Leveraging Blockchain to Meet Soaring AI Demand: The Rise of DePIN
Riding the AI Wave with Blockchain
As the market buzzes with excitement over artificial intelligence, a new trend is emerging that merges blockchain technology with AI’s growing needs. This trend centers around a burgeoning crypto sector known as Decentralized Physical Infrastructure Networks (DePIN), which aims to revolutionize how we source and use computing power.
What is DePIN?
DePIN projects are designed to decentralize and democratize infrastructure, including computing power, storage, and more. These projects are typically deployed on fast, low-cost blockchains like Solana and Cosmos, offering an alternative to traditional centralized providers.
The Potential of DePIN in AI
Kellen Blumberg, a data scientist at crypto data platform Flipside, emphasizes that DePIN projects can deliver faster, cheaper, and more secure services compared to centralized providers. Given that the demand for computing power required to sustain AI doubles approximately every 100 days, equating to a 1220% annual increase, the potential for DePIN is enormous.
Meeting the AI Demand
DePIN projects aim to reduce costs for various services, including the computational power necessary for AI training. Unlike centralized giants like Amazon Web Services or Google Cloud, DePIN projects leverage a decentralized network of participants who contribute idle computer hardware, such as GPUs. This shared pool of computing power can then be rented out for AI training, scientific research, and other processing-intensive tasks.
Success Stories in DePIN
Render Network, a Solana-based decentralized compute provider, focuses on media rendering and AI. It currently boasts a market value of over $3.8 billion and has accumulated a network equivalent to approximately 33,000 hours of high-end GPU use since its inception in 2017. Similarly, the Cosmos-based Akash Network claims to offer computing power at prices up to 70% lower than centralized providers.
The Role of Tokens in DePIN
Both Render and Akash have issued tokens that have seen substantial gains recently. Render’s RNDR token rallied 127% since the start of the year, while Akash’s AKT is up 113%. However, Chris Newhouse, a DeFi analyst at Cumberland Labs, warns that many DePIN protocols struggle to align economic incentives effectively.
The Controversy Over Tokens
Newhouse questions the necessity of native tokens, suggesting that payments could be made in stable currencies like US dollars instead. Tokens are often used to attract initial users, but sustainability remains a challenge. This situation mirrors crypto airdrops where projects reward early users with tokens, but many of these projects fail once the initial incentive fades.
Ensuring Sustainability in DePIN Projects
To avoid pitfalls, Blumberg advises caution with projects that rely heavily on high rewards or token trading without demonstrating genuine utility and adoption. Sustainable growth, rather than speculative trading, should be the focus for DePIN projects.
Conclusion
The fusion of blockchain and AI through DePIN projects offers a promising solution to the soaring demand for computing power. By leveraging decentralized networks, these projects can potentially provide more cost-effective, scalable, and secure infrastructure. However, the success of DePIN will depend on creating sustainable economic models and avoiding the pitfalls of speculative token trading.
