DePIN Sector Explodes: Can Solana Keep Up with New Blockchain Rivals?

• The DePIN sector has also rapidly expanded with its market capitalization increasing to $20 billion within a year.
• DePIN still registers revenue issues: only four among eight protocols with the highest market cap belong to the top-revenue protocols, which illustrates revenue-generation capabilities.
• New Layer 1 blockchains such as IoTeX and Peaq are garnering ample funding and pose a threat to the hegemony of Solana in hosting DePIN projects, which currently totals at $78.

The DePIN sector, which involves physical infrastructure networks, has experienced significant growth. Having tripled over the course of the year to reach $20 billion. This rise has contributed to the increased awareness of DePIN. However, it has also raised questions about Solana and its ability to maintain its position as the leading blockchain in the face of growing competition.

As seen in the picture below, DePIN has demonstrated tremendous progress in the fundraising volume by enhancing 296% year on year. The sector has however achieved notable strides, nevertheless the sector is deemed to be facing challenges. Sales revenue remains relatively small which suggests that DePIN is still faced with demand side challenges. Relative to the market cap growth and the revenues, there exists this gap which DePIN needs to surmount so as to optimize the prospects currently constrained by barriers.

Market Dynamics  and Competition from New Layer 1 Chains

After the latest update, new DePIN niches like DeGIN and AI Data Layer have emerged. Digital Resource Networks, leading with a $12.2 billion valuation, dominate the top eight DePIN protocols, while Helium is the top Physical Resource Network among them.

Revenue-wise, only four protocols rank in the top eight, showing DePIN’s struggle against more cohesive centralized solutions.

Investment focus is shifting towards DePIN-specific Layer 1 chains. In 2024, IoTeX and Peaq raised $50 million and $30 million, respectively, signaling growing interest in specialized blockchain networks for DePIN’s needs.

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Currently, there are approximately 78 DePIN projects on Solana, which proves that Solana is the most popular blockchain for these networks. However, L1 DePIN competition is stiff with emerging L1 DePIN forays such as IoTeX and Peaq. This remains more of a question mark as there is no surety that Solana alone can remain dominant in the DePIN sector as new players enter into the market.