The infrastructure financing gap for emerging markets is between $1.0 trillion and $1.5 trillion annually. Most countries are struggling to meet their needs. Consider Vietnam, which is often praised for spending approximately 6% of its GDP on infrastructure. Despite this high spending level, a massive shortfall remains. The country requires roughly $25–$30 billion annually, and the state budget can only cover about $15–$18 billion. In 2024, Vietnam received only $1.07 billion in foreign direct investment for utility-related projects — not enough to close the gap.
This shortfall is driven, in part, by a “pipeline problem.” Ambitious government concepts often lack the necessary feasibility studies, land rights or permits to make them bankable for traditional investors. Furthermore, investors face “stroke-of-the-pen” risk, where a new administration might unilaterally cancel contracts or lower tariffs to appease voters.
The maturing of decentralized network models
In my work at Phlomis Finance, I have seen firsthand that there is another way to close the infrastructure gap. We work at the intersection of digital assets and impact investing, advising global projects on how to leverage blockchain, smart contracts and stablecoins to create digital impact assets. One of the most promising solutions in this space is Decentralized Physical Infrastructure Networks, or DePIN.
The DePIN concept represents a shift from a centralized “build-it-and-they-will-come” model to a decentralized “crowdsource-it-as-we-go” architecture. Instead of a single entity spending billions on cell towers or energy networks, the framework rewards individuals and businesses for deploying their own hardware, such as WiFi routers, solar batteries or sensors. This model drastically reduces capital costs and creates a permissionless marketplace where people — often referred to as “deployers” — can earn revenue by providing physical services.
Deployers can also earn additional ownership shares and revenue in the project by being rewarded with cryptographic tokens issued by the DePIN protocol. For example, the Render Network’s mission is to “democratize” computer power for AI, 3D animation and other functions. Deployers “rent” their PC hardware to the network and are rewarded with RENDER tokens.
While early DePIN projects were often patchy and unreliable, the model is evolving into DePIN 2.0, or the “franchise model.” In the traditional approach, early adopters acted as “one-man armies,” financing and managing their own hardware. This often resulted in infrastructure efforts concentrated in well-served areas rather than where the need was greatest.
DePIN 2.0 professionalizes the network by unbundling the role of the local operator from the professional entity that manages physical deployment and maintenance. Impact investors can provide debt lending to these operators to purchase equipment. This division of labor transforms the network into a reliable, utility-grade asset.
This approach serves as a vital capital restructuring that addresses two of the most persistent hurdles in development finance: last-mile distribution and long-term maintenance. In the traditional aid model, once an NGO leaves, assets like water pumps often fall into disrepair because no one is incentivized to fix them. In DePIN 2.0, if a device goes offline, the local owner receives reliable support from the local professional infrastructure manager to perform any repairs.
Real-world impact
Several projects demonstrate the power of professionally managed decentralized networks:
- World Mobile (East Africa): While traditional telecoms companies focus on wealthy urban centers, World Mobile uses solar-powered “AirNodes” to connect rural towns in Zanzibar, Kenya and Mozambique. Local shop owners operate these nodes, selling internet vouchers to their neighbors. In a 2024-2025 pilot, AirNode operators earned an average of $400 per month.
- Wifi Dabba (India): This project sidesteps the bureaucracy of laying fiber by franchising a laser-based mesh network to local tea shops (chaiwalas), handing ownership of the infrastructure directly to the neighborhood.
- Powerledger (India): In Uttar Pradesh, Powerledger partnered with the local government to turn households with rooftop solar into “prosumers.” These homeowners sell excess solar power directly to their neighbors via blockchain, resulting in electricity rates 43% lower than the standard retail tariff.
Navigating risks and the “demand gap”
Despite the promise of DePIN 2.0, challenges remain. The sector has faced “hardware grift” — schemes designed to sell overpriced electronics to unsophisticated users. Additionally, token values can be volatile, making them unreliable as primary incentives. The most successful projects use tokens as a long-term equity play rather than a sole source of income.
There is also a demand gap. While it is easy to use incentives to build the supply side of a network, generating demand is harder. For example, Hivemapper may successfully map the streets of Manila, but if global logistics companies do not buy that data, the local network economy will collapse. Consequently, the most resilient investments may be those with local utility — like energy, water and WiFi — where the supply is consumed by the same locale that generates it.
A powerful tool for infrastructure development
For impact investors, the emergence of a new infrastructure framework represents a pivot from traditional financing and incentive systems towards self-sustaining, resilient capital.
The infrastructure gap in emerging markets will not be closed by state budgets or traditional aid alone. It requires a structural shift toward decentralized, professionally-managed networks that mitigate currency and political risks.
Let us stop funding temporary fixes and start financing the permanent, community-owned infrastructure of the future.
Todd Miller is the managing director at Phlomis Finance.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
