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. Like in our previous blogpost, let’s begin with a small tutoring session. 

What’s the Burn-and-Mint Equilibrium (BME) and what’s a Node-Purchase Model? 

The Burn-and-Mint Equilibrium (BME) is a tokenomics model used to help balance the supply and demand of tokens in decentralized networks, especially in networks where there is a need to control inflation and maintain sustainable token values.

Here's how it works:

Burning: A portion of the tokens in circulation is "burned," meaning they are permanently removed from the supply. This is typically done by “destroying” the tokens = sending them to an address where they can't be spent.

Minting: At the same time, new tokens are "minted" or created to meet demand. This means the network can issue new tokens when more services or resources are needed, but it does so in a controlled way.

The idea behind BME is to keep the token supply balanced with the actual demand for services or network participation. When demand increases (e.g., more people using the network or contributing resources), the system can mint more tokens to reward contributors. But by burning tokens as well, it prevents inflation from getting out of hand, ensuring the value of the token remains stable over time.

For example, if a decentralized network is getting a lot of use, the burn-and-mint model helps prevent the token’s value from decreasing too much by controlling the number of tokens in circulation. The goal is to find an equilibrium where the right amount of tokens are available to meet the needs of the network without causing too much inflation or deflation.

It's a balancing act that aims to create a sustainable and scalable ecosystem for decentralized projects, which is why it has become more popular, especially in Physical Resource Networks (PRNs) like Helium and Filecoin.

Node-Purchase

So what’s the news? Burn-and-Mint models are gaining traction and Node-Purchase models are on the rise as well. This is good since it's indicated a broader trend toward sustainable token economies and monetized demand translation.

The Burn-and-Mint Equilibrium (BME) model has seen a significant rise in adoption, especially among PRNs. Before 2022, only 11% of DePINs used BME. Fast forward to 2023, and the number jumped to 25%! A lot of this is driven by the growing number of PRNs, which make up 50% of the DePINs launched since 2022, compared to just 16% before.

So, why is this shift happening? The BME model helps balance token issuance with the demand for services, making it a sustainable option for growing decentralized networks. This model, which first caught attention with Helium, is now being adopted by other DePINs like Filecoin and Render to help ensure long-term stability of their network.

Node-Purchase Models Are on the Rise

As more PRNs launch, there’s also been a surge in node-purchase models. These models allow contributors to purchase specialized hardware (like nodes) to participate in the network. This approach has gained popularity post-2022, with 58% of DePINs launching after 2022 offering node-purchase options, up from just 11% before.

In the past, buying a node often meant you were helping validate services or providing the service itself (like WiFi routers). Today, some DePINs have taken this to the next level by selling nodes even before launching their tokens. This helps generate early support from the community and ensures that the network has active participants from the start. For example, networks like Aethir and Impossible Cloud Network are leading the way in selling nodes as a way to align incentives with early adopters.

More Burn Mechanisms in Action

Along with BME, other types of burn mechanisms are also becoming more common. In fact, the number of DePINs using burn mechanisms has jumped from 24% pre-2022 to 62% post-2022. A burn mechanism helps control the supply of tokens by burning part of the incoming fees or buying back tokens and removing them from circulation.

This trend is evident in major DePINs like Filecoin, which introduced a burn mechanism inspired by Ethereum’s EIP-1559 in 2022, and POKT Network, which began using burning as part of their decentralization efforts in 2023.

What’s Next for DePIN Tokenomics?

We’re seeing lots of exciting innovation in DePINs, and it’s clear that the tokenomics behind these networks are evolving rapidly. Here are some key trends to keep an eye on:

• New Incentive Designs: Some DePINs are experimenting with staking and NFTs to distribute rewards. For example, DAWN Network uses a staking model to unlock rewards based on a specific area. This allows participants to drive market efficiency by focusing on local needs.
• Pre-Launch Node Sales: More DePINs are selling nodes before they officially launch their tokens. This helps lock in early support and creates a strong foundation for the network to grow. Examples include Aethir and icn.global, who use this strategy to ensure that early adopters have skin in the game.
• Upgrades to Token Models: DePINs are also adjusting their token models. For example, Helium revamped their token structure to include sub-DAOs, while Akash 2.0 introduced a community tax to drive demand for services.

As DePINs continue to grow, the key to success will be refining incentive mechanisms to meet the needs of both supply- and demand-side participants. For operators, it’s important to keep tweaking these models to ensure sustainability. For investors, getting involved—whether through staking, node purchases, or active participation—can provide both financial and strategic benefits.With these new trends in tokenomics, the future of DePINs is looking bright. As more projects like Impossible Cloud Network continue to push the envelope, one thing is clear—DePINs are reshaping the way decentralized networks work, and they’re here to stay.Thanks again for reading, and a big shoutout to Messari for their insightful research. To dive deeper into DePINs and their tokenomics, check out their full report here.