Tokenomics for DePIN Projects

Designing tokenomics for DePIN (Decentralized Physical Infrastructure Networks) isn’t just a question of token supply, vesting release schedule, inflation or staking mechanics.

It’s a challenge of behavior design: how to align ecosystem agents, users, and capital with the network itself, and how to accelerate network effects through incentives that drive value creation, enable value capture, and support value accrual.

DePIN protocols rely on distributed infrastructure. That infrastructure doesn’t appear by itself—it’s contributed by individuals or entities who are taking on real-world costs. These systems depend on coordination across a two-sided or even multi-sided marketplace, where both the supply side and the demand side must be active for the network to create meaningful utility.

At launch, most DePIN projects face the same fundamental issue: the network has no value yet. There are no users, no active demand, and often no immediate reason for contributors to onboard. This is the cold start problem, the system needs active participation to generate value, but it can’t attract participants without existing value.

Token incentives exist to bridge that gap. In the early stage, they provide financial utility where native utility does not yet exist. Contributors are compensated for participation before the network produces meaningful usage. This approach allows the system to build early supply, coordinate participation, and begin generating the conditions needed for network effects to form (and ideally reach critical mass).

The basic idea is: early on during the "bootstrapping problem phase" when network effects haven’t kicked in, provide users with financial utility via token rewards to make up for the lack of native utility.

But the structure of that incentive model matters. At Tokenomics.com, we’ve audited dozens of DePIN tokenomics systems across compute, storage, bandwidth, and mapping. The most consistent failure mode is not token distribution or emissions timing. It’s the breakdown in how value flows through the system.

This is why, in our audit framework, the Utility and Value Flow vertical becomes the most important category in DePIN audits

It evaluates whether the token creates economic feedback loops that reward real contribution, or whether incentives are consumed in ways that do not convert into value creation, utility or value accrual to the token.

In this article, we’ll share what we’ve learned over three years of auditing and designing DePIN tokenomics models at both Tokenomics.com (tokenomics auditing firm) and Blacktokenomics (tokenomics design firm).

We’ll look at:

• How token models approach the cold start problem and bootstrap early participation

• The difference between passive and active participation, and how it affects incentive stability

• Examples and case studies where design choices either supported network effects or created unsustainable dynamics

In this report, we follow our number one rule: data over opinions. How do we do this?

We’ve built a database of 2500+ projects across gaming, L1s, DePIN, AI, and more. Growing daily with fresh token launch data. We don’t just collect tokenomics numbers; we study what actually works, breaking down successful models from similar protocols to spot the winning patterns.

By also cross-referencing tokenomics design with real market performance, we ensure our insights are built on actual price action, not assumptions.

In a field as technical as tokenomics, without data, you’re just another person with an opinion.

Understanding the Value Flow Triangle

As we mentioned before, the most important pillar for DePIN tokenomics models is the value flow.

To analyze the Utility and Value Flow vertical, we use a model we developed and apply in every audit: the Value Triangle.

It consists of three interconnected components:

• Value Creation

• Value Capture

• Value Accrual

Value creation is the starting point. It answers the question: what utility is the product actually providing?

• Ethereum enables dApps.

• Arweave stores data permanently.

• Helium supports wireless networks.

These are examples of protocols that solve clear problems and create real usage value.

But tokenization alone doesn’t create demand. Utility needs to be clearly defined at the token level. Is the token required for access, staking, participation, or governance? Is there something a user can only do with the token—and would want to?

Too many teams assume that having users means the token has demand. That’s only true if the token is meaningfully tied to usage.

Our audit evaluates whether value creation exists and whether it’s structurally connected to token mechanics, or if the token is simply riding along passively.

Value capture comes next. It addresses whether the protocol itself retains any of the value it helps create.

This is not about token price. It’s about whether the system can retain economic energy. Projects that generate fees, usage, or volume must have mechanisms in place to keep part of that value inside the system. Otherwise, they’re subsidizing behavior without building a durable foundation.

We assess transaction fees, protocol-owned liquidity, usage revenue, and other signs of retention. The goal isn’t just activity—it’s structural value that can be passed downstream.

