How Peaq is fueling the decentralised machine economy

Throughout history, revolutions have rarely been the result of a single invention. Instead, it’s the fusion of multiple innovations that ignites true transformation capable of fundamentally reshaping the world economy. Whether it was the alignment of the printing press with rising literacy or the pairing of electricity with communication, the most profound shifts come from technological convergence.

Technological advancements in isolation are often not very consequential and don’t really enter the public consciousness until they are bundled and take the world by storm. This was true in the late 1700s, when life was initially slow and driven by manual labour, until a series of groundbreaking innovations emerged. First, the steam engine, improved by James Watt, provided a new, powerful source of energy, allowing factories to operate independent of rivers or human strength. Next, mechanised looms like Edmund Cartwright’s power loom transformed the textile industry by dramatically speeding up production, but these machines needed more power — steam engines fit the bill perfectly.

At the same time, advancements in iron and steel production, such as Abraham Darby’s coke-fueled smelting and Henry Cort’s puddling process, made it cheaper and easier to build robust machines and infrastructure. This newfound strength powered railways, which revolutionised transportation and connected raw materials to factories and finished goods to markets. This convergence of advancements in steam power, mechanisation, and metallurgy would later be referred to as the industrial revolution.

Today, we find ourselves at a similar conjunction as the textiles worker in the late 1700s. The following mega-trends are converging at a rapid pace, giving rise to the machine economy:

• Sensors: The average cost of basic sensors (such as temperature, motion, and proximity sensors) has dropped from about $1.30 in 2004 to $0.40 by 2020, representing a 70% decline over 16 years .

• Computing: The price per gigaflop has decreased by over 99% in the last two decades. For example, the cost per gigaflop went from $30,000 per gigaflop in 1997 to less than $0.10 per gigaflop by 2020.

• Storage: The cost of storing 1 GB of data dropped from $0.10 in 2017 to around $0.01 per GB by 2023, a 90% reduction in less than a decade . Cloud providers like AWS and Google Cloud lowering compute and storage costs by about 50% every three to five years.

• Energy: The energy cost per unit of computation has decreased by 80% from 2010 to 2020. This makes operating large-scale machine networks more economically viable.

• Batteries: The cost of lithium-ion batteries has fallen from about $1,200 per kWh in 2010 to around $132 per kWh in 2021, a nearly 90% reduction . This has been crucial in making electric vehicles and autonomous drones cost-competitive.

• Transmission: The cost of data transmission over mobile networks has plummeted by 88% since 2016, resulting in a cost per mb of data transmission below $0.01.

• Robotics: The average cost of an industrial robot has decreased from around $150,000 in 1995 to less than $30,000 in 2020. Collaborative robots (cobots), designed to work alongside humans, are now available for as little as $20,000, making them accessible for smaller companies.

• LIDAR: The cost of LIDAR sensors, which are critical for autonomous vehicles, has dropped from around $75,000 when LiDAR technology first emerged, to less than $1,000 in 2020. Autonomous vehicle manufacturers have also reduced the overall cost of self-driving systems from over $100,000 to below $10,000.

We can already see the impact of these innovations. There are currently 16.6 billion connected IoT devices globally and this number is expected to grow to 41 billion by 2030. While the first wave of adoption was mainly visible in the consumer electronics space (smart fridges, wearables, etc.), there are currently already more than 500k industrial robots in use (handling 28% of all manufacturing tasks). Humans are increasingly taken out of the equation entirely, with 23.4bn wired IoT end nodes (Machine-to-machine communications).

With the cost of training AI models decreasing at a rate of 70% per year, 5G networks reducing latency to <1 millisecond and the rise of edge computing (33% of IoT devices run compute locally, reducing cloud bills for operating these devices), McKinsey estimates the total economic value this Economy of Things could unlock to be up to $12.6 trillion (around 10% of the world GDP) by 2030. The direct market size is expected to grow at a CAGR of 25%, to $1,463bn in 2027 (coming from just $250bn in 2019).

Who captures the value of the machine economy

When machines were introduced in the textiles production process in the late 18th century, it caused mass unemployment while the remaining workers saw their salary more than halved. The result was the uprising of the Luddites, causing factories to be burned down and progress to be faced with massive resistance from the disenfranchised workers. Also in more recent history, we see that productivity gains haven’t benefitted workers.

Economic Policy Institute

Productivity has grown 2.7x more compared to wages. Most of the excess wealth gains are distributed towards shareholders. This hasn’t caused too much social unrest because the technological innovation at the source of these recent productivity gains (IT) have been largely complementary to the workflows of the employees. When the technological frontier is pushed to the extent where technology substitutes employees and has the potential to cause mass unemployment, it is essential to democratise access to ownership.

