Two major blockchain trends have been gaining ground across the industry as people see the clear value that only Web3 elements such as smart contracts and tokenization can provide. These trends are DePIN (Decentralized Physical Infrastructure Networks) and RWA (Real-World Asset) tokenization.
Why are these use cases so successful? There are likely two key reasons. First, both DePIN and RWA utilize blockchain to represent physical realities in the digital world. This isn’t about speculating or trading digital tokens, but rather tying physical assets with demonstrable value to blockchain-based representations. Second, by using the unique properties of the blockchain, DePIN and RWA tokenization add value in ways that are simply not possible outside of Web3.
Let’s explore these applications, and look at a specific effort to unlock the emerging Economy of Things (EoT). AllianceBlock Founder & CEO Rachid Ajaja will weigh in on their partnership with Peaq, how the two platforms are working to make the DePIN model scalable and efficient, and what the future holds for EoT.
DePIN and RWA Overview
The purpose of a DePIN is to build and operate decentralized, real-world physical infrastructures. By crowdsourcing and networking tangible assets (think smart devices, energy systems, mobility solutions, etc.), a DePIN is able to maximize their use in an organized manner. This is a drastically different approach from a traditional infrastructure provider, and offers significantly more value. Instead of raising massive capital to purchase expensive equipment, a DePIN utilizes pre-existing assets that are owned by individuals who have extra capacity. The individuals are then rewarded for allowing the network to use their assets. While this concept isn’t new for digital assets like processing capacity, creating a network of physical infrastructure is significantly more complex. The use of smart contracts to manage the providers and the users is absolutely critical and makes an efficient DePIN possible.
RWA tokenization also focuses on physical assets, but is much more broad in its application. Typical assets that make use of this include fine art, bonds, equities, and luxury items. These assets have tangible value, and the blockchain creates digital tokens that represent them. Again, the application itself isn’t new (there have been crowdsourced investments of fine art for many years), but blockchain’s ability to ensure transparency, security, and a P2P marketplace are revolutionary.
The Peaq ecosystem contains projects that build and manage DePINs, creating significant value by optimizing underutilized assets. AllianceBlock’s program called Fundrs enables investors to quickly and efficiently raise capital for promising projects. The partnership of Fundrs and Peaq creates promising opportunities to grow the EoT.
How do you think Fundrs can supercharge the Peaq model?
Ajaja: The integration of Fundrs as AllianceBlock’s Real-World Asset (RWA) liquidity engine within the Peaq model can significantly amplify the capabilities and reach of Peaq’s ecosystem. This collaboration leverages the strengths of both platforms to build a more dynamic and efficient blockchain environment, particularly for the Economy of Things (EoT) and decentralized applications (dApps).
For projects within Peaq, such as the Krest Network, the application of Fundrs means an enhanced ability to tokenize physical assets or projects, turning them into digital assets on the blockchain. This process is pivotal for capital raising and ensures a smoother, more compliant path for projects to engage with investors, as demonstrated by the successful token sale of the $KREST token.
Moreover, the use of Fundrs within Peaq addresses essential challenges like scalability and interoperability within the blockchain space. It facilitates the effective transition of RWAs into digital forms, improving capital accessibility and aiding in the expansion and evolution of the Peaq ecosystem.
Where do you see the DePIN economy in 5-10 years?
Ajaja: In the next 5-10 years, the convergence of Decentralized Physical Infrastructure Networks (DePIN), the Economy of Things (EoT), and advancements in technologies like 6G and blockchain are set to profoundly reshape the global infrastructure and economy landscape:
Decentralized Physical Infrastructure and the Economy of Things: The DePIN model, building upon the advancements of the Internet of Things (IoT), will facilitate the transition to a more interconnected and autonomous Economy of Things. This shift implies that vehicles, devices, and machines will not only be contextually aware and connected but will also possess the ability to monetize the value they create. Such autonomy and economic independence of ‘things’ will revolutionize the way we interact with and benefit from physical infrastructure, leading to more efficient, responsive, and user-centric systems.
Transformation of Traditional Infrastructure Models: DePIN, underpinned by blockchain technology, is set to invert traditional infrastructure models, much like how platforms like Airbnb and Uber revolutionized their respective industries. With the tokenization of physical infrastructure, individual and small business participation in the deployment and operation of infrastructure networks will be incentivized, democratizing access to essential services and resources. This democratization could drive innovation and economic growth, particularly in underserved areas that traditional infrastructure models have failed to adequately serve.
Leveraging Advanced Technologies for Enhanced Infrastructure: The integration of emerging technologies like 6G will further augment the capabilities of DePIN. 6G, with its expected higher bandwidth and lower latency, can enable more sophisticated and seamless communication between devices within DePIN networks. This will enhance the efficiency and effectiveness of these networks, supporting applications such as smart cities, autonomous transportation systems, and advanced IoT implementations. The synergy between 6G and DePIN will likely lead to unprecedented levels of automation and connectivity, making infrastructure more resilient, efficient, and adaptable to changing needs and environments.
Impact on Global Economic Systems and Sustainability: The adoption of DePIN and EoT, combined with blockchain and 6G technologies, holds the promise of creating more sustainable and environmentally friendly infrastructure solutions. By optimizing resource allocation and reducing waste, these networks can contribute to more sustainable outcomes. Moreover, the transparent nature of blockchain ensures integrity and accountability in managing data and resources within these networks. The tokenized reward system in DePIN will cultivate community and ownership among network participants, encouraging collaboration and resulting in more robust and resilient infrastructure systems.
What’s Next?
With RWA tokenization and DePIN use cases, we are only scratching the surface of what is possible. As Mr. Ajaja discussed, the next 5-10 years will be incredibly busy as blockchain enables more and more networks of physical assets to reach maximum usage. A rise in networks of devices and sensors, a demand for decentralized solutions, tokenized incentives becoming the norm, and improvements in technology will all drive this growth. Partnerships like AllianceBlock and Peaq are leading this expansion, and will continue to set the tone for the rest of the EoT ecosystem.
