Original Title: "LD Capital: Mobile 7-Day Tenfold DePin Breakthrough on the Eve of Old Money Entry"

Original Author: Yilan, Lisa, LD Capital

1. DePin Track Breakthrough on the Eve of Old Money Entry

DePin stands for Decentralized Physical Infrastructure Networks. In late 2021, IOTEX referred to this track as MachineFi. By the end of 2022, Messari first introduced the concept of DePIN, stating that it is one of the most crucial crypto investment tracks for the next decade. Over the next ten years, we can expect traditional institutions to inject incremental funds. The involvement of traditional funds will disrupt the past preference for fully on-chain economic speculation around crypto-native applications, shifting towards investment opportunities with more off-chain logic and real-world impact. The importance and investment potential of DePin in the crypto development process align with the need for new narrative funding in the crypto world.

The core concept of DePin is to use tokens to incentivize users to deploy hardware devices to provide real-world goods and services or digital resources. DePIN can be understood as consisting of two parts: the Physical Resource Network (PRN), where users provide services such as WiFi, 5G, VPN, geospatial data, and information sharing through hardware distributed worldwide, and the Digital Resource Network (DRN), where the hardware infrastructure network provides digital resources including broadband, storage, and computing power.

In simple terms, DePIN utilizes hardware to offer resources such as software, bandwidth, computing power, etc., to token-incentivize real-world services that originally required centralized management. Through more flexible and decentralized node deployment, heavy asset services are made lightweight, decentralized, and address the project's cold start problem. In the early guidance stage, DePIN adopts a spiral-up dynamic mechanism, allowing users, providers, and platforms to participate with relatively low risk. However, hardware involvement means DePIN projects require substantial initial capital support to ensure widespread hardware deployment for establishing strong network coverage. Simultaneously, both on-chain and off-chain marketing strategies need to keep pace. The full integration of these elements can lay a solid foundation for the success of a DePIN project.

2. DePin on Solana: The Strongest Ecosystem and Narrative Double Buff

The DePin projects on SOL are ranked by market cap from smallest to largest, including HONEY (Hivemapper), IOT (Helium IOT), Helium Mobile (Helium Mobile), HNT (Helium Network), and RNDR (Render Network), representing specific software applications in the DePin sector (decentralized mapping, IOT services, 5G services), IoT infrastructure (decentralized wireless and 5G service platform), and peer-to-peer rendering compute matching AI platform in niche segments. In the storage (also considered Depin) related projects, Arweave is a project that is deeply tied to the Solana ecosystem, as most of Solana's NFTs are stored on Arweave. The following sections focus on Honey, DIMO, and the Helium ecosystem's Helium and Mobile.

2.1 HONEY (Hivemapper)

On Solana, Honey (Hivemapper) is a low market cap DePin track Alpha with a strong investment background and project endorsement.

Hivemapper is a blockchain-based mapping network that has created a decentralized global map rewarding contributors. Contributors can collect data by installing Hivemapper's dashcam and earn the Native Token HONEY as a reward. In the Hivemapper setting, the dashcam is equivalent to a "miner." Through a seamless mobile app integration with the Hivemapper network, mapping is placed on autopilot and automatically uploaded onto dashcams. By installing the Hivemapper dashcam, one can mine HONEY token rewards while driving, collecting 4K street-level images and mapping the world.

The project's designed incentive is to obtain better map data. The quality, timeliness, and urban density of uploaded data become dimensions for assessing the incentive rewards. In terms of quality, the Hivemapper team has created a reputation score driven by the quality of uploaded data. When users have higher-quality images captured by an exterior camera, they receive a higher reputation score. Additionally, rewards are tied to the reputation score, with higher rewards for higher rolling average reputation.

Timeliness is to ensure that the street information is up to date. The project team created the so-called freshness score. They essentially created a function that increases with time intervals, assuming that if no one collects data for a whole year, the next attempt to collect and upload new data will receive a higher multiplier. This promotes timely updating of map data.

In terms of data density, the project team aims for a higher density of map nodes in several major cities, so there is a large bonus reward system in place for the selected 35 cities, giving these locations a higher reward weight.

