The beginning of the year was marked by the rise of Decentralized Physical Infrastructure Network (DePIN) tokens, which includes the following subsectors:

• Compute networks: Render, Akash, Golem, Nosana
• File storage networks: Filecoin, Arweave
• Wireless networks: Helium, Hivemapper, Dimo
• Cloud platforms: AIOZ, Aleph.im

Granted, over the past 6 months, most of these tokens have largely retraced the gains they made since the start of the year.

Nevertheless, the DePIN sector as a whole is one that investors may want to pay attention to, considering the thesis that DePIN can be a potential pick-and-shovel infrastructure play that functions as a proxy for the rise of AI applications.

But given the myriad DePIN tokens in the market, especially after recent launches like Aethir and io.net, investors are spoiled for choice when it comes to gaining exposure to the DePIN sector.

And in the spirit of spoiling you guys even further, this token brief will throw a new hat into the ring – peaq, a L1 blockchain built specifically for DePIN, whose token (PEAQ) will be launching soon (sometime in Uptober)!

peaq - a dedicated DePIN L1

At a macro level, peaq aims to power a global infrastructure revolution by being a global computer, where community-owned machines create value for communities and people are empowered to own and earn from mobility, energy, connectivity, environment, agriculture, and digital infrastructure.

To attain its vision, peaq has built a L1 blockchain specifically designed to power DePIN through its Modular DePIN Functions offering:

• peaq ID: a verifiable, decentralized digital ID that seeks to promote interoperability by establishing a framework for machines to identify and communicate with each other.
• peaq access: allows developers to implement and configure access control.
• peaq verify: a multi-tiered verification process to verify physical machine data.
• peaq pay: facilitates payments between machines or users and machines.
• AI-Agents: Integrated with Fetch.ai’s autonomous agents for developers to optimize and automate business processes.

By providing ready-to-use functionalities crucial to the development of DePIN, it comes as no surprise that peaq is already home to over 45 DePIN projects and applications across 18 industries, with more than 1 million connected machines, vehicles, robots, and devices.

PEAQ tokenomics

Back in March this year, peaq raised $15 million in a round led by Generative Ventures and Borderless Capital, and in May, peaq secured $20 million in a CoinList launch. The CoinList launch, which was oversubscribed, will have 15% unlocked at TGE with the remaining linearly vested for 6 months.

But aside from this, not much is known about the PEAQ token. While peaq has confirmed that PEAQ will have a max supply of 4.2 billion tokens, with the distribution elucidated below, the vesting schedule has not been made available yet.

• Funding: 34%.
• Community: 21%.
• Team and Core Contributors: 20%.
• Network Security: 5%.
• Ecosystem and Treasury: 20%.

The exact TGE date is also unknown, but peaq has mentioned that it will be in October.

peaq also explained that PEAQ will adopt a disinflationary model, where the initial inflation rate is set at 3.5% to provide sufficient incentives for early adopters, and will decrease by 10% each year until it stabilizes at 1%.

As for token usage, like most typical L1 native utility tokens, use cases include transaction fee payments, onchain governance, and staking. On a more novel note, a new use case introduced by PEAQ would be staking on machines, with the aim to build a decentralized reputation and trust system.

The bear

Let’s first analyze peaq’s bear case. As peaq is still in its nascent stage, most projects building on peaq are small-scale projects that are rather unknown. Scrolling through peaq’s peaqosystem, I literally know none of the projects building on peaq.

This precipitates the question: how can peaq’s ecosystem projects out-compete incumbents? To exemplify this point, consider the following:

• How can EC3, a decentralized energy marketplace building on peaq, compete with Powerledger?
• How can Chirp, a decentralized wireless network building on peaq, compete with Helium?
• How can DeNet, a decentralized storage protocol building on peaq, compete with Filecoin?
• How can MapMetrics, a drive-to-earn navigation DePIN building on peaq, compete with Hivemapper?

No hate towards these projects, but you get the idea. While DePIN is undoubtedly a burgeoning industry, the hard truth is that network effects can’t be ignored.

The bull

On the flipside, the bull case for PEAQ largely revolves around peaq’s ability to grow its market share as a DePIN L1.

Technical-wise, LayerZero has integrated peaq, allowing projects to migrate to peaq from other blockchains. peaq is also fully EVM-compatible and supports Rust smart contracts.

Ecosystem-wise, peaq has established a grant program to offer early-stage funding and support for DePIN builders. peaq also recently announced that it is backing Borderless Capital’s $100 million DePIN fund as an anchor investor, and this should unlock new opportunities for bringing more DePINs into peaq’s ecosystem.

To bid or not to bid

Overall, what’s there not to like about peaq? It seeks to democratize access to ownership of autonomous devices through tokenization and fractional ownership. Users can then manage and control these devices transparently and securely, and when these devices generate economic value, revenue can be streamed directly to users.

And while the projects building on peaq are very low profile, this is to be expected for any new chain.

Additionally, peaq has been involved in external projects such as the Gaia-X 4 Future Mobility moveID project where peaq is co-creating the standards and infrastructure for the future of mobility. Besides peaq, other project participants include prominent companies such as Bosch, Airbus, Continental. If this project is successful, I’m sure peaq will be brought into the spotlight.

From a token demand perspective, PEAQ is fairly accessible given the availability of Tier-1 bridges, stablecoins and on/off-ramp solutions. Integrations with Ledger and SAFE also provide a level of assurance for hardware / security-conscious users, and peaq’s recent integration with Fireblocks could also attract institutional attention.

That being said, my decision on whether to bid PEAQ when it launches rests on these factors:

• FDV: DePIN projects were trading at a high premium early this year. However, given the lack of prominence of the projects building on peaq, I am not ready to assign a high valuation to peaq yet. PEAQ’s CoinList token launch was priced at just under $0.08, which translates to an already high FDV of $336 million, given the lack of market-ready DePIN apps on peaq.
• Vesting Schedule: While I am okay with low float launches given the project’s need to incentivize usage in the future, PEAQ’s vesting schedule is what I am afraid of. Still, I would expect PEAQ to undergo a cliff unlock, which gives us a window of opportunity to execute trades without being affected by future dilution.

To sum up my thoughts, betting on peaq is a bet on the network’s ability to onboard more DePIN apps, and the applications’ ability to grow. Once either of these starts to become evident and PEAQ is able to justify a higher FDV, I will consider bidding PEAQ.