Table Of Contents
A Pattern Emerges
The story of Helium, as I detailed in my first post, is not an anomaly. The slide from a grand vision of a “People’s Network” into a centrally-controlled system that primarily benefits its founders and a small handful of insiders is, unfortunately, a well-trodden path in the DePIN space. The issues of opaque governance, extractive tokenomics, and a disregard for the actual community that builds the network are not bugs; they are features of a flawed and deeply ingrained model.
This pattern reveals that the entire DePIN sector is standing at a fork in the road. One path, the one we see most often, is degenerative. It uses the language of decentralisation to attract capital and community effort, only to extract value and centralise power. The other path, so far less travelled, is regenerative—a model that aims to create and circulate value within the community, fostering true ownership and sustainable utility.
To understand this choice, we must look beyond Helium’s initial failures and see how the degenerative pattern manifests in other projects.
Case Study 2: The XYO Sentinel Graveyard
Long before DePIN was a popular acronym, XYO was selling a similar dream. It promised to build a vast, decentralised location-verification network. The method? Selling small, proprietary Bluetooth devices called “Sentinels.” Users were encouraged to buy these fobs and run an app on their phones, with the promise of earning XYO tokens in return for contributing location data.
It was a classic hardware play. The utility of the data was always abstract, but the revenue from selling the Sentinels was very real. The model relied on the hope of future token value to drive hardware sales. Today, after multiple pivots and strategy shifts, the original Sentinel devices are largely useless, another entry in the growing e-waste graveyard created by failed crypto-hardware schemes.
Case Study 3: The MapMetrics Black Box
If XYO represents the failure of the hardware model, MapMetrics showcases the problem of extreme opacity on top of what can only be called amateur hardware and just plain incompetence. Positioned as a decentralised alternative to Google Maps, the project seemingly has a compelling market fit. Who wouldn’t want a mapping service that respects user privacy and rewards them for contributing data?
Yet, MapMetrics operates as a near-total black box. Its code is closed-source. Its data is not publicly available. And most critically, it has no visible system for community governance. Decisions are made entirely by a central team, and users are asked to buy expensive hardware based on faith alone. I have seen a lot of things - but total data-loss being masked as a minor technical glitch. It’s the type of project that would not even make it in a healthy ecosystem.
Defining “Degenerative DePIN”
The stories of Helium, XYO, and MapMetrics are not identical, but they share a common DNA. Together, they help define the characteristics of a Degenerative DePIN project as is the current standard:
- Centralised Control: All key decisions are made by a core team. A foundation or a DAO may exist, but it serves as a facade, not a true governing body.
- Value Extraction: The primary goal is to enrich founders and early investors. This is achieved by selling overpriced hardware, controlling the token supply, and treating the community as disposable labour.
- Information Asymmetry: The community is given an optimistic narrative, while the unfavorable realities of the tokenomics and governance are obscured. Code is kept private, and data is siloed.
- Unsustainable Economics: The model relies on speculative hype and a constant influx of new participants to create demand for the token. The actual utility of the network is an afterthought.
The Demand-Side Exception: A Glimmer of Sanity
While the degenerative pattern is rampant, it would be unfair to ignore the rare instances where projects get a critical piece of the puzzle right. The single biggest failure of most DePINs is ignoring the demand side—the real customers who pay to use the network.
Interestingly, Helium itself provides a powerful example with its Mobile network. While they unapologetically threw their original LoRaWAN community under the bus—stranding those who had invested heavily in now less-lucrative hardware—their pivot to 5G was built around securing a major anchor tenant in T-Mobile. This strategy, however ruthless, correctly identified that a network is useless without customers.
A more organic example is Onocoy, a project building a decentralised network for high-precision GNSS data. From its inception, Onocoy has focused on securing real-world customers who have a tangible need for its data.
Getting the demand side right does not absolve these projects of their other flaws. A successful business is not the same as a successful decentralised network. But they prove that a utility-first approach is possible, and they highlight the most glaring weakness in the rest of the space. The value of a DePIN network must ultimately be measured by the revenue it generates from paying customers, not by the speculative value of its token.
This brings our fork in the road into sharper focus. We see a degenerative path defined by extraction and hype. We see glimmers of hope in projects that, despite their flaws, understand the importance of real utility. The final question is how to combine the two: is it possible to build a network with real customers and a truly regenerative, community-owned structure? In my final instalment, I’ll look intopotential blueprints for exactly that.
Attribution: Image by Audu Homes, CC BY-NC-ND 2.0 Visit here