Source: Hivemapper

On the funding and project background side, Hivemapper raised a $18 million Series A funding last year, led by Multicoin Capital, with participation from Craft Ventures, Solana Capital, Shine Capital, Spencer Rascoff's 75 and Sunny Ventures, with the previous round backed by Spark Capital, Founder Collective, and Homebrew. Hivemapper has raised a total of $23 million. Helium's CEO and founder, Amir Haleem, joined the project's board.

Regarding token distribution, Honey's release rules are similar to Helium, with a maximum supply of 10 billion HONEY tokens, which is a fixed cap. The initial allocation is as follows:

The Hivemapper network started minting and distributing 40 billion HONEY tokens as rewards to contributors. The exact amount of tokens minted weekly is determined by global map progress. The current circulating supply increases by around 1.6 million Honey in 1 day.

2.1 DIMO

DIMO and Hivemapper belong to the Drive-to-Earn track and are competitors of Hivemapper.

Compared to Hivemapper, which also focuses on the application scenario of the connected vehicle network, DIMO's design is more user-centric, incentivizing decentralized ownership of driving data to facilitate data collection and usage by consumers (rewarding car owners and meeting needs like automated parking/finding parking spots; car owners' collected and shared in-car data can be used in more scenarios), while Hivemapper leans towards a B2B product (providing more detailed maps for car manufacturers/service providers).

The underlying business logic is that in the connected car track, backed by the monetization of global automotive data, the overall profit is a huge market of 4.5 trillion to 7 trillion US dollars (by 2023). DIMO tokenizes car driving data for both the car and the driver, taps into the global production supply chain of data from 250 million connected cars, and enables users to profit from driving data.

In terms of data usage, when looking at the number of users, Hivemapper and DIMO are similar, but in Fully Diluted Valuation (FDV), DIMO is smaller. DIMO is an ERC-20 token on the Polygon and Ethereum blockchains, with a slightly less endorsed project and ecosystem positioning not being in the limelight, so DIMO started its value discovery later compared to Honey.

Source: LD Capital

In terms of token distribution, DIMO has a total supply of 1 billion, with baseline rewards accounting for 38%. 380 million DIMO will be distributed over 40 years, with 1,105,000 DIMO issued weekly to users in the first year, and the mining reward per user distributed according to the following rules in the chart below. The issuance decreases by 15% each year; Dimo Treasury accounts for 22%, and individuals or teams contributing to the network may receive $DIMO as a bounty or grant; Team allocation is 22%, with the tokens subject to a two-year lockup period, followed by linear monthly unlocks until fully unlocked after three years; Investor allocation is 8%, with the tokens subject to a two-year lockup period, followed by linear monthly unlocks until fully unlocked after three years; Airdrop allocation is 7%;

Source: DIMO

Currently circulating supply is 194 million (including 70 million airdropped, 57 million of baseline rewards already distributed, and 67 million allocated to the Treasury), with the initial airdrop actually being a large-scale distribution of baseline rewards (understood as mining income) (70 million), leaving 382,491,185 $DIMO remaining. This pool will be distributed over 40 years, with 1,00,1050 $DIMO issued to users weekly in the first year, decreasing by 15% annually. It is a good chip structure.

2.1 Helium

Helium is a centralized wireless network project (distributed IoT). Founded in 2013, it is a pioneer of the DePIN track. Helium, as the most authentic DePin project in the Solana ecosystem, has the most mature ecosystem network, which is also stronger compared to other IoT ecosystems. With the support of Helium, its ecosystem token MOBILE has seen a tenfold increase in seven days.

HNT is the primary economic asset in the Helium ecosystem, and the only way to pay for network data transfer fees is by burning HNT. Helium's revenue has seen an increase with the rise in HNT price, reaching $9k/day, still in a state of undersupply, perhaps one of the reasons being Helium's strong promotion of its sub-DAOs. More sub-DAOs have a driving effect on the HNT price. Stage two of HIP 51 implemented the Helium DAO, which oversees and maintains various sub-DAOs. With the emergence of more sub-DAOs (currently only IoT subDAO and 5G subDAO), there will be more competition between protocols to compete for the fixed amount of HNT generated daily (currently a net release of 1.23 million HNT per month, 40,000 per day).

