This is an interesting opportunity: a startup Called SkySafe It sells sensors you can place on your roof to help monitor drone activity. In return, you’ll get a portion of the revenue you collect from clients like stadiums and government agencies, while also enjoying access to FlightAware’s drone offering. It’s a great project, but there’s a problem: the sensors cost $949, and any payments will be made in a new type of cryptocurrency. Are you going to go for it?
To get an idea of what this is all about, it’s helpful to know that SkySafe is one of the latest entrants into a segment of the cryptocurrency market called decentralized physical infrastructure networks, or DePIN. This concept has been around since 2021 and the most famous example is a project called Helium – whose ads were all over the New York City subway system – which will pay you to be part of its wireless phone network. A mapping initiative called Hivemapper is another example.
In theory, these projects are a great idea. Distributed networks are typically much more powerful than centralized networks, and are attractive for distributing ownership of underlying services over a broad segment of the public. The question is whether the economy adds anything. It is not clear that they do.
The problem lies with the token-based payment systems that underlie the DePIN model. Like other cryptocurrency projects, it offers good allocations to founders and investors (hello, Andreessen Horowitz!) that can be brought to market before the average network participant can collect. In this case Of heliumThere is ample evidence that insiders took… Long, greedy doses From supplying the token at the expense of others. This led to accusations that Helium was selling expensive devices while paying only a pittance.
It’s tempting to write off this entire sector as a scam, but that’s not the case. SkySafe, the drone startup, has dozens of paying customers, and its CEO is an MIT graduate and former Air Force officer. It is a legitimate process and expanding its network with participating citizens makes sense. Even Helium may be turning a corner with its launch of a low-cost national phone network and tie-up with T-Mobile.
The issue is symbols. Drone enthusiasts might jump at the chance to join the SkySafe network, but would any of them really want to get paid in the startup’s emerging currency called FLYTE? Meanwhile, Helium has issued not one, but three new types of cryptocurrency, adding a pile of confusion to an already questionable economic arrangement. The case for any of this is less convincing given the growing popularity of stablecoins, which offer the efficiency of blockchain networks without having to delve into the world of the “token economy.”
The late Charlie Munger liked to say: “Show me the incentives, and I’ll show you the behavior.” This is good advice for many situations, including anyone tempted to invest in the world of DePIN.
Jeff John Roberts
[email protected]
@jeffjohnroberts
Decentralized news
Paxos Prize of US$100 Million: Longtime stablecoin player Paxos has acquired New York-based wallet startup Fordefi, a cleverly named startup that specializes in DeFi wallets. The deal signals that Paxos’ institutional clients have a growing interest in decentralized trading. (luck)
Stolen on payday: South Korea’s largest exchange, Upbit, revealed a $30 million hack, likely carried out by Lazarus, one day after it was announced that it had been acquired by one of the country’s telecommunications giants. (Cluster)
Problems of universal freedom: A co-founder of a small company that stored the Trump family’s World Liberty Financial cryptocurrency is threatening to file a whistleblower complaint over whistleblowing. The company, which agreed to hold $1.5 billion worth of WLFI tokens, fired its CEO in September. (Information)
To MoonPay: Payment company MoonPay has become one of the few cryptocurrency companies to obtain a New York trust charter, which designates it as a fiduciary and puts the company in a position to attract more institutional clients. (Decryption)
Powerful coding gain: The push to put stocks on the blockchain is gaining momentum with the help of giants like JPM and Robinhood. A new report explains how this shift is freeing up collateral, democratizing assets, and creating more direct relationships between companies and shareholders. (luck)
Main character of the week
Andrew Harrier – Bloomberg/Getty Images
Crypto-hating economics professor Steve Hanke brought this up again this week, Phishing Bitcoin users in its usual “go to zero” style – and get predictable responses.
Mimi, oh wait
@Stephen Bone Break
The latest bear market brings familiar holiday gloating from crypto-skeptical friends and family members.
