This podcast episode features a discussion between Wu Blockchain founder Colin Wu and EO Hao, CEO and founder of Future Money Group. They explore the potential of DePIN (Decentralized Physical Infrastructure Networks) and its integration with real-world applications. Topics include the origins of DePIN, investment logic, its connection to hardware, AI, and the real-world economy, the impact of ecosystems like Ethereum and Solana on DePIN, and how participants from varying cultural backgrounds shape this field’s future. Other discussions cover shifts in the U.S. regulatory landscape, opportunities at the intersection of blockchain with real-world assets (RWA), AI computing markets, hardware mining, and the innovative realization of economic value through DePIN.

Note: Guest opinions do not represent those of Wu Blockchain. Wu Blockchain does not endorse any products or tokens. Readers are advised to comply with local laws and regulations.

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Introduction

Colin:

EO, why don’t you start by sharing your background and details about your fund?

EO:

I’m a loyal reader of Wu Blockchain. On Twitter, I follow you and noticed you might follow me too, though I haven’t been very active there recently. My profile picture has always been Milady. I’m EO, and I joined the crypto space in late 2016 to early 2017. Before that, I was an entrepreneur with a background in traditional finance, working on asset securitization and handling distressed assets in investment banking. Later, I ventured into fintech, founding companies offering cash loans and data-driven lending services.

We scaled our products to 3–4 million mobile users in China and Indonesia, similar to U.S. credit card lending platforms. During cross-border operations, we discovered Bitcoin as a way to repatriate income from Indonesia back to China. This connection led us to engage with early crypto veterans, including those at Huobi. It was a serendipitous entry into crypto, and now it’s been seven or eight years.

In late 2017 to 2018, we launched Future Money Group (FMG) investment business. We believe Bitcoin and crypto are the future of money — not just as wealth measurement tools but as iterative technologies digitizing traditional monetary concepts into a part of the database. Fascinated by this technology, we’ve supported it ever since.

So far, we’ve managed about three funds: a direct investment fund, a primary market fund, and a secondary market fund. Our focus has been on underappreciated sectors, particularly those merging with the real world, like DePIN and RWA. We began investing in these areas three to four years ago. Messari even recognized us as Asia’s leading DePIN investor. That’s our background and current focus.

Discovering Solana and DePIN Opportunities

Colin:

I recall your strong focus on Solana. Was it pivotal in your crypto journey and later engagement with DePIN?

EO:

Yes, Solana stood out in 2018 or 2019 during its funding rounds. A U.S. friend introduced us to invest early in Solana. However, back then, our understanding of Solana was more as an Ethereum alternative — the so-called “Ethereum killer” — rather than its connection to DePIN.

Colin:

What was Solana’s valuation at the time?

EO:

It was a few hundred million USD — not exactly at its earliest stage but relatively inexpensive by today’s standards. Our view then didn’t extend to DePIN; we primarily saw it as a potential Ethereum substitute, supported heavily by the FTX ecosystem.

However, signs of DePIN were already apparent in projects like Helium, supported by MultiCoin Capital. We engaged with Helium early, buying its token at $1–2 and collaborating with miners and hardware producers. One mining company even expanded to produce seven to eight types of DePIN hardware, which we supported.

Solana later became the ecosystem most committed to DePIN and innovation. Its support for DePIN enhanced our focus on this area, forming a mutually reinforcing relationship. This synergy became a compelling path for discovering alpha opportunities.

The History and Development of the DePIN Concept

Colin:

When it comes to DePIN, it’s not entirely a new concept. Historically, it has been present in the crypto space for many times. If we take a broader definition, Bitcoin could be considered the earliest DePIN, as its integration with hardware has always been a crucial component of the crypto industry.

For example, in 2017, Onechain launched the highly popular PlayCoin cloud. In the last cycle, Helium and Filecoin were among the most talked-about DePIN projects. Comparatively, this cycle’s focus seems to be leaning more towards AI, with projects like IO.net and ATH gaining some attention. However, unlike previous cycles, there doesn’t seem to be a breakout, iconic DePIN product so far. That’s my understanding of DePIN’s history — what’s your take?

EO:

You’re spot on. When we first encountered DePIN, it wasn’t even called by this name. There were related concepts floating around. Over the past two to three years, as I lived in the U.S., I became familiar with the team at Messari and witnessed them coin the term “DePIN.”

