Multicoin Capital: Physical Proof of Work and Main Projects

One of the most powerful features of cryptoeconomic protocols is their ability to create incentive structures that allow anyone in the world to contribute to a shared set of goals without permission. These incentive structures can be fine-tuned to facilitate large-scale coordination to achieve specific goals.

This represents a step-function improvement in capital formation.

To date, the vast majority of crypto innovation has focused on coordinating digital communities and economies. However, tokens also create opportunities for innovations in capital formation and human coordination that go beyond the digital world and into the physical world.

Proof of Physical Work – Proof of Physical Work that incentivizes people to do verifiable work to build real-world infrastructure. As opposed to traditional forms of capital formation used to build physical infrastructure, these permissionless and trust-neutral protocols:

  1. Infrastructure can be built faster – in many cases 10-100x faster
  2. More adaptable to hyper-local market demands
  3. can be more cost effective

In Multicoin Capital, there are two projects related to Proof of Physical Work currently invested in, Helium and Hivemapper.



Helium is a cryptoeconomic protocol that incentivizes people to build and manage physical telecommunications networks – eg, micro-cell towers. The Helium network is built by “hosts” that mine the Helium protocol’s native token, HNT, in exchange for creating coverage and transmitting data over the network. Helium was founded in July 2013, the Helium network was launched in August 2019, and in two and a half years, it has grown to over 700,000 hotspots (Hotspot, hardware hotspots in the Helium network) and is currently available worldwide Connect and cover.

The power of Helium’s hotspots isn’t as big as a traditional telco’s cell tower, but it makes up for it with more hotspots. The deployment costs of these hotspots are a fraction of those of traditional telcos. Permissionless cryptoeconomic protocols provide network-level reliability through redundancy, even if individual network nodes are less reliable. In addition, building new cell towers increases the labor cost of traditional telecom networks, and labor costs at Helium are zero. This is an asymmetric advantage for Helium, enabling it to compete with traditional telecom network companies: the Helium network provides low-power IoT devices and, through token incentives, attracts participants to actively buy Hotspots, thereby transferring cost of construction at the start-up stage of the project.

e93O4LcRLY3T44CxBk5SfyGuBAgZV5kI3qUTvHrw.pngOn February 19, the decentralized wireless network Helium completed a $200 million Series D financing at a valuation of $1.2 billion, with Tiger Global and FTX Ventures participating. Helium has previously raised about $116.5 million in investment capital, including a $111 million token sale led by a16z last summer. Today, Helium’s existing backers also include Khosla Ventures, GV, Multicoin Capital, Munich Re Ventures, and FirstMark Capital, among others.

Official website:


Hive folders


On April 5, crypto-backed mapping startup Hivemapper announced the completion of an $18 million round led by Multicoin Capital, with participation from Solana founder, former Apple Maps executive, and Helium CEO.

According to Hivemapper CEO Ariel Seidman, the funds will be used to support the mainnet launch of Hivemapper (HONEY), as well as bring in more map contributors. In exchange for the native token HONEY, map contributors install specially designed dash cams on their cars, share the video with Hivemapper, which is then used to create maps.

Hivemapper, a decentralized map built by people using dash cams, represents a fundamental shift in how maps are built.

Hivemapper creates a new way to update maps more frequently and at a lower cost by outsourcing maps to individuals who already have “good enough” hardware. Hundreds of millions of people drive every day. Imagine if only 1% of people mapped the road around them while driving. These maps will include every new freeway ramp, small business, neighborhood street, pothole, and more in hours or days. This is possible because of Hivemapper’s native token, HONEY, which rewards users for continually contributing fresh, updated information to their maps.

tRhn7Uv5mk10krbjlXYQtRZSxnRgR3YtQ4LdH6D7.pngHivemapper network

Although the starting point is a street map, Hivemapper is not limited to that. The same network can collect and map other types of data such as air pollution, wireless coverage quality, noise, weather, and more. Clearly, Hivemapper can create maps at a lower cost than Apple and Google. With this in mind, physical proof of work naturally extends to other use cases as well.

3fOA2UvTh7lhmsHu2oqEPp3uXGIMaKMHSh11zumQ.pngHivemapper development route

Official website:



Helium and Hivemapper are just two examples of protocols that use cryptographic incentives to bridge the physical and digital worlds. In Multicoin Capital’s view, this field is fascinating, and its design space is very broad. Multicoin Capital believes it offers one of the best opportunities to disrupt capital expenditure-intensive business models with a novel form of capital formation.

While some would argue that this protocol model can be replicated without encryption – shares and other bounties for acting in concert already exist in most centralized organizations. However, cryptoeconomic protocols unlock five key advantages:

  1. Rapid scaling – Permissionless and borderless protocols can grow in parallel around the world, across many legal jurisdictions.
  2. Trusted Neutrality – Trusted neutral networks provide assurances to their stakeholders that rules cannot be arbitrarily changed from beneath them.
  3. Collective Ownership – User-owned systems that create loyalty, align incentives, and drive growth.
  4. Frictionless Payments – Blockchain allows for peer-to-peer micropayments that traditional payment systems cannot.
  5. Integration with DeFi rails – DeFi  rails can be used to channel liquidity through automated market makers. Over time, we also expect physical proof-of-work networks to leverage other composable DeFi-native tools, including NFT markets, social tokens, derivatives, and more.

Given society’s collective experience with centralized capital formation over hundreds of years, there is a natural inclination to consider addressing these types of problems in a centralized manner, in which one company decides who, when, where and how to be compensated. We think this model is outdated in the internet age. A company that makes central planning decisions and compensates its stakeholders at its own discretion will never be as effective as a properly designed permissionless network that uses the free-market concept of supply and demand to scale and compensate its most productive participants.

So far, small individual operators have never been able to compete with large companies on large infrastructure (eg, telecommunications, maps, power grids, 3PLs, etc.). Physical proof-of-work represents a paradigm shift in how businesses operate and scale. Cryptoeconomic protocols allow people to coordinate their economic activities without a centralized, rent-extracting one, and will help shift these industries from corporate feudalism to meritocracy and freer markets.

Posted by:CoinYuppie,Reprinted with attribution to:
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