Web3 Tangible Impact Promises: DePIN, RWA Tokenization, and DeSci

Blockchain, Web3, and cryptocurrency have grown in popularity since the famous Satoshi Nakamoto Bitcoin whitepaper. Yet, for many people worldwide, they are simple buzzwords they hear during crypto bull runs. At best, fads; at worst, scams.

For the blockchain 'maxi' and the average Joe alike, it can feel that the colossal and tangible change that has been hyped by the blockchain community is yet to be seen, at least when it comes to cryptocurrencies. The technology's potential is being eclipsed in the news by unhelpful meme coins, people searching for the next 100x coins, and general self-interest and vanity.

It can be a frustrating sight to see (how the culture around blockchain has been moving) given there are some of the brightest minds working in this space. Having said that, specific sectors within this ecosystem are showing significant potential for transformative change. Building robust and game-changing infrastructures is inherently time-consuming, so one must appreciate that it is sometimes inevitable that they take their time to bloom. From a broader perspective, it is evident that three particular sectors have recently garnered increased attention, and with good reason.

1. DePIN

Decentralized Physical Infrastructure Networks (DePIN) refers to networks where physical infrastructure – such as IoT devices, networks, or energy grids – are decentralized using blockchain technology. This ensures transparency, efficiency, and security in the management and operation of such infrastructures. The whole field of DePIN is vast and interest is rapidly growing. This is because the DePIN field is seeking to build blockchain applications that are "actually useful". Some people also believe that they would be beneficial for emerging markets, economies, and countries.

One of the companies leading the pack in this field is Peaq, a layer-1 for DePIN, with interesting projects within its ecosystem such as Silencio (a noise pollution tracking project) and Combinder (a project working on distributed energy resources, or DERs). DePIN offers a new form of control and fragmentation of ownership, and this will be especially important with the technological changes that are around the corner, notably when it comes to IoT technologies and the general economy of things (EoT). Peaq by itself is projected to have a $1.8bn impact value generated by 2027. More details about the DePin sector can be found in the 2023 Messari DePIN report.

Use Cases

• IoT Networks: Decentralized control and management of IoT devices can enhance security and efficiency.

• Energy Grids: Blockchain can help in decentralizing energy grids, making energy distribution more efficient and reducing wastage.

• Telecommunications: Decentralized networks can lead to more robust and fault-tolerant telecommunications systems.

• Various others: Solar energy trading, car sharing, boat renting, and sharing, and more.

2. RWA Tokenization (Real-World Asset Tokenization)

Real World Asset (RWA) tokenization involves converting physical assets, such as real estate, commodities, or even art, into digital tokens on a blockchain. This makes the assets more liquid and accessible to a broader range of investors. Wouldn't it be great to be able to have a share of a property through tokenization?

At times, oracles would be needed to perform real-time data checking. These are services that provide smart contracts with external data, enabling them to interact with the real world. They act as bridges between blockchain and off-chain environments, ensuring that smart contracts can execute based on real-world inputs. Chainlink and RedStone are some of the examples of data providers.

Use Cases

• Real Estate: Tokenizing real estate properties allows fractional ownership, making it easier for small investors to enter the market. Projects such as RealT are a good example of this at work.

• Art and Collectibles: High-value art and collectibles can be tokenized, enabling fractional ownership and easier transfer of ownership.

• Commodities: Commodities like gold or oil can be tokenized, providing a more efficient and transparent way to trade these assets.

3. DeSci (Decentralized Science)

DeSci refers to the use of blockchain technology to decentralize the funding, conduct, and dissemination of scientific research. This can lead to more open and collaborative research practices. For example, there are plenty of Electronic Health Records (EHRs) projects using blockchain technology.

The general idea behind DeSci resonates much with what Aaron Swartz stood for; no more siloing of academic and potentially lifesaving data. It stands for transparent, fast, open source and metric-based data relating to science. Some companies within this very nascent field include Hairdao and Labdao.

Use Cases

• Research Funding: Decentralized platforms can democratize research funding, allowing researchers to receive funding from a broader pool of contributors.

• Data Sharing: Blockchain can facilitate secure and transparent sharing of research data, promoting collaboration and reproducibility.

• Publication: Decentralized platforms can disrupt traditional scientific publishing, making research more accessible and reducing publication biases.

The Hiccups: Laws and Marketing Efforts

Legal Challenges and Regulatory Developments

The major hiccups with these sectors are laws. Laws are not months, but years behind what is being built within the blockchain ecosystems. It is becoming increasingly difficult for these projects to navigate and innovate in this space when they are all taking a risk due to unclear laws. It is of no surprise that companies generally seek the legal clarity of Switzerland to set up shop.

The EU has now included MiCA (Markets in Crypto-Assets), but the law deals mostly with stablecoins. It is why almost only Web2.5-type companies (which usually deal with crypto payments and help in bridging Web2 to Web3) are benefitting from these. However, laws have to become clearer for Web3 specific companies to facilitate innovation in the blockchain space.

Marketing and Education in Upcoming Technologies

Furthermore, another salient point for the types of companies mentioned above is that their marketing and communication of the product value needs to be on point. Education needs to be at the forefront as these technologies will disrupt the world not now, but in the coming years. This means that certain topics would need to be explained, either via blogs (educational academies), simplified landing pages, white papers, and pitch decks. All of these could be repurposed for any type of content needed, be it LinkedIn, X, or Web3 native social media platforms that are upcoming (such as Farcaster and Mirror). They should also keep an eye out for new marketing software, such as Cookie3.

Companies that are building in this area need to continue familiarizing themselves with how to position the product, and that usually starts with educating not only potential users, but more importantly, investors first. They have to detach themselves from the 'engineer's brain', and know how to explain their ideas in layman’s terms, and more important, WHY such a product is important. Founders and engineers usually get caught up going down the rabbit hole of what they are building and end up forgetting the 'why' (why they are building it and why it is significant). It is important to share that why with the outer world to bounce the idea and see whether it is actually needed, and if it is, it will serve as good marketing and PR material.

Conclusion: A Slow and Steady Impact Waiting to Bloom

In summation, while the blockchain revolution has been slow to manifest in the form of palpable, everyday changes, the promise it holds for sectors like DePIN, RWA tokenization, and DeSci is substantial. These domains showcase the transformative potential of decentralized technologies in enhancing efficiency, transparency, and accessibility across various infrastructures and asset classes.

Yet, realizing these promises hinges on overcoming significant legal and marketing hurdles. Regulatory clarity remains a paramount concern, requiring concerted efforts from both industry leaders and policymakers. Simultaneously, effective communication and education strategies are crucial to bridge the knowledge gap and garner wider acceptance.

The journey toward mainstream blockchain adoption is undoubtedly fraught with challenges, but the sectors highlighted here illustrate that the foundation is being laid for a future where blockchain's impact is not just theoretical, but tangible and widespread. With perseverance and strategic focus, the blockchain community can turn these promising sectors into pioneering examples of what the technology can achieve, proving that the colossal change we envision is indeed within reach.