February 27, 2025

What is DePAI (Decentralized Physical AI)?

peaq

Community

What is DePAI (Decentralized Physical AI)?

NVIDIA coined the term “Physical AI” at CES in January. Now, Decentralized Physical AI (DePAI) has hit the crypto scene. But what is DePAI? What does it have to do with robots? And what do those robots need to operate as decentralized physical AIs in peaq’s Machine Economy?

DePAI: Where C3PO meets Web3

A new day, a new acronym. DePAI — short for Decentralized Physical AI — has entered the conversation. Coined by Messari after NVIDIA CEO Jensen Huang popularized the term "Physical AI" at CES in January 2025, this shiny new term is already making waves in the industry. And for good reason. DePAI sits at the crossroads of AI, robotics, Web3, and DePIN. It organically unites some of the most exciting fields in emerging tech into a powerful paradigm where their combined potential is essential for reshaping industries and revolutionizing the way the world works.

NVIDIA CEO Jensen Huang on stage discussing the evolution of AI

But why should you care? Well, if you’re part of the workforce, chances are you’re already at least slightly concerned about robots’ and AI’s potential to replace a wide range of jobs. If that’s the case, you’ll definitely want to keep an eye on DePAI, as it has the potential to become one of the key drivers of the global economy—offering a way to navigate and mitigate the disruptions AI is likely to bring.

But what is DePAI, exactly? How is it different from regular Physical AI (AKA robots) and why does it matter so much?

Let’s find out.

‍

What is DePAI?

Based solely on its name (Decentralized Physical AI), you might think DePAI is, in fact, not that new of an idea at all. Decentralized networks of physical hardware providing compute to AI models already exist, after all. But compute is just one piece of the DePAI puzzle.

DePAI encompasses so much more than merely decentralizing the computational power required for advanced artificial intelligence. It involves actual machines – specifically robots – using AI to exist and prosper in the real world – completely on Web3 rails. Beyond that, it relies on the crowdsourcing of data that machines need to perceive the world and interact with their environment, as well as the infrastructure essential for running entire economic models centered on this new paradigm.

In short, DePAI combines the fields of robotics, agentic AI, spatial intelligence, and DePIN. It imagines robots and machines – embodied AIs – operating not just autonomously, but with agency and sovereignty, in the Web3-based Machine Economy.

‍

From AI to DePAI

We all know ChatGPT. For most people, OpenAI’s popular Large Language Model (LLM) has already become as ubiquitous as, say, Google, Netflix, or any of the various social media platforms we frequent daily. It’s hard to imagine that, just over two years ago, barely anyone knew that ChatGPT existed.

It’s even harder to comprehend the massive strides AI has made in that short time. What started with generative AI only focused on content creation is now evolving into fully autonomous AI agents capable of independent decision making. To put that into perspective, consider this example:

Generative AI: You input your dietary plan for the week, and the AI generates a grocery list.
Agentic AI: Analyzes your health data, creates an optimized meal plan, suggests daily recipes, tracks what’s in your fridge, and automatically orders groceries when supplies run low—ensuring you’re always stocked.

That shift from reactive (generative) to proactive (agentic) AI is already huge. Now imagine the possibilities when agentic AI gets a body and starts to traverse the real world. Yes, the robots are here. And big players in the AI sector, like NVIDIA, are currently leading the charge.

But centralized AI (and especially centralized physical AI) comes with its own set of challenges and risks. For one, where does all the data AI models need to understand and interact with the physical world come from?

This problem carries into the physical realm. Who gets to own the robots? Which hardware provider decides on the underlying protocols ensuring compatibility and interoperability between all robots? And ultimately, who rakes in the profit? Are we in for a future where Big Biz bigshots get to pocket billions while the everyman is left at the mercy of UBI handouts? Or is there an alternative?

By now, you should be able to guess the answer.