By combining web3 technology with the IoT network, Helium addresses the high funding threshold issue in the IoT network market (similar to mobile operators like AT&T) and aims to improve 5G services to solve the pain point of inefficient coverage in the middle zone not efficiently covered by Wi-Fi and centralized carriers. Through a participatory approach, the high upfront costs of IoT infrastructure construction are shared among each user, achieving a lightweight start. Currently, some indoor/outdoor positioning devices, smart farms such as Abeeway, Agulus, etc., have started to adopt Helium. T-Mobile began working with Helium Mobile last year.

The Helium network and its related tokens are based on the Proof of Coverage (PoC) mechanism, which is fundamentally different from Proof of Work (PoW). Unlike GPU mining, which consumes a large amount of energy, a Helium hotspot only requires as much energy as a 12W LED light bulb to operate, and the miners' main cost is the one-time hardware purchase.

The specific process of hotspot mining is that miners purchase special LoRaWAN routers, such as Bobcat 300, place them on the roof or balcony, and then maintain the network. Miners will receive HNT tokens as a reward, which will automatically appear in the Helium App connected to the miner. The PoC continuously checks whether the hotspot is actually located at the provided location and whether it generates wireless network coverage at that location.

Current Development

The current two sub-DAOs represent the Narrowband network for IoT devices (Helium IOT) and the 5G hotspot network compatible with HNT miners (Helium Mobile).

Source:Swissborg

Regarding 5G, although Helium's development is hindered by a dual dilemma of compliance and market ceiling, the partnership between Helium Mobile and T-Mobile is helping Helium Mobile truly achieve mass adoption. Transitioning to the high-performance public chain Solana has highlighted Solana's role as fertile ground for the DePin project's development.

In terms of compliance, the United States is subject to strict regulation from the Federal Communications Commission (FCC) regarding spectrum allocation and licensing. Authorized T-Mobile utilizes the 600MHz band for 5G deployment, while Verizon uses the 700MHz band. As a latecomer, to reduce deployment costs and tackle compliance challenges, Helium chose the unlicensed CBRS GAA band, which, compared to mid-band, has a slightly smaller coverage area and does not demonstrate a clear advantage over U.S. carriers.

As for the market ceiling, 5G is a sector tightly regulated by national policies, with most network operators worldwide being state-owned, and only a few being private entities closely linked to the government. Therefore, from an international market perspective, Helium faces challenges in replicating its U.S. 5G market experience overseas.

The strategic deployment to Solana began in March of this year, as Helium migrated from its own Layer1 blockchain to Solana. The main reasons for choosing Solana were, first, Solana's latest state compression feature, which allows for the minting of a large number of NFTs at a very low cost, enabling the minting of nearly 1 million NFTs on Solana for only $113, saving a significant amount of fees. These NFTs can serve as Helium's network credentials to validate hotspots and can also integrate the entire ecosystem's functions, including token gating and hotspot owner access, making it highly efficient and convenient. Second, there are numerous areas of collaboration with Solana in the Solana Mobile Stack, Solana's upcoming Saga phone, and other projects, presenting a win-win situation for Solana seeking to develop phones and Helium looking to enter the 5G service provider space. Third, the rarity of the programming language, lack of EVM compatibility, and difficulty for developers to enter the space have hindered Helium from attracting high-quality developers and fostering a vibrant ecosystem, making integration with Solana's ecosystem the breakthrough solution.

Tokenomics

HNT is used as Data Credit for data transfer and is utilized across various subnets when a user interacts with a hotspot (revenue side). Rewards in the form of MOBILE/IOT are earned for deploying hotspots or transferring data in the 5G SubDAO or IOT SubDAO and can be burned to acquire HNT (supply side).