DePIN to the rescue

We’re facing a massive global underinvestment in physical infrastructure on an as-is basis to the tune of $10+ trillion across verticals like agriculture, energy, IT, transportation, etc. This is a very conservative estimate, as the technological trends we outlined above will unlock new applications and investment requirements.

DePIN as a category is coming of age at a critical time, as the automation and robotics trends is approaching an inflection point in the adoption curve. Not only do DePIN networks level the playing field by democratising access to (fractionally) own these new productive assets, DePIN reimagines what physical infrastructure could be entirely.

When new technology is introduced, especially at the level of entrenched incumbents, we typically observe a skeuomorphic reflex where this new technology is used to imitate the appearance or functions of older, familiar objects or processes, even when those features are no longer necessary. Chris Dixon explains this well in his book Read, Write, Own where he gave the example of early movies that looked like plays or the first popular use of electricity being as a light source (like candles) and only later on to power other appliances. DePIN helps overcome skeuomorphic design limitations by reimagining how machines and infrastructure are built, governed, and utilised.

Purpose-built, decentralised networks

Traditional infrastructure, like energy grids and communication networks, tend to follow centralised, human-centric designs. DePIN creates decentralised, distributed networks. For example, Helium rethinks the idea of communication networks by decentralising wireless infrastructure through community-owned hotspots. This shifts away from centralised, corporate-driven network layouts to machine-optimised designs, where the network is more efficient and adaptable to machine needs.

Leveraging autonomy

Rather than designing robots to mimic human labor or factory setups, DePIN projects in sectors like energy or logistics can optimise robots and machines for fully autonomous functions. For example, decentralised solar grids or energy-sharing platforms don’t rely on traditional energy grid management and can use automated systems that prioritise peer-to-peer energy sharing and dynamic load balancing.

Untethered to the human-operated workflow

One of the key innovations in DePIN is the use of smart contracts to govern machine operations, bypassing traditional, human-oriented control systems. This allows machines to transact autonomously, make real-time decisions, and collaborate based on predefined protocols, without the need for human intervention.

Dynamic funding and maintenance

In DePIN, the tokenisation of infrastructure ownership means that machines can be funded and maintained in decentralised, dynamic ways, allowing continuous innovation without waiting for centralised upgrades or funding cycles.

The potential for DePIN is vast but both development and adoption has been a challenge because general L1s are not a perfect fit for purpose.

Enter Peaq

Peaq is a purpose-built L1, designed to power DePIN networks.

It ensures that machines can securely authenticate and exchange data by introducing the PeaqID, a decentralised identifier standard (DID) where machines have their own identity. This allows machines to engage in secure, verifiable interactions while maintaining privacy.

The Peaq access pallet, built on Substrate, facilitates specific access control for machines and users within DePINs. This allows for the regulation of permissions and interactions based on predefined roles.

Peaq Pay enables smooth transactions between machines and users within networks. This process includes creating multi-sig wallets, funding them, and approving transaction flows (such as refunds or payments).

Peaq integrates Fetch.ai’s autonomous AI agents. These agents are used to optimize processes, such as automatically matching users with services like parking spots or coordinating complex machine networks.

Machine NFTs, which represent unique digital versions of individual machines or machine pools. These NFTs can be used to fractionalize ownership or crowdfund new machines.

With a Nakamoto Coefficient of 91, Peaq ranks amongst the most decentralised and resilient Layer1s in existence today. The Nakamoto Coefficient is an indicator designed by Balaji Srinivasan and Leland Lee and measures the smallest amount of independent entities that can collectively shut down a chain (measured as how many node operations would collectively amount to one third of the staked amount). Peaq is a high performing Layer-1 with a TPS of 10k and achieves this in the most environmentally friendly way possible while providing modular infrastructure to power and tokenise vehicles, robots and devices on any DePIN. The speed combined with a transaction fee per transaction of $0.00025 and high throughput unlocks many new DePIN applications. Peaq brings this power together with infrastructure that facilitates these new use-cases — e.g. protocols can be engineered in a way that users pay as they go, by streaming micro-payments per kilometer or minute they are using a device of robot. If this device needs to be charged on the way, the device can autonomously transfer money to a third party providing the service.

