Decentralized Physical Infrastructure Networks (DePIN) are designed to enable peer-to-peer implementations of traditionally centralized infrastructure. For example, a blockchain network may be used to support a decentralized system for power generation and use or to replace traditional cloud storage.

Blockchain is used as a foundation for these systems due to the various benefits that it provides. A similar system that isn’t hosted on top of a distributed ledger would lack many of the same functions and security guarantees. Understanding these benefits and their applications is essential to implementing an effective and secure DePIN ecosystem.

DePIN offers the potential to replace traditional centralized systems with decentralized, peer-to-peer alternatives. However, accomplishing this requires underlying infrastructure with certain key qualities.

Blockchain technology is essential to the success of DePIN due to the various capabilities and benefits that it provides to protocols built on top of it. Here, we describe some of the key functionalities that blockchain provides, how they are relevant to DePIN, and the most significant security considerations associated with it.

One of the key selling points of blockchain technology is its immutable digital ledger. Blockchain immutability is achieved via the chains that link the headers of adjacent blocks in the chain. An attacker who wants to rewrite the history of the network faces greater difficulty in doing so as the number of blocks built on top of a particular block increases.

Blockchain’s immutability is valuable for DePIN because it creates a tamper-resistant record of agreements and actions taken within the DePIN ecosystem. This helps to prevent theft or abuse of the system by bad actors by enforcing non-repudiation.

The security of the digital ledger depends on the size and security of the blockchain network that supports it. If, for example, a DePIN ecosystem were built on Ethereum, it would be prohibitively expensive for an attacker to modify the ledger and rewrite history.

Bitcoin, the original blockchain, was built as a decentralized payment system. While the vision and capabilities of blockchain have dramatically expanded since its origin, most blockchains incorporate cryptocurrencies that allow value to be transferred peer-to-peer on top of a decentralized payment platform.

One of the primary objectives of DePIN is to allow users to buy and sell products or services from one another on top of the blockchain. Integrating payment support into the infrastructure itself makes it easier to implement DePIN systems.

An integrated payment system also offers significant security benefits for DePIN. Without one, there is the risk that developers may implement insecure systems or that a third party might gain centralized control over the payment aspect of the DePIN infrastructure. With payments built into the blockchain, all of the code is thoroughly reviewed and tested for vulnerabilities, and the payment system is fully decentralized.

Decentralization is a major differentiator of blockchain from traditional IT systems. Many modern IT systems work under a client-server model, where a single entity performs all of the data processing, storage, and communication with customers. This provides significant power to the server and the potential for abuse. Instead, blockchain technology uses a network of independent blockchain nodes to support the digital ledger and is explicitly designed to protect against potential centralization.

The decentralization ethos is shared by both blockchain and DePIN. In DePIN, the goal is to provide alternatives to centralized systems that can take advantage of their power or potential monopoly at the expense of their customers.

With DePIN, a network of independent users provides services, and none of them is critical to the health or operation of the overall system. In addition to protecting against censorship, this also enhances resiliency against potential attacks. A centralized system may be taken down by a distributed denial-of-service (DDoS) attack on the server, but it’s much more difficult and expensive to take down a blockchain network in the same way.

Smart contracts were introduced with Ethereum and have since become the basis for many of blockchain’s most promising use cases. With smart contracts, programs can be run on top of the blockchain’s digital ledger that encode complex functionality and have the ability to issue new tokens, store value, and interact with other contracts and accounts.

Smart contracts are a key part of DePIN because they allow critical logic to be implemented as code and are integrated with the blockchain’s underlying payment system. A smart contract can be used to take and fill orders, act as an escrow, and automatically remit payments once certain milestones are met. Their decentralized nature also means that they can be used to automatically enforce policies without bias to a particular party.

However, smart contracts are only as good as the logic that they encode and the quality of the implementation. Errors in smart contract design or implementation could create vulnerabilities that a malicious user can exploit. The fact that these contracts implement privileged functionality and can store large amounts of cryptocurrency only makes them a more appealing target for attackers.

DePIN is a highly promising application of blockchain technology that uses many of blockchain’s core features to its advantage. Without a decentralized, immutable digital ledger, it would be difficult or impossible to implement a DePIN system that would be wholly fair and unbiased to buyers and sellers alike. Similarly, support for smart contracts dramatically enhances DePIN’s potential capabilities due to the wide range of functions that they can encode.

However, ensuring the functionality and security of these systems requires careful design and implementation since a vulnerability could lead to abuse and potential theft of locked assets. In addition to smart contract audits before code is released on-chain, DePIN ecosystems should be supported by security programs that ensure the protection of private keys and other elements of their underlying infrastructure.

Halborn has extensive experience in designing and implementing security protocols for the Web2 and Web3 spaces alike. For help with enhancing the security of your blockchain-based project, get in touch.