The ICN team had the chance to glimpse into Messari’s research treasure chamber with their latest report, DePIN Tokenomics Part 1, and it’s packed with insights. But first and foremost, let’s do a little refreshing of our DePIN vocabulary flashcards:

What Are DePINs? 

Decentralized Physical Infrastructure Networks (DePINs) are networks that incentivize contributors with tokens in exchange for supplying network services. Messari classifies DePINs into two main categories based on the type of underlying resource they procure:

Digital Resource Networks (DRNs): These include services like cloud computing (e.g., Impossible Cloud Network, Filecoin) and video streaming (e.g., Livepeer). Think of DRNs as platforms where hardware providers, typically individuals operating data centers, contribute their resources to power the network.

Physical Resource Networks (PRNs): These include networks like 5G wireless (e.g., Helium, XNET) or street mapping (e.g., Hivemapper). To join these networks, contributors need to purchase specific physical devices—for instance, Hivemapper’s Bee Dashcam or the iconic Helium Hotspot we’re all familiar with.

Now that we’ve brushed up on our DePIN basics, let’s dive into 2 of the key learnings from the report and explore what makes tokenomics in this space so fascinating.

Learning 1/2: Proprietary Layer-1s vs. General-Purpose Base Layers

Running your own L1 is expensive and is going out of style. Before 2022, most DePINs built their own Layer-1. After 2022, most started using existing platforms like Solana, IoTeX, and Polygon instead. There’s also a big difference in token issuance rates based on the underlying infrastructure. Protocols running on proprietary Layer-1 blockchains issue tokens at more than twice the rate of those using general-purpose base layers like Solana or Polygon. According to the report:

“The median token incentive issuance rate is over three times as high for protocols running their proprietary Layer-1s versus those using general-purpose base layers.”

This makes sense—proprietary Layer-1s come with higher operating costs and one could argue that new ecosystems need more lucrative arguments why someone should invest in them.

Learning 2/2: Skin-in-the-Game Mechanisms

Every DePIN relies on contributors having “skin in the game.” But how they achieve this differs based on the type of network. If the hardware works for different use cases and platforms, you typically need to stake the protocol's token. But if you buy a (physical) node, you don’t need to stake because that hardware is usually locked to one system.

• Digital Resource Networks (DRNs) primarily use a Stake-for-Access model, where participants must stake tokens to provide services and earn rewards.
• Physical Resource Networks (PRNs) typically use a Node-Purchase model, requiring contributors to invest in specialized hardware to participate.

As the report puts it:

“When staking: the DePIN contributors have a vested interest that the protocol does well for their locked investment to do well. When running dedicated nodes: the DePIN contributors have a vested interest in the protocol's success since the node investment typically has little use outside the protocol.”

Thanks for reading! We hope you found this article insightful. If you'd like ICN to keep exploring the DePIN ecosystem, feel free to let us know. Why do we think this matters? DePINs are changing the way networks function, and reports like Messari's help us understand why. One thing is certain—DePINs are here to stay! A big thanks to Messari for their fantastic research. You can check out the full report here.

https://messari.io/report/depin-tokenomics-part-1-token-distribution-models-incentive-mechanisms-token-trends-and-more