Value accrual is the final leg of the triangle. It focuses on whether the value captured at the protocol level actually flows back into the token—and makes it more desirable to hold.

That can happen through buy-and-burn mechanics, fee distribution to stakers, governance locks, access gating, or other systems that create holding incentives — We evaluate how strong those links are and whether they’re diluted by high emissions, reward loops, or excessive token velocity.

To clarify: value capture happens at a protocol level. Value accrual happens at the token level.

A protocol can capture meaningful value, but if none of it accrues to the token, the token becomes disconnected from network success. It doesn’t matter how well-structured the rest of the model is—if no one has a reason to hold the token, it weakens the entire system.

Think of it like a well-designed funnel with a leak at the bottom. Value flows in, but never stays.

That’s what happens when value creation, capture, and accrual aren’t aligned.

A token doesn’t just need a reason to exist. It needs a reason to be used. A reason to be held. And a system that rewards both. → repeat and write down 100 times.

Passive vs Active Participation

Not all participation is equal.

Some networks rely on contributors who set up infrastructure once—then continue supporting the system without much ongoing involvement. Others depend on users constantly checking in, confirming data, verifying activity, or maintaining nodes. That’s the key difference between passive and active participation—and it’s one of the first things we look at in any DePIN audit.

If you get this wrong, your incentive model will attract the wrong type of behavior, and burn capital doing it.

Passive Participation

Passive participation is when users provide a resource once—bandwidth, storage, hardware—and the network continues benefiting from it over time.

This structure is common in DePIN protocols focused on infrastructure provisioning:

• Helium: hosts deploy a hotspot once, and it runs continuously without needing daily maintenance

• Arweave, Filecoin, Storj: participants offer unused storage capacity and keep it online

• HiveMapper: contributors mount a dashcam, and data collection happens automatically during routine driving

These systems don’t need daily interaction. They need availability, uptime, and coverage. That’s why emissions can be tuned to reward real value creation, rather than manufactured engagement.

Passive systems tend to align naturally with the value triangle:

Infrastructure is deployed → the network captures usage or fees → value flows back into the token.

It’s simple. And it works.

Active Participation

One of the most important principles in network design, especially in DePIN, is to attract the right type of user early.

Acquiring users is not enough. You need contributors who feel the pain you’re solving. People who show up because the product solves something real, not just because the token is printing. These users are more likely to tolerate friction, stick through early volatility, and provide value the system can actually use.

The problem with many active participation models is that the incentives attract the wrong crowd.

Instead of drawing in aligned users, the system starts rewarding behavior that can be brute-forced. Participants overdo, repeat, spoof, or script their way to higher rewards. They’re not supporting the network. They’re extracting from it. Token emissions become the goal rather than the tool.

Think of an Uber driver who only logs in when surge pricing hits 4x. Technically, they’re active. But they don’t add the same long-term value as someone who builds around the network full-time. The same dynamic plays out in token ecosystems, just with more bots and fewer cars.

We’ve seen this pattern across many early-stage systems. Contributors sign in daily, submit proofs, run through tasks, or check in through mobile apps. Not because they care about the infrastructure, but because the token tells them to. And as soon as the rewards drop, so does the participation.

Axie Infinity is one of the best-known cases of this failure. The tokenomics were designed to reward players for engagement, but most users weren’t there for the game. They were there to earn. When token momentum slowed, daily active players dropped over 50 percent, triggering a feedback loop that wiped out more than 95 percent of AXS’s value.

Filecoin hit a similar wall from the other direction. Incentives bootstrapped the supply side quickly, but the demand side lagged. As of now, only 5 to 10 percent of storage capacity is actively used. More supply-side users don’t fix the issue. The constraint is on the demand side, where actual value enters the system.

LooksRare executed one of the most aggressive go-to-market strategies in Web3 — a vampire attack on OpenSea, complete with airdrops and trading rewards. It worked. Volume exploded. But most of it was wash trading. Users flipped the same NFTs back and forth to farm tokens. When the rewards tapered, genuine usage collapsed. The protocol attracted extractive participants, not actual traders.

