providers provide their computing resources, run Kubernetes clusters and bid to host deployments; Akash Network, which utilizes DPoS consensus algorithm, turns them into standardized resources, provides reverse auction marketplace and stores records; Akash Tenants describe requests for wanted deployed containers, name prices and select providers. $AKT is used to match the supply and demand, and staked to secure the network. Cofounders are mainly senior specialists and serial entrepreneurs from cloud infrastructure and software engineering, helping Akash raise $2.80 million.

Among all major DePIN projects, Akash has the most CPUs (about 20,000). CPU's utilization rate is between 15%-70%, now at a low level of 20%. Despite the historically high number of available CPUs, daily revenue are only around $4,000, indicating that demand for computational resources from real-world applications is still insufficient. This may be attributed to the fact that large-scale computing tasks are generally more efficiently handled by GPUs, which excel in parallel processing. To address low utilization and meet great demands of AI/ML training, Akash entered the GPU leasing market in 2023/08, and has about 500 GPUs now. However, Akash's GPU count is negligible relative to io.net and Aethir ,and collaboration with ThumperAI (generative AI startup) to train a foundation model on Akash GPUs also received results not up to expectation. AI model training conducted on Akash Network’s decentralized cloud platform is still early.

CPU Utilization Rate of Akash

$AKT is the governance token with governance rights, computing incentives, fees payment, fees discount, value accrual (token burn) and staking revenue, boasting a $995 million FDV, a circulating ratio of 63.92% and 13.00% inflation rate. AKT 2.0 introduces take fees, which is extracted from payments made by tenants to service providers, functioning as a network tax to secure the Akash network. Take fees paid by $AKT can enjoy fees discount (20% for $USDC but only 4% for $AKT). Providers also pay make fees when making liquidity available to the marketplace. Take fees, make fees and inflation rewards to inject into the Incentive Distribution Pool. Tokens in the Incentive Distribution Pool will be redistributed to $AKT stakers, providers, community, developers and $AKT burn to incentive ecosystem contributors. Now, the community pool is about $30 million(4.7% of circulating supply), $AKT's staking APR is 15.39% and over half of circulating supply is staked.

AKT 2.0

Aethir

Aethir is a distributed cloud computing network, aggregating more than 43,000 enterprise-grade GPU chips from node operators and GPU providers and allocating them to users who need on-demand cloud computing resources for the AI, gaming, and virtualized compute sectors. The Cofounder team is comprised of senior professionals from game, edge computing, blockchain industry, helping Aethir raise $9 million in Pre-Series A from Sanctor Capital, Hashkey, Merit Circle, and CitizenX and other famous VCs, and about $140 million from selling 91,000+ checker node sales.

There are three important categories of miners in the Aethir Network: Containers, Checkers and Indexers, respectively responsible for virtual endpoints where cloud-based applications are executed and rendered; maintaining the integrity and performance of Containers; and optimizing the match between users and Containers. Containers and Checkers function as major computing power and service integrity, so they have to stake $ATH in operation and face slishing risk, while earn most of revenue. Within Aethir Network, 20% service fee, paid by users at $ATH, is charged on transactions between customers and suppliers, while the remaining 80% is paid to Containers. Additionally, Aethir allocates 50% of the total $ATH supply as incentives for Containers and Checkers to maintain the ecosystem's decentralization and sustainability.

Aethir Business Model

With 3000+ and increasing number of H100/A100 positioned worldwide in most global regions to provide streamlined flows of premium GPU resources and overcome, Aethir concentrates more on the ToB enterprise market, mainly cloud gaming, AI, cloud phone and edge computing, and gains annual recurring revenue of over $36m.

