Written by the Tokenomics.net team
Mar 8, 2025
Decentralized Physical Infrastructure Networks (DePIN) combine physical infrastructure with blockchain, enabling communities to manage services while earning token rewards. Popular examples like Helium and Filecoin show how tokenomics drive participation and growth. However, challenges like price volatility, reward sustainability, and market competition persist.
Key takeaways for building successful DePIN projects:
Tokenomics: Design models to motivate participation, align stakeholders, and ensure long-term growth.
Rewards: Use performance-based incentives, geographic bonuses, and reliability multipliers.
Supply Management: Implement token burns, dynamic minting, and vesting schedules to control inflation.
Governance: Adopt voting mechanisms like quadratic voting and delegated voting for balanced decision-making.
Revenue Models: Shift toward service-driven income to complement token-based rewards.
Quick Comparison of DePIN Examples
Tokenomics is critical for DePIN success. Addressing supply, governance, and rewards ensures sustainable growth while avoiding common pitfalls like over-reliance on tokens or poor distribution strategies.
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Network Participation Rewards
Reward systems play a key role in attracting and keeping participants in DePIN networks. These systems use a mix of strategies, starting with fair compensation for infrastructure contributions.
Infrastructure Provider Payments
Infrastructure providers bring physical resources to the table and need rewards that match their efforts. Successful DePIN projects often use the following payment strategies:
Token Release Schedule
A well-planned token distribution is key to maintaining economic stability. For example, the OORT Foundation extended its token release timeline from four to six years, locking 800 million tokens for five years. Different token distribution models are used based on project goals:
These planned schedules support effective reward systems, as seen in Helium's approach.
Helium Network Analysis
Helium stands out as a prime example of a well-structured reward and token distribution system. As of July 2021, the network had over 88,000 Hotspots in more than 8,000 cities worldwide. Its Proof of Coverage (PoC) system rewards participants for tasks like verifying hotspot locations, creating wireless coverage, monitoring peer performance, and facilitating data transfers.
Helium started with no HNT in circulation and avoided pre-mining. Its reward structure focuses on network usage, allocating most HNT to data transfers rather than simple deployment. This approach has fueled the network's rapid growth while ensuring long-term stability.
Token Supply Management
Managing token supply effectively is essential for maintaining value in DePIN projects over time. Recent trends highlight an increase in advanced supply control strategies, with 62% of DePIN projects adopting burn mechanisms after 2022, compared to just 24% prior.
Token Burn Methods
Token burning is a process that permanently removes tokens from circulation, reducing supply to create scarcity. DePIN projects commonly use four main burn mechanisms:
One example is the NATIX Network, which burned over 8.5 million $NATIX tokens between July and August 2024. These tokens came from instant withdrawal fees and marketplace revenue. NATIX allocates 40% of its revenue to buyback and burn, 35% to staking rewards, and 25% to research and development.
"The NATIX tokenomics model is crafted to ensure value and sustainability for $NATIX token holders. Through our design, the value of the $NATIX token is designed to increase over time as the supply decreases. We use every opportunity to accrue value to the token, with the main mechanism being token burning, via buyback or directly from fees, along with keeping a maximum fixed supply, which ensures our economic model is fully deflationary." - NATIX Team
Supply Release Controls
In addition to burning tokens, controlling how tokens are released is essential for balancing growth and maintaining value. Many DePIN projects are moving away from fixed minting schedules, which can lead to early front-loaded rewards and fewer incentives later on. Key strategies include:
Dynamic Minting: Adjusts token release based on network activity.
Vesting Schedules: Locks tokens for team members and early investors.
Progress-Based Distribution: Rewards are tied to specific network milestones.
Hivemapper provides a great example of this approach with its Map Progress metric, which links weekly rewards to real mapping activity across the network.