DePAI is to physical AI what DePIN is to physical infrastructure. Namely, an upgrade by way of giving power held by a handful of corporations to the people. That’s not to say the two are inherently separate. In fact, as we’ll soon see, DePIN is essential to the DePAI model. DePINs themselves provide digital and physical AI with data and services, while peaq forms the core infrastructure layer, supporting both DePINs and the decentralized hardware they rely on. Besides these two, there are multiple other key layers that robots unequivocally need to operate as decentralized physical AIs within a global Machine Economy. And, as you’ll see, DePINs play a key part in several of those layers.

‍

The seven layers of DePAI

You’ve probably realized by now that DePAI is a complex beast. There’s much more to a fully operational Machine Economy than just giving an Optimus bot a Ledger and calling it a day.

Truly autonomous physical AIs need:

Hardware — robots that allow AI models to interact with the physical world.
Software — agentic AI models running on those robots.
Data that allows physical AI to learn and evolve
Spatial intelligence enabling robots to comprehend and interact with the physical world.
Infrastructure networks providing key requirements like storage, compute, energy, and more.
A Machine Economy layer to bring this all together with dedicated protocols that ensure interoperability and precise coordination between countless types of DePINs, AI models, and robots.
And finally, organizations must exist (like DePAI DAOs) that allow individuals, communities, and businesses to own and earn from the DePAIs on an equal footing.

Let’s take a closer look at each of the seven layers of DePAI.

‍

AI Agents

We’ve already covered the importance of Agentic AI above. But to recap — these are autonomous AIs capable of planning, making decisions, taking actions, and executing tasks without any human input. They are usually specialized in particular types of tasks, although multiple AI agents could potentially be integrated into one machine, interacting to complete a variety of more complex actions. AI Agents in this context are like human consciousness but for robots. Yep, we’re getting there.

‍

Robots

This speaks for itself. Robots are the “physical” in “physical AI”. The hardware that AI runs on and uses to interact with the real world. Robots can be anything from autonomous vehicles and industrial machines to surgical assistants and full-blown androids like the Tesla Optimus.

‍

Data networks

As mentioned, AI needs data (and lots of it) to function. Luckily, DePINs like MapMetrics, Silencio, Teneo, SkyX, Hyperway, and many others have troves of practical, real world data just waiting to power advanced AI models. By leveraging this existing information, Agentic AI can not only learn about the real world but also make real-time decisions based on verifiable, granular datasets.

‍

Spatial intelligence

While the data collection layer helps AI understand the real world and make informed decisions, the spatial intelligence layer enables AI-powered machines to navigate and interact with it in real time. Essentially, this layer is a virtual replica of the real world — a digital environment that machines can use to interact with each other and coordinate among themselves.

Imagine a video game world mirroring reality or, for the more degen-minded, a metaverse copy of the real world populated by decentralized autonomous AIs. That’s essentially what the spatial intelligence layer of DePAI is.

This layer also relies on spatial data from DePINs — but their role in the spatial intelligence layer doesn’t end there. Beyond supplying data, specialized DePINs can provide virtual environments that will work as digital playgrounds where Physical AI agents will learn to interpret and navigate the real world.

‍

Infrastructure networks

Infrastructure networks (i.e. DePINs) provide the underlying infrastructure required to run a unified ecosystem of autonomous, AI powered machines. These networks can take many forms — ranging from those focused on specific infrastructure requirements like compute or data storage to those providing decentralized internet or even energy grids.

‍

Machine Economy

The layer-1 blockchain that underpins the infrastructure DePINs, data collection DePINs, spatial awareness DePINs, Robot DAOs (which we’ll touch on in a moment) and DePAIs themselves plays a critical role. It not only establishes the machine standards (like ID) and protocols that allow autonomous robots to coordinate and interact in the physical world, but also serves as the application and transaction infrastructure which allows atomic composability between all apps and machines, essentially creating the global market place of the Machine Economy. All while providing the incentives and disincentives for the robots to act in the best interests of humanity — as voted on by humans.

