Grayscale: Understanding how DePIN connects encryption and reality through five major cases

Author: Will Ogden Moore, Grayscale; Compiled by: Tao Zhu, Jinse Finance

Summary

• Compared to traditional alternatives, blockchain technology can more effectively direct capital to key physical infrastructure projects. These projects are referred to as decentralized physical infrastructure networks (DePIN), including wireless connectivity platforms, resources related to AI (such as computing and data), and other applications.
• DePIN assets represent non-speculative use cases for cryptocurrency adoption in the real world, as networks utilize tokens as economic incentives to facilitate the sharing of these resources.
• Solana is currently the leading blockchain for DePIN, as it has some of the top-ranked DePIN projects by market capitalization, usage, and adoption, including Helium, Render, and Grass. [1] Solana is the preferred DePIN blockchain due to its speed, cost-effectiveness, and reliability. Grayscale provides investment opportunities in Solana through the Grayscale Solana Trust for qualified accredited investors*.
• By market capitalization (48%), AI-related DePINs dominate this theme. [2] These assets include functionalities such as decentralized AI model training, computation, data fetching, and storage. Grayscale Research is particularly interested in emerging use cases for decentralized model training. The Grayscale AI Fund offers numerous AI-related DePIN projects to qualified accredited investors, including Bittensor (TAO).

In January of this year, President Trump and First Lady Melania Trump launched a memecoin on the Solana chain, which has recently garnered mainstream media attention. Although Solana is currently the dominant blockchain for memecoin trading [3], it is also a key host for a critical non-speculative use case in cryptocurrency: the decentralized physical infrastructure network (DePIN).

What is DePIN?

DePIN represents a unique emerging field: connecting blockchain with the real world. These physical systems include hotspot devices, wireless routers, physical Internet of Things (IoT) sensors, dash cameras, and GPUs to meet the demands for internet connectivity and computing resources. These devices provide value through the network in exchange for cryptocurrency token rewards. Unlike traditional models that rely on companies like telecom providers and data centers, DePIN is decentralized, distributing ownership and management across various independent participants. Within the Grayscale Research framework, DePIN assets belong to the utility and service cryptocurrency sector, functioning as application layer protocols running on smart contract blockchains like Ethereum or Solana.

DePIN Investment Outlook

As DePIN distributes physical nodes among different participants, it helps eliminate single points of failure and enhances the resilience, efficiency, and sustainability of the infrastructure. In this way, DePIN can foster innovation, promote equity, and provide greater flexibility while reducing operational costs. In summary, DePIN may have several key advantages compared to traditional centralized models:

• Eliminated the need for centralized intermediaries
• Reduce single point of failure and enhance the ability to respond quickly to demands.
• Eliminated management costs, and sometimes can lower consumer prices.
• Coordinate the incentive mechanisms among all participants (including resource providers and consumers).

Due to these advantages, DePIN is particularly relevant to industries with high capital requirements, high entry barriers, monopolistic dynamics, and underutilization of resources. The DePIN model is especially relevant in areas such as internet connectivity, data storage, and computational hardware used for AI development. These industries are worth trillions of dollars and include some of the largest companies in the world, from AT&T to Amazon (AWS) and Nvidia.

Therefore, we believe the opportunity is significant; if DePIN captures even a small portion of these markets, the potential impact could be enormous. Grayscale Research considers this outcome feasible because 1) DePIN offers a more efficient business model than traditional alternatives, and there are already examples of 2) DePIN successfully utilizing crypto incentives to scale network supply.

Today, we believe that Solana is the best way to seize this early and growing thematic investment opportunity, as the preferred blockchain for DePIN (which will be elaborated on later). However, we also believe that several DePIN projects have already demonstrated impressive levels of adoption and are becoming potential category winners.

The Current State of DePIN

DePIN assets have a wide range of use cases, including wireless connectivity and IoT (Helium), geospatial data collection (Hivemapper), decentralized video streaming (Render), and AI-related use cases such as computing networks (Akash). Today, AI-related DePIN projects dominate in market capitalization (Figure 1). In the following sections, we will focus on some of these emerging use cases and projects.

