Scaling DePIN Part 1: Supply-Side Scaling Frameworks, Why DePIN Needs a Native Token, and to What Extent Must Miners Sell Tokens to Cover Costs

Key Insights

• The first generation of DePIN is entering its Scaling Phase, transitioning from initial excitement to a focus on sustainable, revenue-generating businesses.
• DePIN supply sides can grow through concentrated (high-density) or distributed (low-density) scaling, depending on the resource produced. DRNs are generally capable of concentrated scaling while most PRNs can only accommodate distributed scaling.
• The primary reason DePINs need native tokens is to overcome the Cold Start Problem and bootstrap supply, acting as equity-like instruments that shift risk from VCs to miners.
• Whether miners need to sell tokens to cover costs depends on their cost structure, scaling model, and financing approach. PRNs typically have minimal ongoing costs, while DRNs often have higher ongoing costs, requiring active token selling.

Introduction

The first generation of DePIN is entering its Scaling Phase.