The decentralized physical infrastructure sector faces a reality test as investors debate whether it can deliver beyond the hype.
Venture investors are increasingly closing their mouths Demin — short for decentralized physical infrastructure networks — some also argue that the model is losing ground.
What started as an ambitious endeavor To finance decentralized infrastructure With the token economy – and only as of last June Expected To grow into a $3.5 trillion market by 2028 – now under close scrutiny. The conversation has shifted away from vision and toward fundamentals, such as costs of capital, cash flows, and who actually bears the risk when things go wrong.
“Debin is dying”
Meltem Demirors, co-founder of Crucible Capital, did not sugarcoat the issue. writing On X last Monday, “DePIN is dying and I don’t see him coming back.” Demirors argued that DePIN’s token models “deny the physics of finance,” referring to The huge boom in centralizationAI-driven infrastructure spending as evidence that markets are choosing efficiency over ideology.
However, Crucible’s founder and general partner went on to say that cryptocurrencies have an opportunity to be integrated into the shift from public infrastructure financing to private infrastructure financing, adding that “the opportunity for cryptocurrencies is not in bottom-up innovation, but in top-down integrated finance.”
David Choi, co-founder and CEO of the company behind USDai, a yield-generating synthetic dollar powered by AI infrastructure, joined the discussion, proposing Share X The primary challenge facing DePIN is financial, not technical.
Drawing on his company’s work evaluating dozens of types of hardware that support DePIN networks — such as GPUs, antennas, and networking hardware — Choi said many models start to break down once the cost of that hardware collides with the cost of financing it.
As projects try to scale by relying on cheaper hardware, data quality often deteriorates and “without unique data, you can’t really produce superior networks,” Choi noted.
This trade-off creates a counterproductive cycle, Choi said. “The more expensive the hardware is, the higher you need to be paid to justify a higher cost threshold,” Choi wrote, leading teams to use lower-quality equipment just to make the expansion affordable.
Structural uncertainty
But skeptics insist that the defects are structural. Dan Elitzer, partner at cryptocurrency investment firm Nascent, He said in response to Choi that his company avoided the sector altogether, viewing DePIN as “almost completely unveiled ICOs” that lead to “less efficient infrastructure deployment.”
As Elitzer explained, Nascent ultimately backed USDai not because of its exposure to DePIN, but because its founders “won’t stop until they build something huge that changes the capital markets.”
Coordination versus control
However, not everyone is ready to consider her dead. Sami Kassab, managing partner at Unsupervised Capital, warned In response To Demirors Demirors I quickly pushed back In a follow-up, he responded that “orchestration technology where 50% or more of the stake is controlled by a single entity is just a dictatorship.”
While venture capital leaders remain divided on how far DePIN can go, the past year has been rough for the sector, to say the least.
Data from Delphi Digital He appears DePIN and AI-related tokens lost more than 80% on average in 2025, making the category the fifth-worst performer overall and trailing only modular projects, games, agents, and frameworks.
But it’s not as if all DePIN projects go poorly. Aethir, a decentralized cloud computing network that pools GPUs, It was withdrawn More than $127 million in revenue in 2025, just one year after its debut.
Helium, which also launched in 2024 and is building real-world wireless networks, has raised more than $18 million in investments. Annual network fees In 2025 for DefiLlama Data.
Way to basics
Some still view the ongoing chatter as a necessary correction rather than a death spiral. Noman Kabra, co-founder and CEO of NodeOps, DePIN’s AI-powered orchestration layer, told The Defiant that the sector is moving from hype towards fundamentals.
“The DePIN sector is maturing,” Capra said, noting that “initial excitement moved faster than fundamentals, and we are now seeing the natural evolution from hype to substance.”
In Capra’s view, the projects that are gaining traction today are those that built products that people actually wanted and generated revenue before the obsession with symbolic mechanics.
“Companies that thrive will be chosen because the service works well, not because of the blockchain architecture,” Capra concluded. “This move from novelty to utility represents progress.”
Lex Sokolin, a partner at Geneative Ventures, sees the entire discussion as a problem of distribution, that is, of writing In X’s post In response to Demirors, unlike cryptocurrencies, big tech companies can allocate capital “efficiently across the things they own, including distribution.”
Sokolin added that DePIN funds only part of the chain and cannot capture demand directly, leaving projects stuck between ideology and economics until they secure users.
