In this edition, we’re talking about decentralized physical infrastructure networks, or DePIN. In Part 1, Alana focuses on where DePINs can solve supply-side challenges. In Part 2, she explores how it can sustainably boost demand.
Enjoy!
Crypto can help make the world more productive.
One of the areas where crypto can catalyze productivity gains is within the realm of physical infrastructure. Projects in this category are often referred to as DePINs (decentralized physical infrastructure networks).
This piece is part one of our thesis on DePINs. It’ll focus on supply-side challenges and, in particular, network characteristics that we believe crypto is uniquely well-poised to help tackle and scale.
Coordination Challenges
Building new physical infrastructure networks often involves overcoming a series of coordination challenges. Coordination challenges, in turn, tend to arise when there is a scarce resource and some degree of competition for that resource.
Crypto thrives in these types of situations: granting ownership in a network can both help incentivize individuals to cooperate and attract resources that may otherwise be unavailable.
Along these lines, we’ve identified three big coordination challenges that crypto-enabled physical infrastructure networks can help tackle:
Solving verification
Overcoming barriers to centralized supply formation
Accessing broad financial services
Read the full post on our blog.
A core premise of decentralized physical infrastructure networks (DePINs) is that offering network ownership (via token incentives) can help overcome coordination challenges that might otherwise hinder development of new infrastructure.
We’ve seen startups run this playbook effectively to build out the supply side of new infrastructure networks. But demand has historically remained more elusive. Luckily, there are signs that’s begun to change in meaningful ways over the past year. Pockets of real demand are emerging and beginning to provide a guidebook for markets that are well-suited to DePIN.
Here’s how we’re thinking about what’s most interesting on the demand side of DePIN projects.
Read the full post on our blog.
Ideas and perspectives from the team
Jack G.: Building Collective-Intelligence Systems
Many of the same ideas that inspired Bitcoin are now being used to decentralize AI. Here, Jack looks at four principles that made Bitcoin successful and shows how they can help intelligence compound across a network.
Daniel: Agents in a Bazaar
If the future of the internet involves a “bazaar of agents” paying each other for services, crypto will find a level of mainstream product-market fit it could previously only dream of. The question is: Can the bazaar approach beat out the “cathedral” model?
Alana: How to Pick a VC
There are several ways founders say VCs can help, from brand-building to networking. In this piece, Alana gives her recommendations for how to do diligence on a VC when you have investment offers.
Recent posts from the Variant team
We’re happy to welcome Jack Longarzo to our team!
Alana explains why Variant is backing True Markets:
Jesse wonders how smart contract chains can get to deflationary supply:
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