Cloud Gaming: Partnership with Well-Link Tech and Meta48, the largest cloud gaming company with 200 million users and an extended reality giant; Partnership with XPLA to unveil a $10 million Ecosystem Grant Program for Gaming Projects; Unite and GameCentric also joined Aethir Network.
AI: Aethir announced Airdrop Swap with io.net for $50 million to cooperate on marketing and community. In addition to the supply of H100 chipsets on demand, Aethir also provides Aethir Earth, a bare metal GPU cloud service optimized for AI applications.
Cloud Phone: Aethir launched the first Web3 cloud phone APhone, whose computing-heavy features are facilitated by Aethir's decentralized cloud infrastructure, has about 46,000 users worldwide and offers a customizable unique Web3 App Store, AppNest.
Edge Computing: In addition, Aethir also sold 32,000+ high-performance edge computing device Aethir Edge ($1299) and reserves up to 23% $ATH for Aethir Edge users. The Aethir Foundation has also announced that each Aethir Edge device can get extra daily rewards of 100 $ATH per day for each Aethir Edge device from November 2024 to mid-2025, which means daily earning is about $8 and the payback cycle is about half a year calculated at $ATH's current prices. To decrease selling pressure, edge rewards are subject to a vesting schedule: 30% immediately, 30% after 90 days, and the remaining 40% after 180 days. Buying Aethir Edge and hedging $ATH at the same time may be a good mining chance. In addition, Aethir announced the mutual node swap with Sophon's ZK chain, and the Aethir community can simultaneously earn ATH staking rewards on the staking platform and Sophon Points (SP) on Sophon's platform by depositing stATH, which will bring $ATH holders airdrop expectation.

$ATH is the governance token with governance rights, staking revenue and fees payment, boasting a $2.35 billion FDV and a circulating ratio of 9.66%.

Summary

Many computing projects, such as Render, io.net, and Aethir, face common challenges, including a low circulating supply, high inflation rates, and a lack of token utility. In contrast, Akash demonstrates relatively healthy circulating ratio and inflation ratio.

When comparing these projects, Render is primarily focused on 3D rendering, positioning itself as a solution for augmented reality (AR), virtual reality (VR), and spatial computing. io.net, on the other hand, functions more as a toC GPU leasing marketplace, though it struggles with latency issues that hinder large-scale parallel computing applications.

Akash stands out with its strong tokenomics, and the introduction of AKT 2.0 brings additional utility to the $AKT token. However, Akash is more focused on CPU resources rather than GPUs, which has contributed to its smallest market capitalization among 4 projects.

Aethir, more like a toB GPU leasing marketplace, has secured most extensive collaboration, most funding, and offers the most promising roadmap among 4 projects. It is poised to build a comprehensive smart computing ecosystem, but its financial operations remain somewhat opaque.

Artificial Intelligence (AI)

Decentralised AI protocols harness decentralized computing power, protocols leverage blockchain’s decentralized structure to deploy, train, and manage AI models. This approach aims to prevent control by single centralized entities, transforming AI into a public good. It empowers smaller AI researchers, fostering innovation in one of the century's most impactful technologies. Currently, Crypto AI leads in activity, with 33.9% of crypto builders engaged, yet it represents only 1.1% of the total crypto market cap—highlighting the sector’s early-stage potential.

Decentralised AI System

Unlike centralised systems where the models are close-source, unverifiable and having sole control by a single entity. Decentralised AI systems open-source the network, letting different models from all around the world join and compete to provide the most accurate and efficient inferences, while being rewarded for subsidizing them to fine-tuning the models and getting better by day. Example protocols include Bittensor and Spectral Labs.

Bittensor

Bittensor is the iconic protocol in this space. Bittensor is built up of miners, validators and subnet owners. Each subnet owner is responsible for an AI application and designs an incentive economics to reward the validators and miners to run a sustainable and efficient application. Miners are the "brain" of the network, providing their respective AI models to compete to provide an effective inference. Validators are the "Quality Controller" of miners' output. Quick example to understand this harmony, a subnet owner designed the "ChatBPT" subnet, miners provide their respective LLMs to provide the answers users inquiry and validators will inspect the answers given by miners (make sure its accurate and appropriate) before showing them to end users.

TAO is Bittensor native token. TAO adopts Bitcoin 21 million coins maximum supply with a halving cycle of every four years. TAO is expected to be inflated by 37% from the block reward before the first halving, which is expected to be around November 2025. The circulating supply is 7.7 million as in October 2024, with 77% of the circulated tokens being staked. Minimum 100 TAO is required to register a subnet. In reality, subnet owners are required to have an average 2,000 TAO or $1.1 million for the netuid registration cost. Netuid registration costs will be locked and returned when the subnet is deregistered. Subnet owners are eligible for 18% of the subnet emission, while validators and miners are both eligible for 41% emission respectively. Subnets are subjected to deregistered if scored last among other subnets after 7 days immunity period once activation. Maximum top 64 validators (except root network and subnet 1) with minimum staking requirement of 1,000 TAO will be selected to rank the miners' performance and be rewarded according to their stake. The UID registration costs paid by validators and miners will be recycled and be used in the new emission batch, effectively delaying the date of the halving event.