Figure 1: AI-related DePIN projects dominate by market capitalization

Helium — Wireless Connectivity and IoT

Helium, based in Solana, is one of the early pioneers of DePIN and a typical example of cryptocurrency usage in the real world. Helium enables individuals to monetize their unused network capacity in exchange for token rewards (HNT), thereby creating a decentralized hotspot network. Users access internet connectivity through this hotspot network at a much lower cost than traditional alternatives. Helium currently has over 129,000 mobile users, offering an unlimited data plan for $30 per month—well below the average of $144 per month in the United States. Notably, Helium recently announced its free mobile plan, which has limited data, text, and call time. [4]

Helium has also partnered with telecom providers such as T-Mobile. Through this partnership, T-Mobile users can seamlessly access Helium's wireless connectivity in high-traffic areas, reducing congestion and lowering costs. T-Mobile pays Helium's network based on usage, which has a deflationary effect on HNT supply. Thanks largely to the efforts of the business, Helium has provided wireless internet access to approximately 450,000 people and is expected to see an increase in overall network usage in the second half of 2025 (Chart 2). [5]

In addition to mobile connections, Helium also supports IoT devices, allowing sensors to transmit data through its decentralized network at a lower cost than traditional Wi-Fi solutions. Similar DePIN projects focused on IoT solutions include Geodnet, Hivemapper, and NATIX, which use IoT sensors in cars or homes to collect real-time geospatial data. This data is highly valuable for today's navigation services and can be used to improve the accuracy of AI systems like autonomous vehicles and robots. Notably, Geodnet has seen astonishing growth in its annual network fee revenue, reaching $3 million in January 2025 (an increase of approximately 518% year-over-year). [6]

Grayscale Research believes that if Helium can 1[7] continue to expand its usage and geographical coverage in its current collaborations with partners such as T-Mobile and Telefonica; 2) gain broader consumer recognition through its new free mobile plan, then its opportunities could be quite significant.

Figure 2: Helium network usage will increase by the second half of 2024.

![TblLH8xLlxGhScvr89wfhmoP43L9g57Y6xUIOUv3.jpeg])https://img-cdn.gateio.im/webp-social/moments-9c3275e5205e42fe66b22105d02f9a46.webp “7350449”(

Data Scraping - Grass

DePIN and AI use cases have significant overlap; one example is data collection. Large language models )LLM( require large amounts of high-quality data. Existing AI services like OpenAI and Gemini continuously access real-time and multimodal data through Bing and Google, providing them with a significant advantage over competitors. Grass aims to create a level playing field by enabling a new data collection model driven by token incentives.

Through a simple desktop application, Grass allows anyone to share their unused internet bandwidth in exchange for GRASS tokens. This bandwidth is used to scrape online data, which is then sold to AI companies and developers for model training. As a result, individuals on the Grass network can monetize their bandwidth, while AI companies can access data that would otherwise be trapped in silos.

Grass is one of the successful cases of DePIN, utilizing token incentives to guide supply, expanding its contributor base to 2.5 million nodes across 190 countries/regions, more than any other DePIN project. ) With such a large bandwidth, Grass has already scraped 20% of YouTube's data, totaling over 7000 TB of data (Chart 3). The Grass network currently provides data for AI labs such as Laion and Ontocord, and there may be significant room for growth if it can collaborate with some larger AI labs.

The competitors of this theme include Masa, which provides similar decentralized data scraping services for the Bittensor ecosystem.

Chart 3: Total amount of data collected by Grass since November last year

![O4jNkl1SAY8ibhQfE9tu2gfghc53rwD22jZRMKSe.jpeg][8]https://img-cdn.gateio.im/webp-social/moments-b93ebfecbe3584fca9eac10ed04dc1f4.webp “7350450”(

Artificial Intelligence Model Training - Prime Intellect and Others

After artificial intelligence companies obtain high-quality data, they can use this data to train LLMs (Large Language Models). One of the earliest use cases of DePIN (but still one of the most promising use cases) is decentralized training.

