The Dawn of DePIN: Leading the Series A in DIMO’s Open Platform for Car Apps

Alex Felix

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The CoinFund Blog

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9 min read

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12 hours ago

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The rush of this new year brings the feeling of growing interest in blockchain’s real-world applications beyond the more established sectors of payments, DeFi, gaming, and NFTs. Google Searches for DePIN (decentralized physical infrastructure networks) have more than doubled since August 2023. Companies specializing in DePIN are applying blockchain technology to existing market opportunities and introducing innovative and improved methods for managing marketplaces, physical and digital services, real-world assets, IoT, and data. While these more intricate use cases might not land with the hype often associated with crypto, each has a role to play transforming consumers’ everyday relationship with transparency, connectivity, privacy and the internet itself. Over time this progress may help usher in newfound appreciation for the value, efficiency and reach of blockchain-based applications.

Although internet connectivity is often our barometer to define our own interconnectedness, our sense of the quality of that connectedness heavily relies on platforms that offer communication, collaboration and content sharing services — platforms which we must trust to safeguard our interests. The emergence of smart contracts now allows us to verify digital service delivery and privacy preservation without the need for trusted intermediaries, reducing risks in settlements and returning control and transparency to developers and users. This marks the start of the potential for open platforms to lead the smart contract revolution, potentially changing the permission landscape for every personal consumer device we wear and every social network with which we share the daily behavior of our lives.

As one step toward improving the daily experience for car owners and drivers, we are excited to lead the Series A for Digital Infrastructure Inc. (publisher of DIMO Mobile and a core developer of the DIMO Network) and reinforce our partnership with its forward-thinking founding team. DIMO is an open platform designed for developers of car applications to deliver more effective features and services to consumers. Using a mobile app and software or easy-to-use hardware integration, a driver connects their vehicle to analyze, store, and even profit from their car data, all while gaining access to tailored offers and services. It’s a Nest-like experience for your cars, enabling users to gain better transparency and more value than previously possible from one of their most costly assets, whether owned or leased. The team’s substantial expertise across automotive, mobility, telecom, and crypto has helped them to deliver on their ambitious roadmap and achieve milestone KPIs quickly. DIMO is pursuing a significant market opportunity with a well-defined value proposition made possible by leveraging the advantages of Web3 infrastructure. Furthermore, they have demonstrated early success in achieving product-market fit, generating network effects, and outlining the potential for a robust business model. In their first full year in the market, the network welcomed 30,000+ net new cars, marking an impressive 900% increase in connections for 2023, and the car value on the network surged to $879 million.

One of the most significant sectors by GDP is the automotive industry, accounting for 3% of GDP globally and even as high as approximately 7% in emerging markets like China and India. Few household spending categories offer as substantial an opportunity as the automotive industry. Excluding depreciation, the average annual cost of owning and operating a vehicle is roughly $7,000 per year according to a 2022 AAA report (AAA). This spend stands to be captured by more software offerings and independent developers, and minimized for the consumer, through an interface like DIMO with a wallet that can coordinate financing, insurance, secondary sales, aftermarket and preventable repairs. By comparison, the average annual U.S. household electricity bill amounts to $1,380 (EIA) and the average annual spending on fitness, wellness, and beauty is $1,320 (Well News).

DIMO is leveraging the alternative data playbook by sourcing data directly from end users in a trusted format. Messari’s State of Depin Report framed this as “Great ads networks combine: 1) viral user acquisition, with 2) proprietary, contextual data streams, in 3) large end-markets.” Alternative data became a crucial factor in revolutionizing the Fintech industry, enabling personal loans and empowering aggregators like Bankrate.com to source competitive mortgage offers. Similarly, the potential to revolutionize the consumer automotive experience lies in the strength and dynamism of direct integrations with vehicles and their drivers. For example, navigation app Waze is maintained by hundreds of thousands of unpaid volunteers with 150 million active monthly drivers and outcompeted Apple Maps due to data advantage, eventually being acquired by Google (BI). In the United States alone, with its 300 million cars, the automotive market ranges from $2.1 trillion to $2.3 trillion in total expenditure; globally, with 1.5 billion cars on the road, the opportunity is even more substantial.

And automotive software is on the rise, thanks to the increasing shift towards electric vehicles. Although many automakers are expected to improve their software offerings, there’s currently no strong motivation for them to collaborate and establish a common language across the industry. As someone who manages multiple cars in my household, I still face challenges like keeping track of where each vehicle is parked, identifying potential issues like lights left on that drain the battery, understanding the cause of the Check Engine light, and figuring out the exact value of my car for resale. DIMO drives valuable insights, and early integrations at the application layer foreshadow exciting future developments. For instance, RepairPal offers on-demand servicing, while CoverageCritic helps plan routes with good cell service and DIMO provides in-car WiFi. Hopefully someone will simplify the chaos of managing scores of electric charging station apps for my EV.