Subnet Registraction Cost

Despite TAO having a fair-launch in 2021, the token distribution didn't appear to be widely distributed today due to low participation rate in earlier stages. The stake amount of the top 10 validators represents 60% of the TAO circulating supply. Secondly, miners were accused of exploiting the emission by generating sub-par inference results and validators failed to detect such exploitation. With increasingly smart individuals attracted to Bittensor including AI-focus ventures and Bittensor mining companies, Bittensor rollout solutions such as stake-based consensus for utility scoring to further align validators' interest with the performance of miners. Additionally, Bittensor also introduced Dynamic TAO to address the monopolistic tendencies in the root network by introducing the non-tradable "subnet tokens" or dTAO for each subnet and TAO holders are able to buy the dTAO of their favourite subnet, which causes the particular subnet dTAO prices to increase. The emission rewards will be allocated according to the price of each subnet's dTAO. By leveraging an open market approach to determine emissions, this opens up the opportunity to increase the number of subnets dramatically, which potentially brings significant impact to TAO token. Lastly, Bittensor plans to bring EVM-compability smart contracts to the network, bringing the DeFi applications such as liquid staking, lending, stablecoin and AI-powered user-facing protocols.

Decentralised AI Marketplace

A decentralized AI marketplace enables the deployment and operation of AI models while providing developer tools for seamless integration. Protocols in this space typically offer computational resources and an incentivized economic framework to encourage decentralized contributions for on-chain training and fine-tuning. Notable protocols in this category include the Artificial Superintelligence Alliance and Zero1 Labs.

Artificial Superintelligence Alliance (ASI)

ASI was introduced in March 2024, by joining forces between Fetch.ai, SingularityNet, Ocean Protocol and Cudos (proposed in September 2024 to provide decentralised computational to the Alliance). ASI aims to develop decentralised AI technologies from four different streams. First, ASI focuses on neutral-symbolic LLMs that minimise hallucinations, decentralising training and inference with verifiable data sources. Second, OpenCog's Hyperon, a cognitive architecture that connects LLMs and other DNNs to carry out efficiency and practical functions. Third, creating a time-series prediction machine, World-World Model, by using the decentralised data fed from Ocean's Data Farming program. Lastly, similar to the second stream, ASI also aims to develop "algorithmic chemistry" for integrating different AI agents to carry out practical tasks.

ASI token is merged from FET, AGIX, OCEAN and CUDOS with different ratio. ASI could be utilised within all four alliance protocols, including governance rights in these protocols, as payment token to create, deploy and operate autonomous agent on Fetch's Agentverse, stake to curate AI reputation and publish AI services in marketplace on SingularityNet, use as a payment token to purchase data services from Ocean Predictoor, and to buy compute capacity on Cudos Intercloud for AI computing. Currently token migration of AGIX, OCEAN, CUDOS to FET is live, phase 2 of converting FET to ASI will soon be announced. FET $3.5 billion FDV has been the dominance of the crypto AI agent sector in 2024, with Spectral as the closest contestor with $1 billion FDV.

Fetch.ai Network 30-Day Active Accounts

The AI agents market is projected to grow at a robust CAGR of 44.8% by 2030, according to MarketsandMarkets(1). The valuation of ASI or FET would be highly dependent on the growing demand of AI agents in the ASI ecosystems. As the leading protocol in the Alliance, Fetch.ai network has approximately 6,700 monthly active users on the network, 30 active agents active on Agentverse today with a combined 950 interactions. The recent AI-agent-meme hype could potentially ignite growth to attract proper attention and capital to bolster the AI agent implementation technology.

Decentralised Initial AI Offering

Crypto industry is ideally positioned to leverage capitalism in establishing co-ownership of AI, fostering a fair, community-driven framework for ownership and governance. By aligning profit incentives with collective interests, this approach democratizes AI innovation and ensures equitable value sharing. Crypto’s decentralized structure supports a sustainable, inclusive model, advancing capitalism-driven co-ownership in the evolving digital economy. Leading protocols include Ora Protocol, ANKR's Neura and Virtual Protocol.