Training artificial intelligence models requires enormous computing power, typically centralized in data centers. DePIN is changing this situation. By distributing workloads across a global GPU network, these projects unlock decentralized training. Last November, Prime Intellect successfully trained a 10 billion parameter language model on 1 trillion tokens across five countries and three continents. ) Prime Intellect achieved this using their DiLoCo framework, which enables efficient training across loosely connected devices by significantly reducing communication requirements. [9] Competitors include Nous Research, which has built the Hermes open-source model and recently chose Solana as its blockchain. Another emerging player is Flock.io [10]FLOCK(, which enables financial companies like Animoca Brands and GSR, as well as healthcare companies, to train AI models in a privacy-preserving manner. While Prime Intellect and Nous Research have not yet launched tokens, Grayscale Research believes that some of these decentralized training protocols can lower costs and improve access for AI developers.

Artificial Intelligence Model Inference — Akash

Once an LLM is trained, it can be queried by consumer applications such as chatbots (e.g., ChatGPT). Each time a user asks ChatGPT a question, reasoning costs related to generating output are incurred. This reasoning process requires complex GPU hardware (such as NVIDIA H100) to perform the necessary computations. These resource-intensive requirements are often sold at high prices and long-term contracts, making it difficult for startups, researchers, or organizations without significant funding to afford. Meanwhile, many data centers that have these GPUs have underutilized capacity of up to 30%. )

Akash is a decentralized cloud computing GPU leasing marketplace. It enables GPU providers to monetize idle supply and allows consumers to access high-performance GPUs over flexible time periods, often at a lower cost than other options.

The number of GPU leases on Akash increased from fewer than 200 before November 2024 to over 600 in January 2025, including 398 NVIDIA H100 units. [11] As a result, Akash's network fee revenue increased to an annualized $4.6 million in January this year (Chart 4). [12] brev.dev (acquired by Nvidia), Venice.ai, ElizaOS (formerly ai16z), and UT Austin all utilize Akash GPUs. [13] Although Akash and similar decentralized inference platforms may not directly compete with major cloud providers, they have the opportunity to capture market share when serving startups, decentralized AI projects, independent researchers, and universities. Competitors of Akash offering similar services include io.net, Nosana, and Hyperbolic.

Figure 4: Accelerated growth of Akash fee income and GPU leasing in November 2024

![oQu1cHoXhu7IwYRx1ZbGxWhzXXEvQf6GAX7oEgoM.jpeg][14]https://img-cdn.gateio.im/webp-social/moments-1f3bcd1b3729eaf214f065ad89230260.webp “7350451”(

The largest DePIN asset by market capitalization currently is Bittensor (Figure 5), which is an AI-related platform we have previously covered in depth. As a platform for the “AI Internet”, it hosts subnets specifically designed to carry out tasks such as data scraping and model inference calculations (the two use cases mentioned earlier). Each subnet acts as an independent entity within the broader Bittensor ecosystem, and the operation of the Bittensor ecosystem is similar to a mutually connected DePIN network. On February 13, Bittensor underwent a significant upgrade called “Dynamic TAO”, which for the first time allowed individual subnets to be investable.

Chart 5: Examples of DePIN categorized by category, blockchain, and market capitalization

![MvHdOJFxvzUjGKwbmi9cdb3KxcAukQ2tZw5OiM0S.jpeg])https://img-cdn.gateio.im/webp-social/moments-6f51722ba76b37d65813564c0d6a50a3.webp “7350453”(

Solana as a Leading DePIN Blockchain

Although many DePIN projects choose to build their own independent Layer 1 blockchains (“application chains”), Solana has become the main blockchain for DePIN applications. By market capitalization, Solana is the leading DePIN blockchain and the preferred blockchain for many top DePIN projects (Figure 6). A notable example is Helium, which was initially built on its own Layer 1 and then migrated to Solana. Similarly, the video transcoding network Render, one of the larger DePIN assets by market capitalization, migrated from Ethereum to Solana in 2024. Other DePIN projects built on Solana include Grass, Hivemapper, io.net, Nosana, and more.

Grayscale Research believes that Solana is the preferred DePIN chain for several reasons. First, Solana is a fast and low-cost chain that allows DePIN projects to transfer value and operate efficiently for vendors and consumers. Second, among high-throughput and low-cost chains like BASE and SUI, Solana offers the greatest network security, liquidity, and historical record. Finally, by building on Solana rather than on a standalone Layer 1 application chain, DePIN project developers can focus on their core competencies at the application layer without allocating resources for scaling as well as infrastructure-level tools and maintenance.