This is the consistent pattern. Active participation systems tend to attract behaviors that are optimized for payouts, not for utility. These users don’t build with you. They don’t advocate for the product. They show up for the yield, and they leave when it dries up.

Incentive Design

Incentives don’t just need to be aligned. They need to be timed.

One of the most common mistakes in DePIN tokenomics is front-loading emissions to drive early participation. The logic makes sense on paper. The network needs contributors now, so let’s pay more now. But what actually happens is different.

You attract the most reward-sensitive users. Participation spikes. Supply comes online. But if demand hasn’t caught up yet, there’s no real usage. The emissions are spent, the tokens are distributed, and the network still hasn’t proven value. You’ve burned runway, inflated circulating supply, and taught users to expect high payouts just for showing up.

This pattern repeats in DePIN over and over. Projects over-incentivize supply-side behavior in month one and hit a wall by month four. Contributors churn or stop participating the moment rewards taper. The system becomes addicted to emissions just to maintain baseline activity.

The problem isn’t emissions. It’s emissions out of sync with network maturity.

To avoid this, we use the S-Curve framework, which breaks network adoption into three phases: bootstrapping, rapid growth, and stabilization. Each stage requires its own strategy. What works to attract contributors early will fail if used too late. And what sustains value in maturity won’t help you get off the ground.

A DePIN model needs to account for these distinct phases:

Bootstrapping
The network has no demand. Incentives should go to building critical infrastructure and onboarding high-quality contributors, not spamming growth.

Traction (Growth)
Some usage begins to emerge. Incentives now help reinforce behaviors that drive retention, utility, and feedback loops across the network.

Stabilization
At this stage, utility exists. The tokenomics should transition toward supporting value accrual and long-term alignment, not raw participation.

The emissions schedule should evolve with the product. If the tokenomics stay static while the network matures, misalignment creeps in. You end up paying the same for behaviors that no longer need to be subsidized.

This is why we always look at incentive pacing in relation to network maturity. It’s not about how much you pay. It’s about when and why you’re paying it.

Design Beyond Emissions

Every token model looks functional when rewards are flowing. The question is: what happens when they slow down?

This is where most DePIN projects get exposed. If the network relies entirely on emissions to function, the moment rewards drop, participation collapses. Not because the contributors are wrong, but because the system never built reasons to stay once the tokens ran out.

Sustainability is not just about lowering emissions. It’s about what you’ve built around them.

In audits, we often look at this question directly: If token rewards stopped tomorrow, what would still work?

Would contributors still show up because of the product?

Would users still transact because they need the service?

Would value still accrue to the token in any meaningful way?

In strong systems, the answer is yes. That’s because the incentives didn’t just push participation — they seeded utility, retention, and alignment that outlives the emissions curve.

If your product works when incentives pause, you’re building a system that can last. If it doesn’t, you’re paying for life support.

Final Summary: What Actually Matters

After three years auditing DePIN token models, here’s what’s we learned:

1. Incentives are a tool, not the product.
   If rewards are the only reason someone shows up, they’ll leave the second they slow down.
   
   

2. Participation needs to match the phase.
   Early-stage networks need contributors, not mercenaries. And mature networks need retention, not noise.
   
   

3. Value flow is the test.
   Creation is good. Capture is better. Accrual is what makes the token holdable. Miss any leg of the triangle and the whole thing collapses.
   
   

4. The wrong users break your model.

   Optimizing for task completion isn’t the same as optimizing for utility. If your incentives attract the wrong behaviors, the token will reflect it, in price, velocity, and trust.
   
   

5. Your emissions schedule is a strategy.

   If you’re handing out tokens like coupons without knowing what each phase is trying to build, you’re not designing an economy — you’re draining one.

This isn’t theoretical. It’s what we see in the audits that hold up. And it’s what’s missing in the ones that don’t.

The most successful DePIN projects we’ve audited all did one thing right: they treated tokenomics as infrastructure, not marketing.

If the token doesn’t support the system, it’s dead weight. If it drives usage, aligns incentives, and captures value — it becomes the system.

That’s the difference.

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