Virtual Protocol

Virtual protocol launched its TGE in December 2023 on Ethereum and subsequently deployed on Base in March 2024. Virtual aims to reshape the landscape of non-player characters (NPCs), virtual companions and AI-generated content (AIGC) by introducing the concept of co-owning AI agents via Initial Agent Offering (IAO).

Virtual Agents could be divided into two types, IP agents and Functional agents. IP agents are agents that service as virtual companions with different fine-tuning from community contribution. Luna is the most well known AI agent in Virtual Protocol and its market cap increased by approximately 2,000% in a week after the market's buying spree of GOAT token, which is endorsed by a separate AI agent on X called Truth Terminal in October. However, LUNA is more than an AI-memecoin. It represents part of the ownership of Luna and revenue generated from Luna will be used to buy back LUNA tokens and burn them, which aligns the value accrued to the token holders if Luna's influence grows. Luna already has 537K followers in Tiktok together with 2 other AI agents Olyn and Iona. The Tiktok account is reportedly generated around $700 from streaming. Furthermore, Luna also has access to its own X account without human oversight with Sentient Mode v2.0, chatting on Telegram and transacts on Base autonomously.

LUNA's market capitalisation at the end of October

On the other hand, functional agents such as Generative Autonomous Multimodal Entities (G.A.M.E), which are designed for developers to create multi-agent stimulation to interact in the virtual environment autonomously by processing inputs, planning, reasoning, search algorithms, self-reflecting and generating responses while learning from past interactions with long-term memory processors. By continuously evaluating the outcomes of actions and conversations, GAME enables agents to refine their knowledge and improve their planning and performance over time. These features enable personalised generative in-game environments for different players, unique NPCs that have customised reaction according to players' decisions and interactions.

VIRTUAL is the base liquidity pair for every agent token created in IAO. Specific amount of VIRTUAL will be locked by the agent creator to create the initial liquidity pool for the new agent token. The pool will stay locked for ten years. In return, the creator will be eligible for part of the trading fees involving the agent token, providing sustainable incentives for creator to operate the agent. The tax rate is subject to reduction based on future conditions. VIRTUAL also acts as the payment token for anyone to use the agent permissionlessly via API and the paid VIRTUAL will be used to buyback and burn the agent token. After the protocol V2 upgrade, the top 3 agent liquidity pools will be eligible for 60 million VIRTUAL emissions in the first 12 months. LP holders can further delegate their voting power to validators to oversee the validation and approval of AI models before they are deployed, and rate contribution submissions using a blind-test Elo rating model. VIRTUAL is greatly tight with the demand of existing agents and future new agent creations, in order to encourage more LP delegations and new locked agent LP. Currently, there is approximately 15.2 million VIRTUAL or 1.5% of total supply in agent LPs with 306 agents being created.

Agents created in Virtual Protocol

Summary

In summary, decentralised AI systems rely on the increase of network subnets to increase the amount of tokens be staked and removed from circulating supply. The next innitiatives from Bittensor, dTAO and EVM implementation will lay the foundation for the network to drasmatically increase the subnet count. Decentralised AI marketplace rely on the AI deployed on the marketplace and organic demand from users/protocols, this typically raise a challenge as organic and sustainable agent demand is often low in current stage of crypto AI. Decentralised Initial AI Offering will easily attract market attention because of the speculative element. Protocol tokens designed to be locked for every new token offering, creating an environment for sustainable increase in new token offering or high organic demand on a specific AI model or agent is necessary to reduce the protocol token supply in circulation.

Others

Helium

Helium Network is a decentralized wireless network on Solana, which allows individuals and organizations to deploy and operate wireless networks through token incentivization. The Helium Network was founded in 2013 by Amir Haleem, Shawn Fanning, and Sean Carey, and raised a total of $364.80 million from a16z, Multicoin Capital, Tiger Global Management and other famous VCs. Beginning with IoT devices and the LoRaWAN wireless, Helium aims at covering more different communication networks and becoming a "network of networks", including LoRaWAN, 5G/WiFi, CDN, VPN, Energy and other Decentralized Network Protocols (DNPs).