The Peaqosystem

There are currently 45+ DePIN projects building on Peaq, amounting to 1m+ machines, robots, vehicles & devices across 18 industries (with a total aggregate value of $25m+). Meanwhile, Peaq partners with industry leaders such as Bosch, Mastercard, Airbus, Continental, etc. How these partnerships are structured varies based on the strategic plans of these enterprise partners. For example, Airbus partnered with Peaq in the context of their Gaia-X moveID project, which is focused on developing decentralised mobility solutions. In this project, Peaq contributes its blockchain infrastructure, particularly its Self Sovereign Machine Identities (SSMI), to enable secure communication and transactions between vehicles, machines, and other infrastructure components.

Peaq DePIN projects

Teneo Protocol

Teneo Protocol is a platform focused on the tokenisation and data management of real-world machines, ranging from shared EVs to Robo Cafes. Teneo Protocol has significant traction and clear signs of product-market fit, with 30m datasets processed and $5m in RWA value tokenised.

The founders first built Eloop, a car-sharing service that originated in Vienna and allowed customers to rent Tesla’s while also giving them the option to buy tokens and own a fraction of the fleet (and subsequent revenues from ridesharing operations). The goal of Teneo Protocol is to unlock previously inaccessible data with high commercial value. The machine identities (SSMI) and decentralised real-time data streaming & verification that Peaq offers were invaluable to bring this idea to market.

Farmsent

FarmSent is a marketplace aimed at decentralising the global agricultural supply chain. It empowers farmers by providing them with direct access to buyers, eliminating the need for intermediaries, which often take a large share of the profits. The platform helps ensure that farmers receive fair compensation for their produce, while also providing transparency and traceability in the food supply chain.

Peaq plays a crucial role in enabling this by enabling machine identities (SSMI) to manage the identities of farmers and supply chain devices, ensuring secure and transparent data uploads on chain. Moreover, Peaq’s smart contracts are deployed to support global food traceability systems and tokenised reward mechanisms, further enhancing transparency and participation within the network. With over 160,000 farmers from regions like Indonesia and Colombia already onboarded, FarmSent improves both market access for farmers and food security globally​.

NATIX

NATIX is a platform that collects valuable real-time data from environments such as roads and urban areas in a privacy-preserving manner by using a network of AI powered cameras. The network’s goal is to map and analyse the world dynamically, turning devices like dashcams and smartphones into data-collecting hubs that can monitor traffic, crowd sizes, and other real-world conditions.

The data collected is anonymised and can be monetised by users, who earn rewards for contributing to the network. Peaq enables NATIX by assigning unique IDs to each sensor in the network, ensuring secure and anonymous data collection. Additionally, Peaq’s machine rewards mechanism allows users of NATIX’s Drive& app to earn rewards based on their contributions to the network. This allows NATIX to scale and provides privacy-focused data management, crucial for its AI-driven sensor network​. With 160k registered drivers and 80m+ km already mapped across 171 countries since its launch in April 2023, NATIX is one of the DePIN projects to watch.

Disclaimer: MN Capital is an investor in NATIX

Peaq’s mission

As we stand on the brink of the decentralised machine economy, Peaq is in a great position to play a pivotal role in this movement by redefining how machines, data, and infrastructure interact. Peaq’s infrastructure, with its focus on interoperability and modular DePIN functions, enables projects within the peaqosystem to integrate seamlessly.

There are many examples of how projects collaborate within the Peaq ecosystem, both across the value chain and across the tech stack.

Take XMAQUINA as an example. Their partnership with Farmsent ensures that the supply chain of its robotics operations, such as in the Robo-Cafes, is transparent, traceable, and equitable. Meanwhile the integration with Chirp Network addresses the critical need for reliable connectivity and real-time monitoring of its autonomous systems. They work with Teneo to transform raw machine data into a valuable asset through advanced processing, labeling, and AI integration. This data is then used to unlock new revenue streams and business models for XMAQUINA.

At the heart of these synergies is Peaq’s design, purpose-built to power DePIN projects across industries like mobility, energy, healthcare, etc. The integration of machine identities, machine tokenisation, and real-time data streaming allows these projects to collaborate, optimising processes and unlocking new opportunities.

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Disclaimer: This article is provided for informational purposes only and does not constitute an offer, solicitation, or recommendation to buy or sell any securities or financial instruments. The views expressed are those of the author and are not necessarily reflective of the views of MN Capital or its affiliates. Nothing in this article should be interpreted as financial, legal, tax, or investment advice. Always seek the advice of a qualified financial professional before making any investment decisions. MN Capital and its affiliates disclaim any liability for actions taken based on this information. MN Capital is an investor in Peaq Network and may hold positions in affiliated projects.