Colin:

When did this term emerge?

EO:

Around late 2022 to early 2023. Before the term “DePIN” was introduced, there were other related concepts. For example, “EdgeFi” emphasized edge computing combined with financial incentives, rewarding edge devices for completing computational tasks. MultiCoin Capital proposed “POPW” (Proof of Physical Work), which relied heavily on physical activities, like setting up 5G stations to run networks — essentially a very grounded, “blue-collar” kind of work. In the future, such proof mechanisms could become Web3’s answer to Web2’s sharing economy.

Another precursor was “TIPIN,” which referred to token-incentivized physical networks. Finally, two Messari researchers, Sami and Stephanie, finalized the name DePIN (Decentralized Physical Infrastructure Networks). Thanks to the buzz on Twitter, the term quickly gained traction and became a hot topic. This highlights the comprehensive narrative-building process in the West and how communities can craft a concept. In Asia, such phenomena are relatively rarer, but we’ve seen it recently with terms like BRC and Ordinals.

Despite the buzz around DePIN, we face some challenges. For example, some startups label their projects as DePIN merely to attract funding, which doesn’t always align with the direction we value. We’re more interested in genuinely impactful projects rather than those chasing buzzwords. DePIN, in our view, should aim to create offline job opportunities, offering more people a chance to join blockchain networks and earn through their efforts. This type of network feels more like a “future work network.”

My perspective on the current crypto industry is somewhat mixed. While I’m optimistic overall, I hold a more pessimistic view of the short and medium-term outlook. Too much focus is placed on gambling, Bitcoin, and ETFs, which isn’t diverse enough to attract new participants. Newcomers struggle to earn or gain wealth through labor, posing a significant challenge for crypto’s globalization and mainstream adoption. We need to enable people without initial capital to participate in the network through their labor and earn rewards, thereby fostering a bond with the network.

One good example is Axie Infinity. While not entirely DePIN, it successfully attracted mass participation by allowing people in the Philippines to earn between $50 to $300 a month by playing games. This model of binding users through labor is what we hope to explore, rather than DePIN becoming a finance-heavy network dominated by whales or capital-intensive operations.

Colin:

From your description, it seems like DePIN projects that encourage mass participation align better with your vision. In contrast, projects like Bitcoin and Filecoin, which require expensive hardware, don’t quite fit this narrative. Perhaps mobile mining or car-based mining is closer to your ideal?

EO:

Exactly. One crucial aspect of a network’s economy is its distribution mechanism. Take Bitcoin, for example — its wealth distribution is extremely concentrated, comparable to that of North Korea. Whales, large miners, and equipment manufacturers dominate Bitcoin ownership, and this status quo is hard to change.

We hope to see token distribution mechanisms evolve through creative labor and innovative contributions, rather than just capital-intensive networks. Considering onboarding millions — or even tens of millions — of users, traditional mining is clearly unrealistic. A better approach is to design activities that people can participate in daily, such as contributing data or actions, to join the network and earn rewards. This model aligns better with our ideal vision.

Solana Phones and Hardware Explorations

Colin:

Previously, Solana launched its phone to significant buzz. Do you think that’s an interesting path?

EO:

In the short term, it’s an intriguing experiment. Regarding Solana’s phone, I think its reliability is relatively high. In contrast, it’s incredibly challenging for smaller companies to develop phones successfully. Many Web2-era attempts have failed, like Amazon’s phone or similar projects from Chinese firms like Meitu.

The main issue lies in the highly mature supply chain for phone manufacturing. For example, in Shenzhen’s Huaqiangbei, you can find phone molds to produce devices costing as little as $35, which are then sold in Africa. However, the real challenges are distribution channels and ecosystem building. For instance, in Africa, distribution is almost entirely monopolized by four Chinese companies. Building your own app ecosystem is another daunting task.

Thus, I’m not optimistic about small companies or startups creating successful Web3 phones. If there’s an exception, I’d say Solana’s phone has a better chance. With its well-developed ecosystem supporting numerous applications and tokens (e.g., meme coins), it has enough appeal to sustain its operations.

Additionally, phones could serve as a bridge for DePIN in the future. If platforms like Apple or Android offer more support for crypto, decentralized physical networks will gain a better carrier. At that point, we may not need specialized equipment; crypto phones alone could handle numerous functions. If Solana’s phone succeeds, it might become a critical node in the Solana DePIN ecosystem.