Beyond that, it facilitates global governance and an open system for everyone to participate in the Machine Economy - not just a few big companies - and paves the way for decentralized abundance distribution mechanisms.

‍

DePAI DAOs

If DePAI is going to solve the looming jobs crisis, it needs to ensure every regular Joe gets the opportunity to own a share of physical AIs and earn as they participate in the Machine Economy.

And let’s be real, robots aren’t exactly cheap. In fact, you could argue the number of individuals that can afford an industrial robot arm, a fleet of delivery drones, or even an autonomous vehicle is quite small.

That’s where Decentralized Autonomous Organizations (DAOs) come in — specifically, DAOs focused on robotics and physical AI. These organizations not only allow anyone to invest in DePAI and earn from autonomous robots, regardless of their purchasing power or location, but they also provide mechanisms for coordinating funding and decision-making with input from industry professionals.

Take XMAQUINA, for example — a DAO dedicated to robotics and physical AI. Not only did they predict the rise of the DePAI model but were among the first to come up with a framework for individuals and communities to secure opportunity in this tectonic technological shift. So instead of rambling on, let’s hear what they have to say. XMAQUINA, take it away.

‍

XMAQUINA — your DePAI sensei

Two revolutions are converging to reshape the global economy: Digital AI will impact white-collar jobs and Physical AI will replace blue-collar ones. Digital AI is smart, tireless, and efficient while Physical AI never complains, never rests, and stays focused. Both can potentially work 24/7. In a world changing fast, how can humans secure capital and participate economically?

This is where Decentralized Autonomous Organizations (DAOs) come in. In our case, the XMAQUINA DAO creates a framework for shared ownership, governance, and development of decentralized robotics. It enables communities, entrepreneurs, and investors to collectively fund and build, while ensuring that those who contribute also share in the economic value they create.

DePAI needs DAOs because without them, ownership and control of intelligent machines will stay locked in the hands of a few corporations. AI-driven robots are expensive, and without shared models, only large companies will be able to afford and profit from them. DAOs break this pattern by letting people pool resources, co-own robots, and earn from their work.

But more than ownership, DAOs also handle governance. Machines making decisions in the real world need oversight. A centralized company setting the rules means those rules serve its interests first. DAOs create a way for communities to decide how these machines operate, how they interact with people, and who benefits from them. Decisions happen in the open, not behind closed doors.

There’s also the question of jobs. Automation will keep replacing human workers, but DAOs turn this shift into something people can engage with. Instead of being displaced, individuals can take part by funding, managing, or earning from physical AI. The alternative is watching from the sidelines as large corporations take full control.

‍

How are DePAI DAOs different from regular DAOs?

Most DAOs focus on digital assets, DeFi, or governance models that operate entirely online. DePAI DAOs, on the other hand, deal with real-world businesses and real-world machines: robots, sensor networks, and autonomous vehicles that need constant upkeep, coordination, and management. This means their challenges go beyond token staking or governance proposals. DePAI DAOs have to delegate the management of fleets of machines to companies that have to do the work in the physical world.

DePAI DAOs also face a different kind of governance. Unlike purely financial DAOs, which mainly oversee digital transactions, DePAI DAOs must balance AI ethics, machine decision-making, and real-time operations. They need systems that can respond to how robots behave in public spaces, how data is used, and how revenue is shared among contributors. A DAO managing delivery drones isn’t just handling treasury funds, it’s coordinating machine routes, ensuring safety, and deciding how profits get distributed to its members.

For example, the XMAQUINA DAO focuses on physical AI and combines co-ownership, co-governance, and co-creation under one structure. It’s a DAO that participates in the funding of physical AI companies, enabling members to have exposure and benefit from robotics companies without needing to be venture capitalists or private equity funds. With its own development lab, it will be able to spin-off physical AI projects with a focus on open-source development. Meanwhile, the governance structure in place ensures that control over the funds is totally distributed among DAO members.

