Daily Crypto, Finance, and Tech News Summary – December 13, 2023

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Welcome, and thank you for being part of the MyZucoins community! Let’s get into an interesting piece of crypto, finance, or tech news to stay ahead.

Connecting computer networks to physical infrastructure

Can Crypto Unlock A New Wave of Billion-Dollar Decentralized Physical Infrastructure Networks (“DePIN”)?

Decentralized Physical Infrastructure Networks (DePIN) are an emerging use case of cryptocurrency.

DePINs address existing issues in centralized infrastructure and could encourage the development of decentralized networks for GPUs (Graphical Processing Units, which often handle computer graphics and intensive AI computations), storage, energy, wireless, and GPS.

DePIN offers three core advantages:

  • Easier capital formation resulting from diversified risk of service providers
  • Immediate cash flow generation through bootstrapping incentives, and
  • The potential for both past and future profits to grow through token utilization

Services such as Filecoin and Helium have already demonstrated the potential of DePIN, and the recent surge in demand for compute power from the AI industry, has drawn renewed attention to the model.

Centralized infrastructure, while efficient, carries the risk of large cumulative losses, particularly during periods of underutilization or sudden drops in demand.

DePIN addresses these risks in a sophisticated manner.

DePIN breaks down the goals of any infrastructure service into individual components, effectively outsourcing capital formation to users who provide and sell services to other users.

The process is facilitated by the protocol which coordinates interactions, maintains supply-demand equilibrium, and incentivizes network quality and health.

DePIN also offers unique financial advantages.

For instance, it allows for more diversified risk, enabling faster network growth and innovation.

Providers are incentivized to join the network early, with the expectation of fast payouts, thereby accelerating network maturity.

The use of a native token aligns provider rewards with network growth, driving continued expansion.

Payment mechanisms are a crucial element of DePIN design.

An effective approach involves creating a “fixed, fiat-rate” price per unit of service, ensuring stability for both users and providers while encouraging long-term network adoption.

What are “fixed fiat-rates”?

When users pay for services, the protocol converts their fixed rate into the equivalent token amount based on the current price of the token.

Currently, several DePIN protocols, including Filecoin, Bittensor, and Helium, employ varied payment structures.

Simulations suggest that fiat-fixed rewards offer more price stability and a steady increase in price over time.

DePIN represents an ambitious goal that could revolutionize our infrastructure systems.

Each protocol will undoubtedly face unique challenges, but general best practices such as fiat-fixed pricing models can guide effective protocol design. Read more here.

More On This Topic:

Crypto as a source-of-truth?

Huge: US Federal Reserve Bank releases paper on real-world asset tokenization benefits.

Centralized vs decentralized digital networks: Some key differences.

The rise of noncustodial finance: A user-friendly bridge to cryptocurrency adoption?

AI needs to be decentralized for the same reasons money does.

The Potential Of Decentralized Physical Infrastructure Networks (DePIN) And Zucoin’s Splitchain?

DePIN, a new way to apply the technology behind cryptocurrencies, is an interesting look at addressing the issues with centralized infrastructure.

Zucoin’s SplitChain network resonates with DePIN’s mission, working to provide its own solutions to the issues of centralized infrastructure.

Splitchain, as do many blockchains, already have elements of DePIN within them.

But it’s important to look at ideas that are being explored further within the industry.

Centralized infrastructures, although effective, can result in significant losses during periods of underutilization or sudden demand decreases.

Decentralized infrastructures allow for open, permissionless markets to form, as participants can join and leave as they need.

DePIN aims to separate infrastructure into modular parts, delegating tasks and fees to service providers.

Zucoin utilizes the SplitChain network to simplify digital currency transactions into separate parts, delegating tasks to nodes that mainly store data caches from the results of these transactions.

Payment methods are vital in DePIN design.

Zucoin reinforces this with its capability to manage micro-transactions at 32 decimal places without in-built fees, to provide price stability for both users and providers.

Splitchain, as a network under development, is aiming to reach a point where it can be open-sourced and where each use case, such as DePIN, can be mapped onto the existing set of Splitchain capabilities by third-party developers as needed.

DePIN doesn’t just add another use case for cryptocurrency, but it also reshapes our perspective on what it can do to affect infrastructure and economic systems.

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Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.