Filecoin's Storage-Based Model
Filecoin offers a strong example of controlled token minting and distribution. Its system incorporates several unique features:
By September 2022, about 70% of the 520 million FIL tokens minted or vested were in circulation, showcasing the effectiveness of Filecoin's approach. Additionally, the FIL+ program has successfully incentivized meaningful storage deals while maintaining supply control.
"Filecoin's cryptoeconomic constructions help ensure that value accrual for participants aligns with the long-term utility of the protocol." - Vik Kalghatgi, Cryptoeconomics @ Protocol Labs
DePIN Governance Systems
Governance systems play an important role in DePIN projects, ensuring decisions are made fairly and growth remains steady. However, participation in governance is often low - data shows that less than 1% of eligible token holders typically take part, with fewer than 100 addresses controlling over 50% of voting power. Let’s break down the current voting methods, the path to decentralization, and an example of governance in action.
Voting and Decision Making
DePIN projects aim to balance community involvement with operational efficiency by using various voting systems. Active DAOs generally see a voter turnout of 10–15%, with 60–70% of community proposals successfully reaching consensus.
Steps to Decentralization
Once voting systems are in place, projects move toward decentralization through a series of structured phases:
A good example is Hivemapper, which uses its HONEY token to reward contributors and empower the community to make decisions on mapping priorities.
Render Network Case Study
The Render Network offers a strong example of balanced governance. It combines on-chain voting with off-chain discussions, ensuring fair representation through tools like time-locked and quadratic voting. This hybrid approach not only protects the system but also keeps token holders aligned with the network's growth goals.
Governance systems need regular updates to maintain the right balance between decentralization and efficiency. The Render Network shows how flexible governance models can align a project’s growth with its community's interests.
Long-Term Token Model Success
A well-designed long-term token model prioritizes stability and growth over time. DePIN projects achieve this by balancing token circulation, price stability, and sustainable revenue streams. This is done through flexible token mechanics and diversified income sources.
Token Circulation and Price Management
Managing how tokens move within the network and their price is crucial for maintaining value. Top DePIN projects use several methods to achieve this:
These strategies not only control token circulation but also complement evolving revenue models to ensure long-term network stability.
Network Fee Systems
Once token management stabilizes value, adding diverse revenue sources strengthens the model further. DePIN projects are increasingly moving from token-based rewards to service-driven income. A great example is Akash Network, which earned $2.5 million in 2024 through a mix of revenue streams, including marketplace transaction fees, resource leasing, developer tools, and enterprise partnerships.
Hivemapper's Approach to Revenue
Hivemapper provides a compelling example of how reward adjustments can support sustained growth. In 2023, the platform managed to map 10% of the world's roads in less than a year. By offering performance-based rewards, Hivemapper keeps contributors engaged while delivering impactful results.
Key Points for DePIN Projects
Building on earlier discussions about rewards, supply control, and governance, these strategies highlight effective token design approaches.
Core Token Design Rules
DePIN projects that succeed often follow key principles to ensure their tokens serve a purpose and remain viable.
Common Token Design Errors
The rapid rise in DePIN funding and market caps has exposed some major missteps. For example, the Helium Network's journey - despite deploying $1 billion in hardware - highlights the need for sustainable demand.
Here are common mistakes to avoid:
Relying too heavily on native tokens, which can tie network value to volatile market conditions.
Creating overly complex token models that discourage user adoption.
Poor distribution strategies that lead to centralization.
Failing to establish clear, practical use cases for the token.
Learning from these errors is key to achieving the kind of success seen with projects like Helium and Filecoin.
Regular Token Model Reviews
Frequent reviews using mathematical models help maintain sound token economics. Projects should evaluate factors like network participation, token velocity, circulation, user feedback, and market trends. It's also essential to monitor the sustainability of smart contracts and liquidity needs. Leveraging market demand and stablecoin-based revenue distribution can provide infrastructure providers with a steady income.
Consistent reviews ensure token models stay aligned with the project’s evolving needs and market dynamics.