Helium utilizes Burn-and-Mint Equilibrium (BME) mechanism to balance the supply and demand of native token $HNT. $USD-pegged and untransferable utility token Data Credits (DC, 1 DC= 0.00001 USD) is introduced in Helium ecosystem, which can only produced by burning $HNT and used to pay for network fees(including subnetworks). Helium emits predictable amounts of $HNT to increase its supply. When the demand for Helium network increases, more DCs are needed, thus more $HNT will be burned. When the amount of burn surpasses that of mint, HNT's circulating amount will decrease and intrinsic value will increase.

After the HIP-51 proposal, each DNP built on top of the Helium Network has its own subDAO with its own governance token (DNTs), and governs their own network parameters such as Proof-of-Coverage (PoC, a consensus mechanism that incentivizes Hotspot Operators to deploy Hotspots in underserved areas), mining rewards, and Data. Under the similar two-year halving schedule, HNT and each DNTs have fixed maximal supply, but subDAOs such as Mobile and IOT can adjust the conversion ratio between DCs and DNTs to control the emission of DNTs to balance DNTs' inflation and incentives of subnetwork's hotspots expansion. SubDAOs have relatively high independent financial autonomous decision-making power, but Helium network can still govern SubDAOs through $veHNT and the Treasury Reserve. Users can delegate $veHNT and impact that subnetwork’s DAO utility score, finally increased emissions for the DNP subDAO treasury reserve. Each subDAO treasury reserve allows for one-way exchanges between DNT and $HNT, with the exchange rate determined by the respective swap rate. This rate, typically undervaluing DNT, establishes a floor price for DNT, ensuring its value is preserved. Meanwhile, the premium or discount and trading volume observed in the secondary market reflects the true market value of DNT.

The Relationship Between Helium And subDAOs

Helium currently operates two distinct subnetworks: the IoT Network for LoRaWAN and the Mobile Network for 5G/WiFi, each with its respective native tokens—$IOT and $MOBILE. Despite Helium Mobile launching only in April 2021, it has rapidly become the primary revenue source for the Helium network. In contrast, the Helium IoT network has shown limited growth, with 98% of data credits (DCs) being burned within the Mobile subnetwork. Additionally, $MOBILE is trading at a 48.02% premium on the secondary market, and nearly half of $HNT emissions are allocated to the Mobile treasury. In contrast, for Helium IOT, after selling officially authorized hotspot equipment worth hundreds of $USD, , the daily trading volume of $IOT is only about $10,000, which indicates that the real utilization rate of IOT's hotspots is extremely low. The reason can be attributed to the nature of the IoT market, which is characterized by its broad coverage but limited data transmission.

Token	$IOT	$MOBILE
Utility Score	363,670,976,926	973,929,562,628
Active Hotspots	355,996	18,462
Onboarding Fees	$14,250,808.50	$194,010
veHNT delegated	598,502,751	624,148,052
DC burned(24h, 1 DC=0.00001 USD)	9,780,594	552,799,701
Treasury (HNT)	5,296,985	7,054,768
DNT Premium in Secondary Market	-2.49%	48.02%
MarketCap	$22,436,947	$60,879,276
Circulating Ratio	16%	44%
Volume(24h)/MarketCap	0.05%	4.08%
Propotion of $HNT Emissions to subnetwork treasury (%)	20%	50%

To drive increased adoption of IoT networks and facilitate expansion into the solar power production and battery energy storage markets, a new ENERGY subnetwork has been approved and is currently under development. This subnetwork will feature an ENERGY-capable gateway, enabling users to onboard energy resources from a diverse array of manufacturers. The subnetwork will activate and reward a decentralized ecosystem encompassing power generation, energy storage, and grid management. By leveraging the existing IoT infrastructure, the ENERGY subnetwork will transmit sensor data and support Dual Mining, allowing users to earn both IoT and ENERGY rewards.

In contrast, Helium Mobile has successfully expanded its application scenarios, offering a competitively priced and practical service. Through strategic collaborations with mobile carriers such as T-Mobile and Solana Saga, Helium has navigated regulatory challenges and gained a substantial user base. Helium Mobile executed an exclusive five-year partnership with T-Mobile, the leading 5G provider in the United States. Helium 5G network users can seamlessly switch to T-Mobile’s 5G network when signal strength is weak, while enjoying nationwide coverage and unlimited talk, text, and data for just $20 per month. The surge in Solana Saga smartphone sales, which includes a complimentary 30-day Helium Mobile subscription, further accelerates the growth of Helium Mobile. Users can earn $MOBILE tokens by sharing their location data, which can be used for paying phone bills or shopping in the Helium Mobile store. In 2024, Helium Mobile saw a significant increase in its deployment, with the number of Mobile hotspots rising over tenfold to 26,280, and the number of sign-ups nearly quadrupling to 118,767.

