DePIN Staking, Pt. 1: Medallions

What is crypto‑economic security for DePIN?

Crypto‑economic security is the value locked by users staking tokens into smart contracts and accepting opportunity cost and slashing risk to back network guarantees. A crude top‑level proxy is TVL, but in practice security should be weighted by lock duration and the severity/probability of slashing.

Why add staking? Four jobs to be done

#1 — Ensuring performance of supply

If miners compete entirely on‑chain using off‑the‑shelf hardware, stake‑weighted routing can align rewards with performance (Livepeer, Bittensor). Where competition is partly off‑chain (location, service), staking acts as an on‑chain SLA; slashing should ideally fund on‑chain refunds for clients, not only token burns (cf. Filecoin, GIANT).

When new hardware is required, shift staking to manufacturers to reduce friction (Helium IoT, DIMO). Some networks experiment with staking in liquid assets (e.g., USDC) to bootstrap security quickly (Glow) and monetize via alternative sinks (e.g., carbon credit auctions → buy‑and‑burn).

#2 — Determining governance power

Minimize governance surface area and set strong defaults. Where voting is necessary, representative or multicameral models can balance power (delegated senates; split houses for builders, stakers, users). Avoid tight coupling of economic and governance power where possible.

#3 — Prioritizing demand‑side traffic

Since DePINs are demand‑constrained, staking at gateways (operators that abstract the protocol for end‑users) is common, but introduces (i) required markups, (ii) decentralization optics if founders run gateways, and (iii) fork incentives at scale. Diversity and dynamism of gateways reduce risk. Alternatives include open “burn‑to‑signal” markets (e.g., subgraph curation).

#4 — Estimating off‑chain variables

Helium’s HIP‑51 (veHNT → subDAO delegation) prices future data revenues across standards (IoT, Mobile), but fragments liquidity and governance into multiple tokens. Yields become a market signal for the relative cost of capital of each “bet,” enabling sophisticated strategies but increasing complexity.

Medallions: a single‑token alternative

1. Stakers lock the same token to mint transferable medallions via a bonding curve.
2. Medallions delegate to a chosen [region] (or category) and accrue a share of that region’s revenues/capacity, time‑weighted by delegation duration.
3. Medallions can be traded, re‑delegated, or un‑staked at any time, paying out only when regions generate on‑chain revenue/capacity.

Compared to subDAOs, medallions keep liquidity unified, scale to many regions without spawning new tokens, and reduce cannibalistic dynamics with liquid staking. Yield tokens can exist as narrow economic claims (e.g., yIOT) without inheriting governance rights.

Closest analogue today: Geodnet’s “SuperHex” pilot (fixed yield on binary deployment outcomes) — a step toward market‑informed, targeted supply growth.

Summary

• Staking can secure supply, shape governance, prioritize demand, and price off‑chain variables.
• HIP‑51 demonstrates a powerful but complex multi‑token approach.
• Medallions may deliver similar information content with lower fragmentation and better scalability.

Disclosures

This material is for informational purposes only and does not constitute investment advice or an offer to sell or the solicitation of an offer to purchase any securities. Past performance is not indicative of future results. Projections and estimates are speculative and subject to change.