The decentralized physical infrastructure (DePIN) sector has experienced one of the most dramatic declines in the crypto market. From March 2024, the total market capitalization of projects in this direction collapsed by 82.9%, dropping from an all-time high of $20.2 billion to a meager $3.46 billion. From January 1 to July 15, 2026 alone, the sector lost another 23.4% of its value, firmly securing its place among the worst-performing narratives in terms of returns.

Scale of the Disaster

The decline was not instantaneous but wave-like. After the March 2024 peak, the market made several attempts at recovery, with the last significant local high recorded in November 2024 at around $19 billion. However, since autumn 2025, sell-offs have sharply accelerated, leading to the current level. Over the entire 2025, DePIN's market capitalization shrank by more than 74%, placing the sector in the top ten worst performers by annual dynamics. In the second quarter of 2026, it showed a decline of 24.8%, second only to layer-2 networks (-24.9%).

A particularly alarming situation has emerged with the commission revenues of major blockchain directions: they have decreased by an average of 44.6% year-over-year. Coins issued between 2018 and 2022 have depreciated by 94-99% from their record prices. This indicates that most DePIN projects have failed to transition from the hype stage to a real economy.

Four Reasons for the Collapse

I identify four fundamental factors that led to this crash:

  1. Inflationary tokenomics. Startups attracted equipment operators through excessive token issuance. When coin prices began to fall, participants' incomes sharply depreciated. This triggered a mass shutdown of nodes, leading to network destabilization and initiating a death spiral.
  2. Lack of real demand. The annual revenue of the entire sector amounted to only $72 million. The average project earned about $110,000 per year. The huge valuations of startups were sustained solely by empty promises without backing from real business metrics.
  3. Shift in investor priorities. In 2026, the market stopped believing in nice stories. Capital began to massively flow into safe-haven assets. Overvalued altcoins lacking operational metrics were hit first.
  4. Time gap. Physical infrastructure takes years to build and requires enormous capital investments. Crypto investors, however, are focused exclusively on instant speculative profit. This fundamental mismatch has killed confidence in the sector.

Despite the grim picture, technologies continue to develop. Industry flagships — Helium, Render, and Akash — are showing growth in real usage. Demand for artificial intelligence computing is helping them gradually transition to a healthy business model. However, restoring market confidence will require years and real, not fictional, use cases.

My opinion: DePIN is a classic example of how excessive hype and tokenomics focused on short-term gain kill a promising technology. Only those projects that prove their utility through real revenues, rather than token issuance, will survive.