For example, the phone could integrate with Helium’s 5G network for roaming, validate Helium’s network, upload road data to HiveMapper, or connect with Solana-based apps like the ride-hailing service Teleport. This potential to act as a connector for various DePIN devices makes hardware projects launched by major ecosystems, especially those tied to offline scenarios like payments, more promising.

Colin:

What about devices like rings, wearables, or gaming consoles?

EO:

These devices often depend on support from a larger ecosystem. It’s difficult for them to establish a strong independent network effect or closed loop on their own. Instead, they’re better suited as part of an ecosystem to attract users. However, expecting them to develop independently into valuable projects is quite challenging.

At Ethereum’s Paris conference in 2021, I shared a study on DePIN device usage. Three key factors are frequency of use, device cost, and labor intensity. Devices used daily, like phones or e-cigarettes, often have low economic value. Conversely, high-value devices usually have low usage frequency. If a network emphasizes purchasing expensive devices for rewards without involving user labor, capital will become concentrated, benefiting only wealthy participants or those familiar with the system.

To counter this, we need to incorporate user labor to create “sweat equity,” deeply binding users to the network. Given this, smaller hardware projects are typically capped in economic and network value and are better suited as ecosystem entry points rather than standalone ecosystems.

Colin:

Are there examples of health-related devices?

EO:

Yes, Fred from Paradigm is developing an infrared brainwave device to help users improve sleep and endocrine regulation. With advancements in biomedical tech and growing data demand, such devices could unlock significant economic value. It’s an area currently being explored in the U.S.

Colin:

So, devices like e-cigarettes or Berachain are more marketing tools?

EO:

That’s right. These devices often gain short-term attention but struggle to sustain tokenomics or grow into large-scale projects in the long run. They might have a brief surge in popularity, but interest quickly wanes.

Additionally, DePIN projects should aim to introduce more labor involvement and generate real-world revenue streams. Currently, most crypto protocols derive income from on-chain financial activities like transaction fees and lending, which are highly cyclical. Revenues drop significantly during bear markets and recover in bull markets.

To attract more capital and grow Total Value Locked (TVL), we need to bring in stable, external revenue sources that aren’t tied to crypto market fluctuations. For example, generating protocol revenue through DePIN devices or creating value by scaling the network’s reach. This is a critical focus for us when evaluating DePIN projects.

The Future of RWA (Real World Assets)

Colin:

If we generalize the concept of DePIN, would Worldcoin fit your ideal vision of a DePIN project? It does provide a pathway for mass participation.

EO:

Overall, it’s a high-quality crypto project with strong fundamentals, an impressive lineup of investors, and abundant resources. Its airdrop mechanism is particularly well-designed. However, whether it can evolve into a valuable economic network remains to be seen. We’re also unsure how the team will proceed, but it’s definitely one of the projects we’ll continue to watch.

Colin:

Understood. What do you think is the difference between a good coin and a solid network?

EO:

A good coin is an excellent speculative or meme project, while a solid network takes more time to prove its value.

Colin:

In the last cycle, storage projects like Filecoin were very popular. Did you participate in these projects? They seem to have lost some of their initial hype.

EO:

Filecoin has strong fundamentals, and we’ve been following the project closely. Its ecosystem, including AI-related projects like IO and Akash, relies on Filecoin’s underlying storage and computing capabilities. Filecoin itself is building a computational network to create a truly decentralized platform.

Filecoin’s vision is ambitious. It’s not just a DePIN project; it aspires to transform computing into a distributed ecosystem. Projects like ICP and Ethereum share similar goals but take different approaches. Ethereum focuses on software, prioritizing smart contracts, while Filecoin starts from hardware, such as SSDs and storage.

Ethereum’s path has proven lighter and easier for rapid adoption, while Filecoin’s hardware-centric direction faces initial challenges in attracting users. However, given enough time and development cycles, Filecoin’s rich content layers may ultimately complement Ethereum’s functionality.

Another notable development is Ethereum’s push for hardware decentralization. Currently, Ethereum’s PoS system heavily depends on centralized hardware resources like AWS and data centers in the U.S. and Europe. In regions like Africa, cloud services and physical servers are prohibitively expensive. Ethereum is working on lightweight nodes that can run from home and even developing hardware devices to store block data and operate Ethereum nodes, promoting hardware decentralization.