Regarding specific release allocation, 30% of the monthly HNT release is allocated to network data transfer, rewarding hotspots that transfer data from IoT devices based on data transfer share; 35% is allocated to Hotspots infrastructure rewards primarily for hotspot owners' mining rewards, ensuring coverage as the network grows; and 35% of the monthly release is allocated to the team and investors.

Source: Helium

The actual total supply of HNT is approximately 223 million tokens, with an initial issuance of 43 million tokens in the first year, halving every two years. The price fluctuation of HNT represents both project stake and governance rights, catering to the speculative demand of token holders. The HNT inflation plan is as follows, currently generating 41,000 HNT daily:

Source: Helium

HNT can be obtained by participating as a challenger, challengee, witness, joining a consensus group, or engaging in network transfers (with witnesses and network transfers receiving the most HNT rewards). HNT caters to the needs of the two main participants in the Helium ecosystem:

1) Hotspot hosts and operators (supply): Hosts are rewarded with network tokens similar to IOT or MOBILE as they deploy and maintain network coverage. These network tokens are exchangeable for HNT.

2) Enterprise/Developers/Other users (demand): Enterprises and developers utilize the Helium network to connect devices and build IoT applications. Data Credits, a utility token pegged to the US dollar, are obtained through HNT burning transactions conducted on the network and are used to pay for transaction fees for wireless data transfers on the network.

However, the current revenue generated by burning HNT for Helium is insufficient, and it is actually the device provider that receives more token rewards. Consequently, Helium has suffered from a lack of utilization (demand side, i.e., low revenue), a lack of early industry standards, and criticisms about poor developer and user experiences. Yet, the promotion of low-cost esim cards by Mobile seems to have alleviated the severe lack of demand.

2.3.1 MOBILE

MOBILE is the protocol token of the Helium Mobile Network and also the Helium SubDAO governance token, achieving governance separation. MOBILE was introduced to the Helium Network through community proposal HIP-53.

Helium developer Nova Labs initially collaborated with T-Mobile to launch commercial mobile smartphone service, starting with a $5 monthly plan in Miami. Recently, Helium Mobile launched a $20 monthly wireless phone plan nationwide, along with introducing a free trial of a SIM card for the new smartphone from Solana Labs. Sparking Mobile's market,

The MOBILE token is mined through 5G-CBRS and WiFi hotspots, involving both data transfer rewards and coverage proof. The token distribution of MOBILE follows a coin issuance schedule similar to HNT, but with a maximum supply of 230,000,000,000 (230B). At the launch of the mobile network, 50B MOBILE was pre-minted and allocated to the network operating fund managed by the Helium Foundation. Part of this allocation was distributed to active Mobile Network hotspots during the genesis period. The first year of MOBILE started on August 1, 2022, with the first tokens minted on August 12, 2022.

The issuance schedule includes a halving every 2 years, consistent with the HNT issuance halving.

Source: Helium

The value of the MOBILE token comes from two parts: first, the ability to redeem HNT-Subdao token MOBILE via the programmatic treasury where MOBILE can be exchanged for HNT. To achieve this, each subnet in the Helium Network has been allocated a certain amount of HNT pool based on the network utility score. The redemption ratio is contractually set based on this network utility score algorithm; second, the governance utility within the subDAO. In the future, there may be more utilities, such as using staking to enhance hotspot proof of coverage participation.

The redemption price calculation for MOBILE is done according to the following rules. All HNT rewards earned by 5G Hotspots within a specified period are allocated to a pool, and MOBILE holders can burn their MOBILE to receive HNT distributed from the pool proportionally. For example, if all 5G Hotspots collectively receive 100 HNT and there are 10,000 unused MOBILE, it means that 100 MOBILE can be burned to receive 1 HNT. This architecture provides a floor price for MOBILE, which can be traded based on its utility above its floor price.

Helium Mobile currently has a payback period of 209 days

Source: Depinscan

2.3.2 IOT

Helium IOT Subdao incentivizes Internet of Things devices connected through the LoRaWAN network and balances the relationship between users and device providers. It can be understood as inheriting the use cases of the original Helium IoT section.