Figure 6: By market capitalization, Solana is the leading blockchain of DePIN.

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Conclusion

DePIN may represent a promising frontier of blockchain technology, providing innovative solutions for global resource allocation. While some may claim that the crypto industry is limited to speculation or financial use cases, many DePIN projects offer compelling counter-evidence.

Most DePIN projects are under five years old, but some have already shown encouraging signs of adoption, including collaborations and services for some of the largest organizations in the world (for example, partnering with T-Mobile and Nvidia through brev.dev). Therefore, we are particularly excited about certain use cases, including internet connectivity, decentralized training, and networks for collecting social data or real-world physical video data for AI training. Additionally, the potential growth of DePIN in the future could create incremental tailwinds for Solana. As a leading DePIN blockchain, Solana provides the speed, cost-effectiveness, and security needed for these projects to thrive.

Ultimately, we believe DePIN may represent an attractive investment opportunity. Investors interested in early, high-beta DePIN investments might consider Helium or Bittensor, which are respectively focused on wireless/IOT and artificial intelligence investments. For those who prefer to hold large-cap stock options, we think Solana is the preferred investment choice that grows alongside DePIN.

Index of Terms

Internet of Things ) IoT (: The Internet of Things ) IoT ( refers to a network of interconnected physical devices, vehicles, appliances, and other objects embedded with sensors, software, and connectivity features, allowing them to collect and exchange data over the internet.

DePIN: A decentralized physical infrastructure network that uses blockchain and token rewards to incentivize individuals to contribute physical infrastructure resources.

Blockchain: A distributed digital ledger that securely stores records across a computer network in a transparent and tamper-proof manner.

Helium: A blockchain network designed to facilitate wireless communication for global Internet of Things devices using a unique proof-of-coverage consensus mechanism.

Render: Render Network's native utility token that allows users to share GPU power to render visual projects.

Grass: A protocol on the Solana blockchain that allows users to share unused internet bandwidth for network data collection, supporting AI development.

Solana: A cryptocurrency computing platform designed to achieve high transaction speeds without sacrificing decentralization, utilizing innovative methods such as the 'proof of history' mechanism.

Decentralized Artificial Intelligence: Integrating artificial intelligence algorithms and processes within decentralized networks, often utilizing blockchain technology to promote transparency, security, and collaboration.

Data scraping: a technique in which a computer program extracts data from the readable output of another program.

Bittensor: A platform that connects artificial intelligence and blockchain, allowing users to create or participate in competitive markets (known as subnets)

Memecoin: A cryptocurrency created for entertainment or comedic purposes, often based on memes or humor rather than serious technical development.

Ethereum: A decentralized blockchain platform with smart contract functionality, using Ether (ETH) as its native cryptocurrency.

Data Storage: In the context of a decentralized network, data is encrypted and stored in a system across multiple locations or nodes operated by individuals or organizations sharing additional disk space.

Computing hardware: the physical components and devices that make up a computer system, enabling it to perform various tasks and run software.

Geospatial data collection: The physical components and devices that make up a computer system, enabling it to perform various tasks and run software.

Decentralized Video Streaming: A video platform that uses blockchain technology to distribute content storage and streaming between multiple nodes in a peer-to-peer network, reducing censorship risks and enhancing privacy.

Akash: A decentralized cloud computing marketplace that aggregates and redistributes idle computing power to clients in need, using AKT as its native utility and governance token.

Market Capitalization: The total value of a cryptocurrency, calculated by multiplying the total number of coins in circulation by the current price of a single coin.

LLM: Large Language Model, an advanced artificial intelligence system trained on a vast amount of text data, capable of understanding and generating human-like text.

Token Rewards: Providing rewards in the form of cryptocurrency tokens to participants in the blockchain network to recognize their contributions or activities.

Comment

) Artemis, Grayscale Investments, data as of Feb 18, 2025.

[1] Artemis, Grayscale Investments, data as of Feb 18, 2025.

[2] Artemis, as of Feb 18, 2025

[3] Blockworks

[4] Blockworks

[5] Messari

[6] Artemis, data as of Feb 18, 2025.

[7] Messari

[8] Prime Intellect

[9] Prime Intellect

[10] CBRE

[11] Akash Network

[12] Artemis

[13] Akash Network