DIMO’s platform and technology stack is oriented around user-centric values. It’s a collective that services a community. The protocol efficiently manages vehicle IDs, coordinates database services while safeguarding privacy, facilitates payment transactions, and distributes rewards. The consumer application serves as the user-friendly interface, enabling interactions with data and access to platform services and applications. DIMO, as a cooperative, aims to incentivize users for their contributions to the network through rewards, such as the $DIMO token, which is tradable on Coinbase. In 2023, DIMO drivers experienced average annualized savings and rewards exceeding $1,250 by connecting and transacting on the network. Savings are a huge motivator for consumers, and in turn a flywheel of more users can lead to more services and increased network utility.

DIMO aims to address the challenges that have plagued early Web3 DePIN networks by adopting a balanced approach to bootstrapping supply and demand. For example, Helium successfully scaled its supply side to approximately 378K active hotspots worldwide (likely even more at peak times), however, there was a lack of demand for IoT and LoRaWAN services, leading to difficulties in sustaining the network activity over the past few years and a collapse in the token price. To overcome this, Helium has introduced Mobile and 5G data, which is now experiencing better utilization growth; dollar revenues have risen to $10K/day recently from virtually nothing in 1H23 (DePIN Ninja). Nonetheless, monetizing raw data poses its own challenges for some DePIN projects since data requires contextualization and usefulness in business processes. Collecting data for monetization remains a complex and fragmented value proposition. However, the promising angle is that the openness of Web3 infrastructure and applications will allow for cumulative progress and growth. DIMO has become a significant customer of Helium, leveraging it as a cost-effective alternative to the current Web2 solutions from Twilio and Kore Wireless for transmitting data from devices to the protocol. Furthermore, they utilize Tableland, a decentralized cloud database provider, to meet their data requirements and crypto wallets to facilitate rewards and payment infrastructure.

Since our inception, CoinFund has been a strong advocate for resource networks and middleware, as we’ve anticipated the requirements of web3 application developers. Our primary focus has been on digitally native developer services, including computing, storage, databases, machine learning, indexing, and transcoding. As our scope broadens and the ecosystem matures, there is a compelling opportunity to explore the convergence of physical and digital realms.

DePIN networks leverage crypto tokens to address the common challenge that marketplaces often encounter, known as the ‘chicken and egg problem’. These networks encourage users to participate and contribute by offering them various advantages, including ownership stakes, loyalty rewards, and the ability to vote on governance matters. This approach represents a significant enhancement in the value proposition for consumers. In 2023 we analyzed indices of leading ‘digital’ resource network token prices (Graph, Filecoin, Livepeer, Render and Akash) who, on the left below, outperformed the benchmark (Bitcoin). Toward the end of the year we saw a major inflection of ‘physical’ infrastructure networks on the right below (Helium and DIMO) coinciding with improved growth fundamentals and expectations of the greater crypto ecosystem. For the year, these digital and physical network indices returned 557% and 437%, respectively, compared to Bitcoin’s 155%.

DIMO envisions a future where the automotive industry undergoes a profound digital transformation, reminiscent of the disruption caused by Amazon Prime. It aims to establish a dynamic on-demand marketplace, tailored to anticipate and meet automotive service needs even at the local level, all while ensuring competitive pricing and seamless transactions. Despite the potential for resistance from OEMs and middlemen, consumers continue to shift their preference to control their data universally. Given this is already globally accessible in vehicles through the universal OBD2 port, consumers and DIMO together have the power to promote transparency and cost savings throughout the industry. With the prospect of expedited insurance claims, enhanced vehicle insights, and empowered dealers, all communicating on a live, web3-based network, DIMO enters an existing market armed with advanced tools and the potential to achieve a generational outcome.

FUN FACTS

• 37k networked cars drove 2.8 million miles last week
• Tesla is the most connected car at 27% — Ford and BMW are 2nd and 3rd
• Ecosystem partners have processed 2,738 transactions on the network
• 55% of the connected wallets hold 100% of DIMO they received
• 2023 models are the most connected vintage…then 2021, 2022 and 2020…
• Tesla Model 3 is the most connected model
• 98% of wallets with $DIMO holdings are earning rewards
• Users on average were rewarded more than $1,250 last year

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