Will DePIN Be a Web3 Killer Scenario?
This article was initially written by @laserding
Will DePIN Be a Web3 Killer Scenario**?**
This article was initially written by @laserding
arkreen is a green data-driven network for residential solar PV Panels, fueled by Token incentives and integrated with IoT plus Blockchain technologies. Solar PV Panels and IoT wireless technology adoption are both intensifying in consumer usage and demand. This article will explain why we believe the DePIN(Decentralized Physical Infrastructure Network) for residential solar PV Panels is primed to be a leading killer use case for Web3.
The tokenization of digital assets drives the Enthusiastic “buzz” around the true definition of Web3! Tokens were created to be vital incentivized tools, but if there is a lack of incentives, token growth will stall, causing the reversal in the vital incentives needed to grow the network. The diagram below (in various quadrants) illustrates both Low Internal Utility & High External Utility sectors. This is the sweet spot where “DePIN” resides and includes arkreen, Helium, DIMO, and HiveMapper; it's a hotbed of token incentivization.
The reasons are below:
- High Internal Utility quadrants detail use-cases with rigid consumer demand. It exists already and doesn’t require strong incentives to bootstrap, while discounts/cash-back are still effective for suppliers to stimulate occasional sales. Since the user base is substantial, in a high external utility use case, the network effect will gradually show its power and so does the increasing marginal utility for each user in the meantime. Markets here are usually more digitalized to generate a network effect. Users will wish to join the network to experience an expanding network euphoria and feeling of value creation, according to Metcalfe’s Law. It can be referred to as a Star market with reference to BCG Matrix https://pestleanalysis.com/bcg-matrix/ , although explained from a different angle.
- However, in a rigid demand scenario within the Low External Utility category, this market will eventually become a high-frequency consumer market, unable to brew a network effect in the future. Markets here are expansive, and cash flow is enjoyable. This is a cash cow market. Investing in them would be a good choice in today’s stagflation situation.
- Similarly, the Low Internal Utility+Low External Utility scenario turns out to be low-frequency consumer markets or niche markets. Sorry, this has matured into a dog market.
- For the fourth Low Internal Utility and High External Utility quadrant, this market does not exist. Due to its low internal utility and low-frequency interaction, it is pretty tricky to bootstrap and accumulate a massive user base without Strong and Sticky enough incentive. This is not a venue attractive enough for VC’s interest. Is it Mission critical for Fortune 500 firms? This means its potential network effect can never break ground and expand here, so no network income can be generated to spur the flywheel. A typical Chicken and Egg problem. So what are these markets?
Case studies can be found mainly in the IoT industry. Traditional business models failed in growing IoT sectors because companies from that environment cannot afford the sunken cost & time before reaching their tipping point. Companies such as IBM, GE, Google, Alibaba, and many other big names, saw the vast opportunity emerging from the IoT market over the past several years but ended up only experiencing a quagmire and unprofitable results. Giant multinational firms can’t just wave the magic wand expecting results. Hence now is the right time for DePIN to emerge.
So the key to unlocking this huge market potential rests with bootstrapping it from zero to one. I believe the tokenization of digital assets is Strong and Sticky enough to spin the flywheel into a network effect. These markets are tailored for public benefit and were mostly under NGO/charity-type operations before. Token incentivization, blockchain (DLT) technology, and smart contracts will transform this market into a substantially potent business model. For the Arkreen Network, incentivizing a token offering will attract solar PV Panel homeowners to join the network and stay with us long-term. Adding the blockchain with smart contract usage ensures low-cost coordination globally, including issuing rewards and orchestrating energy resources.
Long-tail residential renewable energy economic model resembles the characteristics of a typical DePIN marketplace. Currently, solar PV panels /storage batteries/intelligent thermostats are not yet experiencing rapid demand by homeowners and currently aren’t even interested in connecting equipment with any network. There is a network effect/benefit once renewable energy resource equipment is connected. This is an appealing attribute not just for the sake of homeowners. The truth is that the data from solar PV power generation, storage, and usage can help improve the public grid’s efficiency and reliability, especially in today’s volatile energy market. Therefore, how can we unite everyone and stick together for the inflection point when demand explodes? With reference to DePIN OGs, such as Filecoin and Helium, arkreen believes token incentivization will quickly help boost global interconnections. Additionally, through our hardware/software solutions, we will help arkreen network adoption by integrating our technology into different OEM brands’ equipment with the least amount of friction possible. Arkreen Network is forecast to connect more than one million global homeowners within three years and become the killer app in this killer DePIN scenario.
DePIN does enjoy a growing trend of physical decentralized network connectivity applications, even as the parameters for its qualification keep expanding. The future of DePIN has great network effect potential and no stickiness associated with upfront incentives.
Economically, DePIN is the most cost-effective method to build a global physical infra collectively.
Technically, DePIN is enabled by integrating physical things through a decentralized identity (DID) from the IoT world combined with Blockchain trusted on-chain data from the Internet.
The time to build the Green Ark has come, and with no need to wait for the great flood, the waves of excitement for the entire community to develop globally sustainable renewable energy resources are now!
By Arkreen on January 10, 2023.