$HNT is the governance token with governance rights, service incentives, fees payment and staking revenue, boasting a $1.47 billion FDV and a 77% circulating ratio.

Livepeer

Livepeer is a decentralized video streaming network built on Arbitrum, offering both live and on-demand services such as transcoding and distribution. Founded in 2017 by software engineers Doug Petkanics and Eric Tang, Livepeer has raised a total of $52 million in funding from notable investors, including Northzone, Coinbase Ventures, and others. Additionally, Grayscale established a Livepeer Trust in March 2021. Despite early investment and growth, from the early half year after inception, its Shares Outstanding grew merely 10.7% in 3 years.

Within the Livepeer ecosystem, two key participants—Orchestrators and Delegators—play pivotal roles. Approximately 100 Orchestrators provide the computational power necessary for tasks like transcoding, bitrate conversion, and format packaging. They delegate these tasks to Transcoders in exchange for fees from broadcasters and rewards in the form of Livepeer’s native token, $LPT. Delegators, numbering over 3,600, support specific Orchestrators by staking $LPT tokens to maintain network security. Despite these operational roles, Livepeer’s financial performance raises concerns. The network is facing difficulties generating sufficient organic demand, which has hindered its ability to achieve sustainable cash flow. Meanwhile, the distribution of token incentives has led to significant token dilution, with an estimated annual revenue of $300,000 compared to $80 million in yearly token incentives—a disparity of hundreds of times.

Livepeer's Financial Statement

In response to the growing demand for generative AI technologies, such as those enabled by ChatGPT and Sora, Livepeer has launched Livepeer AI. This initiative aims to provide computational power for video developers seeking to integrate generative AI features, such as text-to-image, image-to-image, and image-to-video transformations. Currently in its Beta phase, Livepeer AI requires Orchestrators to pre-download models for faster response times. In the future, orchestrators will have the flexibility to load any diffusion model from platforms like Hugging Face on-demand, optimizing GPU resources as needed.

$LPT is the governance token with governance rights, service incentives, fees payment and staking revenue, boasting a $424 million FDV, a circulating ratio of 100% and a 45.9% staking rate. There's no cap on $LPT's circulation, and new $LPT is minted every round (5760 Ethereum blocks, about 22.4 hours). Livepeer increases the inflation rate by 0.00005% for every round when the staking rate is below 50% and decreases the inflation rate by 0.00005% for every round when the staking rate is above 50% to trade-off between network security and token liquidity.

Hivemapper

Hivemapper is a decentralized mapping platform built on Solana, offering precise geographic data for a wide range of applications, including navigation, urban planning, and geospatial analysis. The platform enables participants to contribute to the map by capturing high-quality street-level imagery using certified dashcams or smartphones, or by training Map AI through data labeling and editing. In return, contributors earn the native token, $HONEY, as rewards. For enterprises and developers, Hivemapper provides map data access via offical Map Features/ lmage APl or monitoring tool Scout. $HONEY also utilizes a BME mechanism to balance the supply and demand. To access this data, users are required to burn $HONEY tokens in exchange for map credits.

The Hivemapper project is led by a team of senior professionals with expertise in software engineering, 3D technologies, mapping, and related fields. This strong leadership has helped Hivemapper secure $21 million in funding from prominent investors such as Spark Capital, Multicoin Capital, and Solana Ventures.To date, Hivemapper has achieved 28% global coverage, mapping over 371 million kilometers of roads, with a primary focus on regions such as the United States, Canada, Europe, and East Asia.

$HONEY is the governance token with governance rights, service incentives, fees payment and staking revenue, boasting a $334 million FDV and a circulating ratio of 43%.

Coverage of Hivemapper

Which BlockChain to build DePIN projects?

