Recently, I have been devoting some of my energy to the AI+DePIN track. I have a feeling that this will be the value narrative driving the current bull market. Old DeFi protocols, NFTs, emerging public chains, and many underlying technological innovations are all moving towards DePIN. In the following, I will share a few of my thoughts:
1) How to understand the concept of DePIN? Simply put, traditional CePin networks, which rely on physical infrastructure such as servers, sensors, and communication networks, require centralized computing power clusters like AWS and Alibaba Cloud to operate. This is too costly for many small and medium-sized enterprises. DePIN utilizes blockchain tokens as incentives to allow users with “hardware devices” to establish large-scale collaborative relationships among physical devices, creating a service-capable infrastructure network. This enables small and medium-sized enterprises to use network resources in an accessible and cost-effective manner.
2) Some people say that this is just another narrative of “hardware device mining” like FileCoin, Chia, and Arweave from the previous bull market. It is true, but not entirely. This bull market has added the variable of “AI.” Decentralized storage has demand, but it is not a strong demand. It may include some pseudo-demands, such as data storage access. Although it can solve the storage demand, the unstable network distribution and node efficiency execution hinder the implementation of real-time demanding applications such as online video and gaming. With the introduction of AI, AI large-scale model training becomes a rigid demand. I consulted some small and medium-sized AI companies that do model training, and found that server hardware costs, such as those of AWS, are not friendly to these companies. If DePIN can enable GPU and other supply chain cloud services or mobilize the hardware devices of the entire network to form the infrastructure network, there will be strong demands for large-scale model training, distributed machine learning, data storage verification mining, distributed inference, and other directions. In this round of DePIN, if it can rise with the wind, it will mainly rely on the driving force of the AI track. There may be some projects that rely on PPT narratives at the beginning, but in the long run, the projects that can be implemented will not be too bad.
3) It is highly likely that AI+DePIN will take over the role of the previous DeFi Summer and become the value narrative driving the current bull market. This explains why after BTC rises, MeMe will rise, but the old DeFi that everyone is looking forward to remains quiet. Regardless of whether it is about chasing the new or not the old, the main reason is the heavy burden caused by the poor expectations of the previous DeFi’s landing. The NFT market in the previous bull market reshaped the traditional users and funds through the digital art market. In this bull market, AI+DePIN may play a similar role.
Does this mean that there is no chance for the old DeFi? Not at all. In my opinion, this is actually an opportunity for a reshuffle and reshaping of the traditional old DeFi:
1) Public chains: In the previous DeFi wave, it was too confined to the EVM environment. The EVM-compatible narrative made the differences between chains smaller, and the possibility of interconnection greater. However, the development of application ecology has yet to be realized. Therefore, the first thing AI+DePIN needs to do is to move away from EVM and allow some high-performance chains to emerge, thereby giving birth to some killer applications, such as Solana, Sui, Aptos, etc. Especially on SOL, there are already a group of unique developers. Whether this wave of AI+DePIN can directly determine the mainstream position of SOL in this bull market remains to be seen. The slogan of surpassing Ethereum has been shouted out. Whether it can be achieved depends on the landing of the AI+DePIN narrative on SOL. Recently, I came across a project called @ionet_official, which has a high valuation, but the experience was surprising. It feels like it has the potential to ignite DePIN.
2) DeFi protocols: Recently, Vitalik talked about AI + blockchain, which actually pointed out a direction for entrepreneurship: AI+intent DeFi transactions. Obviously, allowing smart contracts to evolve into super smart contracts and incorporating the needs of intent transactions, such as reducing user thresholds, increasing user interaction experience, and reducing user cross-chain transaction costs, is the direction where intent transactions truly want to make a breakthrough. Therefore, it is crucial for the old DeFi to quickly advance the upgrade of the intent transaction model + wallet front-end and other series of upgrades. By focusing on this direction, it can be integrated into the main narrative of AI+DePIN without falling behind. There are already many projects innovating in this aspect of DeFi. I would like to remind you that the intent-centric narrative is not over yet; all that is missing is a project that can combine AI and actually be implemented.
3) Other technological innovations: The current web3 innovation environment is already mature. The product power and innovation power of web2 have already penetrated into it. As a result, a series of narratives such as “modularity” and “chain abstraction” have emerged. These narratives aim to solve the problems of low inter-chain interaction efficiency and high collaboration costs in the web3 environment. The direction is good, but these micro-innovations have not truly exploded due to the slow development of old chains. Taking ZK technology as an example, everyone says that ZK is the endgame, but currently, ZK only solves the problem of trust between the main chain and the side chain. In fact, ZK can enable all EVM and non-EVM chains to achieve inter-chain asset transfer. The true value discovery of ZK is still in the future. Recently, I have noticed a project called @ProjectZKM, which has implemented multi-chain interoperability based on ZK technology. Together with its hardware acceleration and other DePIN designs, it is very likely to find a key position in the new wave of DePIN narratives.
Note: I have briefly explained several logical considerations I believe AI+DePIN has great potential. They may not all be correct, but my thinking is based on the principles of value investment research and industry mature evolution trends, without the emotional factor of FOMO in the secondary market. The above content is for reference only, and I welcome constructive criticism and learning together.