In spending time with many projects across the DePIN space, Max and I have developed the following as a rough guide to help founders and their teams identify where they need help in order for their project to succeed.
We break these elements into two groups: Project Fundamentals and Go To Market. The following requirements are the bar your project has to clear in order to stay on the path to success.
- The thing has to work.
- The blockchain and tokens have to add value.
- Incentives have to well formed and flexible, able to support network health now and change to match conditions in the future.
Go To Market
- Customers have to understand it.
- Participants have to receive continuing value outside of the token.
- Customers have to know about it.
- You have to take care of your community
Let’s go through those in a little more detail.
The thing has to work
This is typically where projects founders are strong. Good projects usually require some deep technical expertise which the founders have. Founders know how to build a thing that works. Examples of this are GEODNET‘s expertise in global positioning, the React project‘s understanding of energy markets, and the Helium team’s long experience in the world of IoT. Think of this expertise and function as required but not sufficient for a project’s success.
The blockchain & tokens have to add value
If you’ve talked to Max about your project, you’ll remember the first question he always asks: Why does this need a token?
With Helium’s initial extraordinary success as inspiration, many projects we’ve seen have thought, “Hell, we’ll just bolt on a blockchain and the market will love us!” That’s incorrect. Having your project tied to a blockchain and issuing out a token has to have more value than just marketing.
As a short aside, Helium launched into an extraordinary confluence of events, akin to launching a kite in a hurricane. Sure, the thing hit 120 mph, but that’s in a hurricane. For any regular project you need to have a reason to fly when the wind is blowing just 10 mph.
Incentives have to be well formed and flexible
One of the fundamental advantages of having a token is that you get to issue tokens, which has a marginal cost of close to zero for the project. However, for those tokens to have value, the incentives for deployers and users have to be well formed and not easily perverted.
The forces driving incentives will change as a project grows, and the ability to re-shape incentives to match that growth MUST be built in to your project roadmap. The React Network’s docs are an excellent model to follow.
Customers have to understand it
This is usually the largest stumbling point. While project founders usually have deep technical expertise, that typically doesn’t translate to the ability to explain it to a normal person. It is critical for your customer to be able to easily understand your project. If they don’t understand your product, the absolute best you can hope for is a FOMO flash, which always results in long term toxicity.
Participants have to receive continuing value outside of the token
In order to build a project of enduring success, a majority percentage of value has to be able to be decoupled from the token. This is where the P in DePIN comes in. DePIN projects provide something physical that delivers value in the real world. Examples of this are LoRaWAN coverage, energy monitoring, centimeter precision accuracy, vehicle data, weather data, etc. The token cannot be the thing that drives day-to-day value.
Customers have to know about your project
You can have the best product in the world, but if the world doesn’t know about it, all you’ve got is a handful of nothing. Your plans should give significant weight to how you’ll get the word out about your project. Hoping that “it’s so good everyone will love it and tell their friends” is not a good plan.
You have to take care of your community
Your community is at the core of your project; they’re the reason you’re able to build a DePIN project in the first place. Dedicating team resources to serious community building and management backed by technical expertise (so you can quickly and clearly answer the inevitable hard questions) is mission critical.
Where can you get help with these?
Gold Hawks & Associates can help your project with 6 out of the 7 success requirements listed above. The deep technical expertise is up to you. For the rest of your project’s success, we can help steer you in the right direction.
Max & I serve on multiple boards in the Helium ecosystem and have helped form incentives, assessed and explained various DePIN projects, and are trusted advisors in the space and members of the community. If you’d like to be considered as a potential client and add our expertise to your project line up, please reach out!