Since 2022, numerous projects have chosen to build on Solana (e.g., Grass, io.net) or transition from Ethereum to Solana (e.g., Helium, Render). This shift is driven by several compelling factors:

Integrated infrastructure, rather than Ethereum's complex modular design, lowers the difficulty of development. Rust developers and performance-focused developer communities also help.
High throughput(TPS with 65,000 maximum and average at 3000+, 0.4 seconds for block confirmation) & low fees(0.00005 SOL per transfer). State compression for compressed NFTs, which follows the principle of Rollup, decreases the cost of minting 1 million NFTs to only 5.35 SOL and lowers the barrier for projects to identify the devices by DID.
Solana Authority's guidance and support. Solana Mobile, a subsidiary of Solana Labs, introduced Web3 phone Saga and collaborated with Depin projects like Helium to foster ecosystem cooperation and prosperity.

However, Ethereum Layer 2 solutions, such as Arbitrum, also improve throughput and reduce costs. Arbitrum can reach up to 40,000 TPS maximum, and emerging DePIN projects like Aethir are beginning to adopt Ethereum Layer 2 solutions for enhanced scalability.

Other Layer 1 blockchains are also focusing on DePIN’s mass adoption. IoTeX 2.0 has introduced a new DePIN Modular Infrastructure, providing a streamlined tech stack to significantly cut down build time, costs, and market entry resources. This modular infrastructure comprises three main layers:

Modular Security Pool (MSP): This layer serves as the security anchor, ensuring trust and stability across the DIM and Dapp/L2 layers. Providers can join the MSP by staking IOTX, with states periodically anchored to the IoTeX L1 blockchain.
DePIN Infrastructure Modules (DIM): Covering the entire tech stack, DIM provides solutions for hardware abstraction, connectivity, off-chain computing, and storage.
DePIN Dapps & L2s: This layer leverages various DIMs to enable project development.

IoTeX also supports DePIN developers by offering open-source resources(Public Goods), making DePIN development more accessible and cost-effective. On 10 October 2024, GOATs—Season 2 of Get Goated is here, bringing the biggest DePIN incentives campaign in history. By joining in, you'll earn a share of 100M IOTX (about $4 million) in rewards

Modular Design of IoTeX 2.0

Peaq is an EVM-compatible Layer 1 blockchain specifically designed to support DePIN. Leveraging parallelized block production, asynchronous validation, and an agile core time mechanism, Peaq achieves throughput of up to 10,000 TPS, while maintaining low transaction costs, approximately $0.00025 per transaction. Founded in 2017 by EoT Labs, which is focused on advancing a Web3-based IoT economy, Peaq has raised $43 million in funding from prominent investors such as Borderless Capital, DWF Labs, and HashKey Capital.

Peaq’s interoperability, powered by Wormhole, extends across multiple blockchain ecosystems, including Polkadot, Cosmos, Solana, and Binance. It also bridges to over 30 different blockchains, fostering enhanced liquidity and cross-chain connectivity.

A key feature of Peaq is its Peaq ID, which enables device identification. Additionally, ownership of Machine NFTs entitles holders to decentralized ownership rights, including access to a recurring revenue stream and potential appreciation of assets.

In the future, Peaq will introduce Machine Reputation System. Machine owners/operators stake $PEAQ to vouch for the reliability and quality of their machines' services and staked $PEAQ may be reduced ("slashed") when the machine underperforms or fails to provide a service. The potential for penalties (token slashing for poor performance) and rewards (additional tokens for good performance) further incentivizes machine operators to maintain high-quality services, and creates additional demand for $PEAQ.

Currently, Peaq supports over 120 DePIN projects across 18 industries, encompassing more than one million connected devices. In December 2023, Peaq, in collaboration with Bosch and Fetch.ai, introduced a cross-DePIN, all-in-one sensor device Bosch XDK device integrated with AI agents. The Bosch XDK device, which incorporates eight sensors, can collect and monetize 8 different data types, and provide optimization of rewards.

Peaq's mainnet and native token $PEAQ will be launched on November 12, 2024.

Conclusion

The mass adoption of DePIN is still in its nascent stages. Key challenges include a lack of organic demand and cash flow, poorly designed tokenomics, and significant selling pressure from unlock events. However, the tokenization of real-world assets is poised to reduce costs and lower usage barriers, facilitating the development of more permissionless marketplaces with improved liquidity. Innovations such as Modular DePIN and DePINFi are set to enhance the efficiency of DePIN implementation, making the process cheaper, faster, and more accessible.

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