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I hosted Permissionless Labs CEO David Rhodus on the Lightspeed podcast this week, and he gave me an overview of Pipe Network, the company’s forthcoming content delivery network (CDN) that’s being built on Solana.
His pitch made some intuitive sense: CDNs — which temporarily store online content on servers around the world to get closer to end-users — haven’t seen much innovation in 25 years. Pipe could let content be stored even closer to users, which would make their content load faster.
But outside of the product itself, what made an impression on me was the disciplined approach Rhodus described for his DePIN project.
Rhodus said Pipe will be “ruthless” about tokenomics.
“We’re emitting tokens when useful work is done,” Rhodus said. “While we want a lot of nodes, we also want to coordinate them into areas that customers will find useful.” This could look like focusing on business deals where Pipe supplements existing CDN infrastructure in low-performing areas and presumably uses its token to incentivize node operation in those areas.
DePIN is hailed as one of Solana’s most useful business sectors, but the bottom line has proven tricky for these companies so far.
Businesses like Helium and Hivemapper promise to wrest power from legacy infrastructure providers and give control to everyday people, but noble as that goal may be, the economics don’t always make a ton of sense.
A Messari report from the end of 2024 found that 350 DePIN tokens had a collective $50 billion in market capitalization. However, this class of startups has struggled to find mass market adoption and justify that collective valuation.
That’s partly why Rhodus advised potential founders to “go as long as possible” before adding crypto elements to a business.
“Don’t focus on crypto at all until you’ve got users and revenue,” Rhodus said.
The days of simply plugging in some kind of mining device and getting lucrative token rewards regardless of a node’s value to the larger network may need to end if the DePIN sector is going to mature past hype and create sustainable businesses.
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