DePIN Tokenomics Part 2: Finding the Right Balance for DePIN Token Rewards
Key Insights
We analyzed the token rewards distributed to network participants of 27 Decentralized Physical Infrastructure Networks (DePINs) with relevant verifiable data.
Our Findings:
- DePIN token rewards typically range from 5.5% to 11% of the total token supply per year during the first 1–2 years. However, newer DePIN projects tend to offer lower rewards, averaging 4% annually for those launched in the past two years, compared to 6% on average for projects older than two years.
- The dollar value of DePIN reward emissions is highly volatile due to market fluctuations. Since rewards are typically distributed in native tokens rather than fixed dollar amounts, they may not consistently align with operating costs. This misalignment has led to periods where DePINs either overpay or underpay network participants, impacting the sustainability of token incentives.
- Reward based profit margins for Digital Resource Networks (DRNs) — calculated as token rewards over estimated costs — range from 0% to 200%. In contrast, Physical Resource Networks (PRNs) typically achieve profit margins clustered around 50%, and, in some cases, profit margins exceed 200%.
Recommendations:
Robert is Head of Economics at 1kx, focusing on DePIN and working with portfolio companies on their economic designs. Before 1kx, Robert led data science teams (LLMs and pricing), was a member of BCG’s Risk team, and founded a startup.
Mihai is Director of Research at Messari. Mihai leads Protocol Research, covering base layers, mid-layer infrastructure, DeFi, and consumer apps. Prior to joining Messari, Mihai was a tech entrepreneur and worked in AI at UBS and Swiss Re in Zurich. His background is in computer science and math. Mihai holds a PhD in information systems from ETH Zurich, Switzerland
Dylan is a Sr. Enterprise Research Analyst focusing on DePIN, DeFi, AI, and RWAs. He previously worked as a digital assets investment analyst at T. Rowe Price and in venture capital. Dylan is a graduate of Princeton University and co-founded the Princeton Blockchain Club.
- Key Insights
- Methodology
- Network Participants: Who Does What in DePINs?
- Finding 1: DePIN Token Rewards Range from 0.1% to 0.8% of the Total Supply per Month (5.5% - 11% per Year) in the First 1–2 Years After Launch
- Finding 2: Dollar-Denominated Reward Emissions Are Highly Volatile Due to Market Movements
- Finding 3: Profit Margins for Digital Resource Networks (DRNs) Range from 0% to 200%, While Physical Resource Networks (PRNs) Typically Sit Around 50% and in Certain Cases Exceed 200%
- Conclusion
- Appendix - Cost Estimation and Caveats When Estimating Reward-Based Profitability