DePIN poised for $3.5 trillion growth; Stablecoins power RTPs

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A World Economic Forum (WEF) report has tipped the decentralized physical infrastructure network (DePIN) market to reach a market capitalization of $3.5 trillion before the end of the decade.

In its report, the WEF projected the DePIN market to surpass the $3 trillion mark by 2028, a 6,000% rise from its present valuation of around $50 billion. The industry is expected to record a compound annual growth rate (CAGR) of 375% to achieve a $3.5 trillion valuation.

DePINs are blockchain-based networks underpinning real-world physical infrastructure, incentivizing participants to contribute resources for maintenance with digital assets as rewards.

The report notes that blockchain and artificial intelligence (AI) will be key drivers of DePIN’s projected growth. The WEF report particularly mentions decentralized physical AI (DePAI), an emerging concept that uses DePIN and AI to push the frontiers of machine learning (ML).

Under DePINAI, AI models will be deployed on physical DePIN networks, with users supporting the ML process without the constraints of centralized datasets. Decentralized AI training will offer models the perks of diversification without losing the contextual relevance of diversification.

“Currently valued at $30 billion-$50 billion with over 1,500 active projects worldwide, this relatively new sector is projected to grow to $3.5 trillion by 2028,” read the report.

Aware of the potential for expansion, analysts at WEF say the next $1 trillion company will emerge from the DePIN vertical. Already, there is a marked interest in wireless decentralized products offering value to a broad spectrum of investors rather than a small group of elite investors.

The report mentions Bittensor and Threefold as emerging players in the ecosystem, enabling greater interoperability and efficiency. Other industry players tipped to play a role in the emerging market include Helium, Render Market, DIMO, and Hivemapper.

In 2023, a Messari report predicted DePIN would clinch a market capitalization of $3.5 trillion in 2028, nearly three years before WEF’s report. DePIN projects have gathered steam in recent years, with Hivemapper, Coins.ph, and inDrive teaming up for a blockchain-powered fleet to map roads in the Philippines.

Meanwhile, a separate report from Convera predicts that real-time payments (RTP) volumes will peak at $58 trillion by 2028, rising by a triple-digit compound annual growth rate (CAGR) over the next three years.

The Payments Pulse report notes that the global payments industry is bracing for a wave of seismic shifts that will transform the status quo. It noted that the wholesale changes will be heralded by RTP, stablecoins, and decentralized finance (DeFi), which will combine to improve the state of cross-border transactions.

Aware of changing consumer behaviors, countries are turning to domestic RTP networks to support existing payment alternatives. Currently, over 80 countries have their own versions of RTP networks, racking impressive volumes and user metrics.

Given the successes of national RTP networks, the Convera report predicts that financial regulators’ next focus will be enhancing cross-border payment functionality within the networks. It highlighted several pioneers experimenting with international settlement capability, with the European Central Bank (ECB) and its Canadian counterparts exploring interoperability between their RTP networks.

While Europe and North America are pioneering cross-border RTP experimentation, the Asia-Pacific, led by Hong Kong and India, is recording major strides. India’s Unified Payments Interface (UPI) has expanded to Singapore, with the central bank keen on the global applicability of its real-time payment offering.

Meanwhile, Africa and the Middle East have yet to pursue cross-border utility for their RTP networks, opting instead to promote financial inclusivity for citizens.

A closer look at the report reveals a growing adoption of stablecoin across multiple jurisdictions. While stablecoins have enjoyed retail interest over the last five years, governments and institutions are willing to embrace the offering.

The allure of price stability and transparency features is attracting new players to the space. Furthermore, analysts at Convera have highlighted a growing trend of DeFi in modern treasury management, designed to improve and streamline traditionally complex processes.

The report notes that despite the signs of promise, a triple-digit percentage CAGR will not be smooth for RTP volumes. Global regulatory frameworks must be established to ensure uniformity and protect consumers from black swan events.

Furthermore, entities will have to grapple with cybersecurity threats and a glaring absence of technical interoperability standards. However, there are fears that a push for real-time payments may affect the progress of central bank digital currencies (CBDCs).

Watch: Richard Baker on engineering a smarter financial world with blockchain