In the long way, projects may converge toward similar goals, though their paths and timelines differ. From an investment perspective, we must evaluate which approach is more likely to achieve “revolutionary success.”

Colin:

Besides DePIN, you’re also focused on RWA. What’s the rationale behind this interest?

EO:

I studied real estate and finance at Columbia University, delving into the history of U.S. real estate financial instruments. Much of the subprime mortgage crisis stemmed from the collapse of real estate derivatives. On the flip side, real estate, along with corporate bonds, constitutes one of the largest asset classes in the U.S.

Crypto is already breaking into government bonds (e.g., MakerDAO’s stablecoin backed by treasury yields). The next step could be corporate bonds, B-grade debt, REITs (Real Estate Investment Trusts), or mortgage-backed securities. These asset classes are massive, highly liquid, and offer stable yields. Blockchain technology can facilitate their digitization, reduce trust barriers, and improve efficiency.

I see RWA as essential. Most crypto assets today are highly volatile and cyclical. If we want capital to stay in this space long-term, we need a more diversified asset structure. Introducing stable assets like RWA can fill gaps in the current capital structure.

Building RWA requires teams skilled in both traditional finance (TradFi) and on-chain technology. These teams need to bring traditional asset classes on-chain and create bank-like ecosystems that anchor capital. This is a major area of focus for us.

New Directions in AI and Blockchain

Colin:

You mentioned AI and DePIN earlier. While current trends lean toward AI agents and token distribution, you must have studied projects like IO and ATH. How do you view the intersection of AI and hardware in this cycle?

EO:

Blockchain serves as a secondary market for computational power. Crypto doesn’t produce hardware or directly manage computing power but brings these resources on-chain for trading.

In last year’s geopolitical climate, some computing power couldn’t be accessed by developers in certain countries. Projects like Akash and IO introduced the concept of “compute freedom,” advocating for the unrestricted flow of computing resources, akin to spice in Dune. Developers should be able to purchase compute power freely at reasonable prices, leveraging blockchain as a permissionless network. This concept has long-term viability.

Blockchain commoditizes compute power, making it tradeable for developers. It also tokenizes compute resources, enabling staking within protocols and distributing yields to compute resource providers and token holders. This innovative model offers a pricing mechanism for the compute market, enhancing liquidity management. Akash and IO have both excelled in this space.

Colin:

In the U.S., are there interesting AI projects, such as those in autonomous driving or IoT?

EO:

Connected vehicles are indeed a promising use case, especially in the U.S., where cars are integral to daily life. Cars serve as mobile “indoor spaces,” generating vast amounts of private data and reflecting user habits — making them highly potential-rich.

Projects like Dimo and Hivemapper are working in this field. Dimo’s founder shared an interesting idea: turning on-chain vehicle data, such as mileage, safety, and driving behavior, into a credit score. This score could be used directly on platforms like MakerDAO for car loans or personal loans. By combining vehicle and personal data with offline lending services, loan recovery can be ensured, creating a strong use case.

Moreover, AI development demands substantial data. Scale AI, for instance, employs thousands of people globally to train and provide data for AI systems. Similarly, DePIN can incentivize people in remote areas to collect data. For example, in India, a company distributed smartphones in local markets, allowing users to record vegetable prices. This data not only helped predict CPI but was faster and more accurate than government statistics.

If we can integrate blockchain and AI to enable data collection and monetization, it’s a highly worthwhile direction.

Colin:

Beyond compute markets and data, what other AI-related areas deserve attention?

EO:

I believe agents will become assets themselves in the future. Agents could take the form of knowledge assets, stored on blockchains. They could engage in negotiations, games, and settlements through smart contracts, forming decentralized protocols. This model has enormous potential.

The convergence of compute power, data, and intelligent agents represents several deeply promising areas for exploration.

The Future of DePIN and Market Correction Mechanisms

Colin:

I have a question. One of the challenges in the crypto space is its “gambling nature.” If we’re blunt, it’s a casino; if we’re polite, it’s a trading-centric market. This characteristic seems to overshadow all other directions. For example, trading tools like PumpFun or certain meme coin platforms can generate daily profits of hundreds of thousands to millions of dollars with ease.

