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Decentralized physical infrastructure networks (DePIN) tokenomics

This paper provides a rigorous academic analysis of the economic models underpinning Decentralized Physical Infrastructure Networks (DePIN). By examining the du

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Abstract

This paper provides a rigorous academic analysis of the economic models underpinning Decentralized Physical Infrastructure Networks (DePIN). By examining the dual-sided market mechanics involving supply-side hardware providers and demand-side end-users, the authors explore how token incentives act as a bootstrap mechanism for network growth. The research focuses on the ‘cold start’ problem and the transition from hyper-inflationary reward structures to sustainable revenue models. Through quantitative modeling, the paper evaluates how different token distribution mechanisms impact long-term network security and decentralized governance. It highlights the inherent trade-offs between capital efficiency and network decentralization, offering a framework for designing incentive layers that align physical hardware deployment with protocol-level goals. The work is significant for its formalization of token velocity, supply-side elasticity, and the impact of hardware depreciation on protocol solvency, bridging traditional supply chain economics with cryptographic incentive design. Authors: Eduardo Brito, Simon Espinola Publication: Academic Paper Publication date: 2025-01-01

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Key findings

  • Token incentives serve as a functional substitute for centralized capital expenditure in network bootstrapping.
  • The transition from inflationary emission schedules to fee-based sustainability is the primary challenge for long-term viability.
  • Hardware depreciation directly impacts the threshold for supply-side participation in decentralized networks.
  • Network security is inextricably linked to the economic stability of the native token.

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Citation

Eduardo Brito, Simon Espinola (2025). Decentralized physical infrastructure networks (DePIN) tokenomics. Academic Paper. https://www.frontiersin.org/journals/blockchain/articles/10.3389/fbloc.2025.1644115/full
Canonical knowledge ID: research:decentralized-physical-infrastructure-networks-depin-tokenomics