By Alex Tapscott
Last week I wrote a dispatch from South Africa, a country plagued by many seemingly intractable problems, including underinvestment in core infrastructure. In fact, during our stay, the electrical grid would periodically shut down, a process known as “load shedding,” to spare it from outright collapse. South Africans are exasperated and angry with a government that seems paralyzed by mismanagement and corruption. There seems to be no alternative. Indeed, historically the building out of new physical infrastructure was always the domain of governments or large well-regulated utilities that had the resources to commit billions of dollars and millions of man-hours to creating dams, bridges, electrical grids, wireless networks and so forth. But is there another way?
In Web3, and DeFi specifically, we have seen the emergence of decentralized models for problem solving. For example, decentralized exchanges like Uniswap automate the trading of cryptoassets using smart contracts. Decentralized lending pools connect borrowers and lenders. Decentralized stablecoin projects like MakerDAO self-regulate an asset worth more than $5 billion. And now, decentralized models are appearing in the world of physical infrastructure – called Decentralized Physical Infrastructure or DePIN, where networks use tokens as incentives to pool and coordinate the physical resources of many individuals, turning them into decentralized and resilient systems.
The best research I have seen on this area comes from Messari researcher Sam Kassab, who breaks down DePIN into four categories: cloud networks, wireless networks, sensor networks, and energy networks. He estimated that DePin’s total addressable market is more than $2.2 trillion growing to $3.5 trillion by 2028i. Already there are decentralized storage and computing networks like Filecoin and Akash Network that are competing on price in some areas with giants like Amazon Web Services, better known as AWS. Today, the decentralized wireless network Helium, which already has hotspots in 182 countries. The Render Network has rendered thousands of hours of Hollywood-grade computer graphics by knitting together latent GPUs owned by gamers and former Ethereum miners. These emerging models are just beginning to scratch the surface.
To be sure, there are limits to what decentralized models can achieve. I do not see a path forward for a decentralized model of building a highway, airport, railroad, hydroelectric dam, or nuclear power plant. But in the not-too-distant future, we could see a decentralized power grid made up of solar panels, or a decentralized transportation system made up of self-driving cars. Other kinds of critical infrastructure are more subtle. Consider mapping data. Military leaders understand that a map is a weapon and in the world of business, Google Maps wields a bazooka. Millions of businesses and governments rely on Google Maps’ API for mapping data. On this week’s DeFi Decoded we speak to Ariel Seidman, CEO and Founder of Hivemapper, which aims to use the power of the crowds and incentives to bootstrap a competitor that is community owned. Check it out!
1https://messari.io/report/using-crypto-to-build-real-world-infrastructure.
