Welcome to the glossary of DePIN 101. This comprehensive guide will introduce you to key terms and concepts essential for navigating the world of Decentralized Physical Infrastructure Networks (DePIN), as well as important terms related to Web3 and crypto.
DePIN Glossary Key Terms and Definitions
Airdrop
An airdrop is when a predetermined amount of tokens are automatically sent to wallets within the community. Similar to a customer loyalty program in traditional industries, airdrops can generate initial brand awareness and reward early adopters by distributing tokens retroactively. This practice helps projects gain traction and collect early user feedback.
Blockchain Explorer
A blockchain explorer software application allows users to extract, visualize, and review blockchain network metrics. It provides vital information about crypto transactions, such as transaction history, wallet balances, and transaction fees.
Burn & Mint
This tokenomics model creates balance in supply and demand for a token. It defines how a token is emitted (minted) and utilized or taken out of circulation (burned) to avoid inflation. This model is popular in many crypto projects.
Exchanges
Exchanges are platforms where users buy and sell cryptocurrencies, analogous to stock exchanges like Nasdaq. They provide liquidity, enabling crypto trading and serving as on-ramping and off-ramping points. Exchanges are classified into two types: Centralized Exchanges (CEX) and Decentralized Exchanges (DEX).
Centralized Exchange (CEX)
Centralized exchanges, like Binance and Coinbase, are managed by a single entity responsible for liquidity, trading pairs, transaction speed, and KYC (Know Your Customer) processes. They also offer wallets to manage holdings and view token values in fiat currencies.
Decentralized Exchange (DEX)
Decentralized exchanges (DEX) are peer-to-peer marketplaces allowing users to trade cryptocurrencies directly through blockchain transactions without a central intermediary. They are crucial in decentralized finance (DeFi) and require a compatible wallet for interaction.
Composability
Composability refers to the ability of one technology to interact with or enable another. For instance, DIMO devices in cars leveraging Helium's IoT network to transmit data demonstrate the composability of DePIN projects.
DAO (Decentralized Autonomous Organization)
A DAO is a form of crypto governance, akin to a Board of Directors and Shareholders in traditional organizations. Governed by smart contracts and recorded on a blockchain, DAO members, who usually hold tokens, vote on decisions.
DePIN (Decentralized Physical Infrastructure Networks)
DePIN involves the deployment and management of physical infrastructure networks in a decentralized manner. Examples include networks of electronic devices like satellite dishes, cameras, and WiFi routers. DePIN offers significant benefits such as reduced costs, increased rollout speed, greater transparency, and shared governance.
Fork
A fork occurs when a blockchain splits into two separate chains. This can be due to protocol changes or community disagreements. There are two types of forks: hard forks, which create entirely new cryptocurrencies, and soft forks, which act as upgrades to the existing blockchain.
Gaming
In DePIN, gaming refers to the abuse of network protocols to enhance earnings, such as installing Helium hotspots in ways that provide no meaningful coverage but still earn tokens. DePINs need robust systems to prevent gaming and ensure network integrity.
Gm
A term used by hardcore crypto enthusiasts to greet each other, standing for "Good morning," but used at any time of the day.
Hex
Hexes are units in the H3 system, a geospatial indexing system that overlays a hexagonal grid onto the earth for mapping purposes. Originally developed for Uber, it is commonly used in DePIN projects.
HODL
An acronym for "Hold On for Dear Life" refers to holding onto tokens despite market volatility due to a strong belief in the project's long-term value.
Layer 1 (L1)
Layer 1 refers to the base layer of a blockchain, synonymous with the protocol layer. L1 blockchains, like Bitcoin and Ethereum, have their own tokens and provide the fundamental infrastructure for DePIN projects.
Layer 2 (L2)
Layer 2 solutions are protocols built on top of Layer 1 blockchains to improve transaction speed, throughput, and cost efficiency. Examples include Polygon and Arbitrum.
Mainnet
A mainnet is a fully operational blockchain where cryptocurrency transactions are verified and recorded. It contrasts with testnet, which is used for testing purposes.
Testnet
A testnet is a blockchain used for testing and development. It allows developers to test new features and protocols without affecting the mainnet.
Liquidity
Liquidity refers to the ease of buying and selling assets. In DePIN, tokens represent these assets.
Map Explorer
A map explorer is a tool for visualizing DePIN deployments geographically, often using hexes to display coverage areas.
Mining
Mining is the process of creating new tokens following a predefined procedure. Different DePINs use various proof models, such as Helium's "Proof of Coverage."
Moon
"Moon" refers to the exponential growth of a project's token value, a desirable outcome for project owners and investors.
On-Chain / Off-Chain
On-chain transactions are recorded on the blockchain and publicly accessible, while off-chain transactions are not. Oracles are used to bring off-chain data onto the blockchain.
On-ramp / Off-ramp
On-ramping refers to the process of entering the crypto ecosystem by converting fiat to crypto, while off-ramping is the process of converting crypto back to fiat.
Rekt
Getting "rekt" means a project has been destroyed, often due to bad press or scams, leading to loss of community trust and abandonment.
Rug Pull
A rug pull occurs when a project team suddenly removes all value from its token, causing investors to lose their investments.
Smart Contracts
Smart contracts are programmatic agreements that automate transactions and interactions on a blockchain, ensuring speed and reducing the need for intermediaries.
Token
Tokens are units of value in crypto networks, serving as incentives for participation. They can be acquired through trading, mining, airdrops, venture capital investments, or grants.
Wallet
A wallet in Web3 is a digital tool for holding crypto tokens. Wallets can be custodial (managed by a third party) or non-custodial (self-managed) and come in hot (internet-connected) and cold (offline hardware) varieties.
Web3
Web3 is the next evolution of the internet, emphasizing decentralization, privacy, and the use of tokens. It builds on Web2 by adding additional protocol layers for enhanced functionality.
DePIN Categories and Sub-Categories
Servers
Decentralized versions of core networking infrastructure services, including:
Compute
Storage
VPN
CDN
Data Warehouse
GPU
Database
Proxy
Sensors
Networks of interconnected devices collecting real-time data, including:
Mobility
Environmental
Energy
Smart Home
Geo-location
Smart City
Healthcare
Wearables
Wireless
Decentralized telecom industry use cases, including:
WiFi
Cellular
IoT
Bluetooth
LoRaWAN
Geo-location
Manufacturing
Currently a small category with potential for growth, including:
3D printing
Final Thoughts
The above designations are non-binary, and DePINs can fall into multiple classifications or evolve over time.
By understanding these key terms and categories, you'll be well-equipped to navigate the world of DePIN, Web3, and crypto. Whether you're a newcomer or a seasoned enthusiast, this glossary serves as a valuable resource for grasping the foundational concepts of decentralized infrastructure networks.
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