As AI-powered machines become more common, the need for decentralized structures to fund, manage, and govern them will only grow. DePAI DAOs offer a way to distribute not just ownership and decision-making, but also the risks and rewards of automation to ensure that the Machine Economy remains open, accountable, and community-driven.

‍

Why DePAI matters

Now that we know what DePAI is and how it works, the question naturally arises: why does all this matter?

The meteoric rise of AI has massive potential to improve our lives, but it also raises several concerns. Not least of them is the question of centralization. Do we really want such a powerful and transformative technology to remain in the hands of a few corporations controlling the data, models, and infrastructure that drive it?

DePAI shifts the paradigm by democratizing the entire robotics field. It ensures that ownership, control, and value creation are distributed by and to the communities the robots serve – rather than monopolized. On the one hand, this shift will lead to greater innovation by providing more people with the tools and datasets they need to push the boundaries of physical AI. But more importantly, it addresses the pressing issues of job displacement and economic inequality.

By allowing anyone to own a part of physical AI and participate in the Machine Economy, DePAI paves the way for a future where AI serves the entire world — not just the few who control it today.

‍

Challenges DePAI needs to overcome

Like all emerging technologies, DePAI faces numerous challenges on the path to fulfilling its full potential.

Scalability, both in terms of data and compute power, remains a major hurdle. True, there are already numerous DePINs providing both the necessary data and compute. But to fulfil the vision of widespread physical AI, much more are needed.

This leads into the next challenge — the need for robust infrastructure that can handle such vast amounts of real-time data. Physical AI has to collect, analyze, and act upon real-world information in real time. Whether we’re talking about autonomous vehicles navigating city streets, delivery drones coordinating routes, or agricultural machines acting on data from sensor networks — the demand for high-speed data transfer is obvious. And while, on the one hand, a lot of this processing power will likely be handled offchain by edge computing, a large number of transactions and the verification of certain data will still require onchain processing.

Interoperability is another key issue that extends across multiple layers of the DePAI ecosystem. Different types of machines and AI models from a growing number of manufacturers, often distributed between multiple DePIN networks and blockchains, need to communicate seamlessly with each other. And this needs to happen on both the hardware level — ensuring machines using different protocols have the means to interact — and the software level — allowing AIs to learn from and work alongside one another, regardless of the architecture they’re built on.

On the infrastructure side, different networks and protocols must have the means of sharing data, executing cross-chain transactions, and coordinating machine operations, regardless of the governance mechanisms, economic models, or economic incentives they’re based on. Without this type of interoperability, the DePAI ecosystem risks becoming fragmented, limiting its ability to function as a cohesive, decentralized Machine Economy.

However, all of these challenges are already being addressed. The growing number of DePINs building on peaq are already gathering sufficient real-world data that AI models could utilize. And with its projected transaction throughput of over 500,000+ transactions per second, peaq is already well-positioned to ensure those DePINs run smoothly as part of the wider Machine Economy, while its peaq verify framework will keep that data verified.

Things are a bit more complex in the realm of interoperability, though. Here, manufacturers will need to agree on and implement common standards and protocols for a growing number of physical devices. They might want to look into existing standards — like peaq IDs, which already provide unified protocols that allow machines to identify, interact, and share data between themselves.

‍

How to dive deeper into DePAI

Did all this talk about DePAI pique your interest? If you’re looking for ways to get involved and ensure a better, more secure, and all around more equitable future of physical AI, look no further. You can start using DePINs building on peaq today and help provide the data necessary for advanced agentic AI models to function in the real world (all while getting rewarded for your efforts). And if you’re not sure where to start, the ongoing Get Real campaign is specifically designed to guide you through your DePIN journey.

But perhaps you want to get directly involved in physical AI by actually owning your own robot(s). Then make sure you keep your eye on the XMAQUINA DAO. The second wave of their Genesis auction is quickly approaching, and by participating, you’ll get the chance to secure your stake in the Machine Economy.

‍