Decentralized Finance (DeFi) has significantly revolutionised the financial sector by removing intermediaries and allowing users to govern their assets. However, as DeFi protocols scale, they require decentralized, scalable, robust, and economical infrastructure: compute, storage, networking, and data. This is where Decentralized Physical Infrastructure Networks (DePIN) comes into play.
DePIN offers a decentralized model that directly supports DeFi ecosystems. By monetizing idle physical infrastructure such as GPUs, storage, wireless bandwidth DePIN is primed to fill the missing infrastructure layer for DeFi’s mass adoption and resiliency.
In this article we will detail how DePIN is transforming DeFi’s distinct infrastructure, the problems it is solving, its architecture layers, applications, and future.
What is DePIN?
DePIN enables real world owners of physical compute infrastructure to work together and gain rewards by renting their compute, storage, and bandwidth. This is different from centralized provider like AWS and Google Cloud.
DePIN protocols provide a way to monetize this infrastructure by providing a financial incentive, distributed via a blockchain protocol.
The principle of DePIN is to “decentralize resource provisioning” by enabling participation of individuals with under-utilized hardware, whether it’s a GPU at home, an unused storage drive or unused bandwidth on a wireless router, to contribute to a community owned infrastructure.
Why DeFi needs DePIN
While DeFi applications are built on decentralized blockchain protocols, DeFi typically relies on centralized cloud infrastructure for execution, hosted on data centers consisting of compute, storage and bandwidth included.
Examples where centralised cloud infrastructure is utilised by DeFi applications is hosting and compute for smart contract frontends and analytical tasks. Data storage for off-chain components and APIS for communicating with the blockchain,
Problems solvable with DePIN for DeFi
DeFi protocols relying on cloud-based infrastructure have several drawback centralization risks, single points of failure, censorship, and higher costs. DePIN can solve these issues with a decentralized cloud-based resource provisioning system.
DePIN will allow DeFi applicatons to operate independent of big tech cloud providers. No one party can block or manipulate the services provided. DePIN will leverage existing edge resources to lower costs and more sustainability. Any interested party can participate and as more participates join the network,
DePIN architecture layers
The role of DePIN in DeFi is multi-faceted with the architecture it enables. Let’s examine those layers.
Compute Layer
Many DeFi protocols rely on off-chain compute for analytics, simulation, or zero knowledge proof generation. DePIN compute networks utilize aggregate idle CPUs and GPU compute infrastructure to get a price and censorship resistant computing power.
Storage Layer
DePIN storage networks provide decentralized, redundant file storage that supports DeFi frontends, dashboards, metadata, etc.
Data Layer
DeFi utilizes real-time historical data for pricing and transactional use cases along with other metrics. DePIN enables decentralized data pipelines along with indexing services to get open access to analysis data.
Networking Layer
Compute and storage networks can leverage peer to peer (DePIN) network for deploying bandwidth to provide a decentralized communication for DeFi protocols while providing capacity or bandwidth.to nodes for information exchange.
Validation Layer
DePIN node operators can utilize DePIN to host validator or RPC nodes or other relaying infrastructure with limited to no costs to join, node runners are compensated based on uptime and their performance.
DePIN for DeFi applications
Decentralized Oracles
Oracles are the backbone of DeFi for smart contracts and off-chain (real world) data holding. DePIN provides oracles with bandwidth, compute and off-chain aggregation and delivery.
ZK-Proof Computation
Zero-knowledge proofs in DeFi provides privacy and scalability. DePIN can offer an affordable method to run GPU-accelerated environments designed specifically to generate cryptographic proof system computations while reducing computational and storage demands.
Frontend and Development
Instead of relying on just AWS for hosting the DApp, a DePIN storage tier could serve as a highly available environment for protocol UIs and interfaces. DeFi developers can query data without setting up a backend and ensures that data indexing nodes will be distributed, reliable and fairly rewarded for their services.
Conclusion
DePIN will not only a support system to DeFi protocols, but will introduce a paradigm shift that solves some of DeFi’s most foundational shortcomings. The decentralized provisioning of infrastructure has the ability to support compute storage and data ecosystems.
While adhering to decentralization, permissionless access and community ownership we can expect a generative and powerful relationship between DePIN and DeFi.
Join Kaisar Network
Ready to scale your DeFi projects with affordable GPU resources? Join Kaisar Network today and harness the power of DePIN. Visit kaisar.io to get started!