The current circulation of IOT is 24 billion (inflation based on the table below) and is in the early stages of chip allocation. With MC 68mln, FDV566mln, compared to Mobile's strong expansion, the IOT use case has not yet been fully explored.

Source: Helium

The Subdao derived from the Helium ecosystem is actually a continuation of what HNT may face as it approaches the latter stages of distribution. It is conducive to the ongoing development of the entire Helium ecosystem, as the main value capture is still in HNT. It also expands two significant sub-DAO tokens for narrative, which is a win-win for HNT, Mobile, and IOT.

Helium is the most financed, with the most complete product and economic model in the IOT+5G network. With the strategic layout migrating to Solana, its current MC/price is relatively high. As a large-cap leader, it will still benefit from the race to beta, and the recent gains confirm that the DePin track's leader will fall within the Helium ecosystem. Due to Mobile's chip structure slightly outperforming Helium and being at the forefront of mass adoption, its position is also being priced in.

III. What other DePin projects in the secondary market are worth paying attention to?

Apart from DePin projects in the Solana ecosystem, there are other projects in different ecosystems that have matured in terms of ecosystem and project development, including Dimo, IOTX (IOTEX), Streamr (DATA), WIFI Map (WIFI), and others that were compared to those in the Helium ecosystem mentioned earlier. From the heatmap provided by Depinscan, it can be seen that the Helium ecosystem (IOT, 5G) has the widest distribution of hotspots, with 363k devices deployed in Helium IOT and 38k in Helium 5, followed by Streamr with 83k devices deployed.

Source: DePinscan

The applications in the IOTEX ecosystem have not shown as much dynamic growth compared to the Helium ecosystem but have consistently onboarded various DePin applications. The sub-DAOs in Helium focus more on building the ecosystem internally. With Helium migrating to Solana, IOTEX, as an L1 with a unique layered architecture, is considered a more authentic DePin infrastructure with its token having more use cases and scenarios. Currently, IOTX has an MC of 520mln and FDV of 523mln, giving it an advantage over Helium in terms of market value. However, IOTX is a project that has already been fully distributed, and its incentive measures and ecosystem vitality cannot be compared to the Helium ecosystem.

In September of this year, Drop Wireless (formerly known as Nesten) transitioned to IoTeX's DePIN infrastructure. Drop Wireless operates a global LoRaWAN network with 1,000 nodes across 17 countries/regions. The company's core business extends to providing remote healthcare services in India and plans to further expand into Africa to meet significant healthcare needs. IoTeX supports Drop Wireless's native token, launched on the IoTeX chain as XRC20, and facilitates decentralized data storage and transmission through W3bstream. This transition highlights IoTeX's role as a central figure in DePIN.

IV. Conclusion

In the medium term, the leader of this track needs to reach a market value of at least 3 billion to enter the top thirty. Currently, in terms of market value ranking, RNDR is at 1.6 billion in 48th place, Helium at 1.3 billion, Theta at 1.1 billion, IOTA at 860 million, and Mobile at 550 million. The entire track is undervalued.

HNT, as the Depin leader on Solana, has a strong ecosystem. Although the chip structure is not as strong as Mobile, it captures more value and will also benefit from the prosperity of sub-DAOs. IOTX, as an Ethereum Compatible Depin infrastructure target, although it has not touched on the market hotspot (Solana), it has an advantage in the subsequent Ethereum surge after the BTC spot ETF approval. And its current price is relatively cheap (MC 500 million). DIMO still has room for growth, and the automotive IoT track also has a grand narrative space. The collaboration between Mobile and T-Mobile may bring genuine external income and is expected to lead the entire track.

The Depin track, as a Mass Adoption channel linking the AI sector, is a circle-breaking track that can have a grand narrative and be chosen by capital. In the next decade, we can expect incremental funding from traditional institutions. The intervention of traditional funds will disrupt the previous preference for purely on-chain economic speculation around native cryptographic applications, shifting towards investment opportunities with more off-chain logic and real-world impact. The importance and investment potential of Depin in the crypto development process align with the need to find new narrative funds in the crypto world.

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