DeWi networks face uphill battle in declining crypto market

Decentralized wireless (DeWi) providers such as Helium burst onto the wireless scene offering a new way of deploying and operating wireless networks using a combination of blockchain technology and crypto-economics.

The basic premise for many of these DeWi providers is that instead of using the traditional model in which a single telecom operator spends billions to deploy a wireless network and operate it, in the DeWi world millions of individuals participate in deploying and operating wireless infrastructure. And in return, those individuals are rewarded in cryptocurrency. However, thanks to the sharp decline in the value of cryptocurrency, this model currently provides little incentive.

Nova Labs acquired FreedomFi and works closely with Helium. Both FreedomFi and Helium are similar in that they entice people to deploy infrastructure gear in exchange for cryptocurrency but they are building slightly different types of networks. FreedomFi uses Citizens Broadband Radio Service (CBRS) spectrum and its equipment is used to offload cellular traffic onto CBRS. Helium uses CBRS spectrum too but is also deploying IoT gateways for a distributed IoT network.

According to Coindesk, in March 2022 Nova Labs has more than 680,000 hotspots online and was adding new hotspots at a rate of 75,000 per month. At that time Helium (HNT) tokens were trading at a rate of $24.68. Today HNT is only worth about $1.76, according CoinGecko.

Despite the decline in crypto, Scott Sigel, COO of the Helium Foundation, said that the Helium Network is "strong, fully functional, and continues to grow through changing market conditions. The network will complete its migration to the Solana blockchain in Q1, which will bring improvements to uptime, speed, and overall scalability."


But analysts say there is no doubt that the decline in value is impacting these companies. Tammy Parker, principal analyst, global telecom consumer services at GlobalData, said that individuals that deployed DeWi gear are probably not getting a return on their investment.  “Individuals have to pay hundreds of dollars for equipment to mine HNT, which is now worth around $1.75, so it’s increasingly challenging to recoup the hardware investment,” Parker said.

Plus, she noted that another problem for DeWi networks like HNT is that as more people deploy equipment, there is more competition for network traffic and therefore participants receive fewer and fewer tokens for their deployments.  

However, Parker added that even though cryptocurrency is taking a big hit right now, there are many “true believers” in the mission of Helium and other decentralized crowd-sourced networks. 

Helium’s DeWi model caught the attention of both Dish Network and T-Mobile. In September the company signed a five-year exclusive deal with T-Mobile for the launch of a Helium Mobile commercial service that will leverage T-Mobile’s macro network and Nova Labs’ CBRS network. The service is set to launch in beta early in 2023.

In addition, Dish Network plans to use Helium’s cryptocurrency incentive model with customers that deploy their own 5G hotspots using CBRS. Dish views the arrangement as a way to improve its coverage by letting individuals identify areas where a Helium hotspot will improve their cell phone connectivity.

Clarification:  Nova Labs says it is independent from the open-sourced Helium Network. Nova Labs originally launched the network and has core developers working on the network, but the network is owned and operated by the community. Nova Labs, however, did acquire FreedomFi. 

Update: The article was updated to include responses from Helium.