In such an situation, it’s hard to focus on projects that genuinely integrate with the real world, especially hardware-related ones, given their higher costs. Many DePIN or similar projects end up looking like “pump schemes” in some form. Both project teams and users often prioritize tokenomics over the actual value of the project. What’s your view on this dilemma?

EO:

I completely agree with your perspective. Firstly, I often read your tweets, and I think you’re one of the rare voices of reason in the crypto space. The issue you’ve raised is something many are aware of but reluctant to discuss openly. This situation does pose a significant challenge: for survival, the crypto space often has to cater to quick profits and speculative tendencies, which is indeed unfortunate.

That said, I still believe in the power of free markets. Markets have a remarkable ability to self-correct, sometimes faster than we anticipate. Over the past two years, we’ve already seen corrections in the market regarding VC coins and Ethereum.

A few years ago, I attended an Ethereum DevCon. At the time, Ethereum was dominant, but I could sense a growing bureaucracy within the ecosystem. To work on Ethereum-related projects, you often needed to “know someone” or get someone to promote your work on social media. This bureaucratic tendency felt off to me. Yet, the market corrected this issue faster than I expected. Attention gradually shifted from Ethereum to Solana and other applications with more direct profitability.

Similarly, the market quickly corrected the hype around VC coins. Retail investors became less involved with them, and many VCs recognized the issue, opting for fair launches instead. This shows how efficiently free markets can address problems. While it takes time, it might happen sooner than we think. Our role is to stick to the direction we believe in and wait for the market to align.

Regarding the “casino” nature you mentioned, I believe the casino model itself is a legitimate business. In traditional finance, there are publicly traded casino stocks, such as Sands Corporation or certain British online gambling companies. These businesses, while regulated, are still valid enterprises and are fairly valued by capital markets. Blockchain is no different. If some casino-like projects can withstand the test of time, secure regulatory licenses, and operate stably, they too may earn reasonable market valuations.

However, blockchain isn’t limited to this gambling nature. Many groundbreaking projects and companies are emerging, adding diversity and future potential to the industry. I believe gambling will only be a part of the space, not its dominant or sole direction.

U.S. Regulatory Environment and Opportunities for DePIN

Colin:

We all hope to see the industry become more diversified rather than concentrated in one direction. Although the current state isn’t ideal, we still hope for future improvements. How do you view the entrepreneurial atmosphere in the U.S. around AI and crypto integration? Especially with the possibility of Trump returning to office — could this create significant support?

EO:

I think the direction is becoming increasingly clear. Over the years, the U.S. regulatory approach has matured. They’re unlikely to take an “all-or-nothing” stance but instead prefer to establish a framework. As long as you operate within this framework, pay taxes, and follow legal procedures, you can continue running your business.

Take Binance as an example. While they faced substantial fines, they managed to adapt by restructuring their shareholder composition and have relatively stabilized in the U.S.

Within this framework — and given the need to reinforce the dollar’s status through assets like Bitcoin — the U.S. regulatory system is becoming more defined and stable. Key areas of focus will likely include AI, crypto, and DePIN, all of which present significant opportunities.

Interestingly, those working on DePIN in the U.S. differ from the traditional crypto crowd. They are typically men in their 30s or 40s, wearing plaid shirts and trucker hats, often leaning toward a right-wing cultural background. This contrasts sharply with Ethereum’s more left-leaning community, where you’ll see rainbow shirts and dreadlocks at conferences.

These new players bring a more practical value proposition, emphasizing industrial benefits, ease of participation for the masses, and projects beneficial to the U.S. This pragmatic mindset is shifting crypto from a “far-left” ideology toward a more centrist or even right-leaning direction.

This shift is even more apparent under the influence of the current U.S. government. For instance, David Sacks’ Craft Ventures has invested in numerous crypto projects, including Solana and DePIN initiatives like Hive Mapper. JD Vance has also mentioned crypto applications in his speeches, particularly real-world integrations like Helium.

This administration and the new players clearly have different preferences and priorities. They are more inclined to support projects with real-world applications rather than those solely pursuing decentralization. This trend is worth studying as it reflects the potential direction of U.S. government policy.

Colin:

Got it. That’s a fascinating observation. Let’s wrap it up here for today, and we can dive into more interesting topics and hot trends in the future.

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