IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v90y2026ics1544612325023645.html

The road to decentralization: Optimal coverage on Decentralized Physical Infrastructure Networks (DePIN)

Author

Listed:
  • Soria Ruiz-Ogarrio, Jorge
  • Moya Velasco, Jorge
  • Estévez-Mendoza, Carlos

Abstract

Decentralized Physical Infrastructure Networks (DePIN) represent an emerging organizational form for operating physical infrastructure through blockchain-based coordination. DePIN through decentralized protocols and token-based payment mechanisms incentivize independent agents to deploy, maintain, and monetize real-world infrastructure, such as wireless networks, storage units, or sensors. This article presents a first formal economic analysis of DePIN architectures, modelling investment decisions under network effects in a blockchain-native Decentralized Autonomous Organization (DAO), with protocol-defined reward schemes. It establishes the equilibrium conditions that support decentralized provision, where token prices internalize participation, service reliability, and network coverage. Furthermore, it identifies a minimum viable coverage threshold determined by costs and network effects. Through a multi-agent machine learning simulation, we confirm that decentralized provision improves efficiency compared to centralized models. The results support the economic viability of DePIN and provide design guidelines for future decentralized infrastructure protocols. Finally, we propose a DAO incentive mechanism to implement First Best provision in Decentralized Physical Infrastructure Networks.

Suggested Citation

  • Soria Ruiz-Ogarrio, Jorge & Moya Velasco, Jorge & Estévez-Mendoza, Carlos, 2026. "The road to decentralization: Optimal coverage on Decentralized Physical Infrastructure Networks (DePIN)," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325023645
    DOI: 10.1016/j.frl.2025.109115
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325023645
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109115?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325023645. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.