According to Fortune, a crypto sector called Decentralized Physical Infrastructure Networks (DePIN) is gaining traction, with projects like Helium paying users to join its wireless phone network and Hivemapper for mapping. SkySafe, a drone startup with dozens of paying customers and an MIT-grad CEO, is a newer entrant using this model. However, the token-based payout systems are problematic, with evidence that Helium insiders took large portions of the token supply early on. The sector faces economic doubts, compounded by projects issuing multiple confusing coins, like Helium’s three new crypto currencies, even as stablecoins offer a simpler blockchain alternative. The article cites a $30 million hack at South Korea’s Upbit exchange and Paxos’s $100 million-plus acquisition of wallet startup Fordefi as other industry developments.
DePIN Dream Meets Token Reality
On paper, DePIN is a fantastic idea. Who wouldn’t want a more robust, decentralized internet or drone detection network owned by the people who use it? It’s the ultimate “power to the people” tech narrative. And look, some of these companies, like SkySafe, are clearly legitimate operations solving real problems. The fundamental concept of crowdsourcing physical infrastructure isn’t crazy. But here’s the thing: the crypto layer slapped on top often feels like a solution in search of a problem, or worse, a poorly disguised funding mechanism.
The Incentive Mismatch
Charlie Munger’s quote about incentives is perfect here. The current DePIN model incentivizes early founders and investors (hello, Andreessen Horowitz) to hype the token and sell, while the network participants—the folks actually providing the service—are left holding a potentially worthless digital coupon. We saw this with Helium’s “greedy gulps.” So you buy their overpriced hotspot, earn a tiny amount of a token that insiders are dumping, and pray the “network effect” magically creates value. It’s a brutal alignment of interests. Why would a drone enthusiast want to be paid in SkySafe’s FLYTE token instead of, you know, dollars? The utility is forced, and the economics are, as Fortune puts it, dubious.
A Path Forward Without The Hype?
It’s tempting to write the whole sector off, but that might be premature. Helium’s pivot to an actual, nationwide phone service with T-Mobile is a sign that some projects are trying to build real utility beyond token speculation. And the growing institutional push for tokenization of real-world assets, noted in the Fortune brief, shows the underlying blockchain tech has legs. The real question is whether DePIN needs its own volatile, complex token at all. Stablecoins or even straightforward fiat payments could achieve the same distributed network goal without the baggage. The model might survive, but the tokenomics might need to be left behind.
Crypto Winter Chatter
The other tidbits in the report paint a picture of an industry maturing in a bear market. Paxos buying a DeFi wallet firm for over $100 million signals where sophisticated money thinks the institutional action is going—toward decentralized finance tools. The Upbit hack is a grim reminder that security is a perpetual cat-and-mouse game, especially with state-sponsored groups like Lazarus lurking. And of course, the holiday schadenfreude from crypto-skeptic relatives is a tradition as reliable as turkey. You can almost hear the uncle asking, “So, how’s your magic internet money doing?” while economists like Steve Hanke troll on cue. It’s all part of the cycle. The real test for DePIN, and crypto at large, is building something that works so well that the jokes just stop landing.
