Article 12 of UCC Can Unlock DePINs

When a Trade & Commodity Finance bank makes a secured loan to a commodities trader, the ultimate origin of the collateral is physical commodities. Even if the collateral transforms into intangibles like receivables, forward book, or contract rights—it all started out with physical stuff.

I have recently been thinking about how the Uniform Commercial Code’s (“UCC”) new Article 12 might interface with one of the current preoccupations in the digital asset space: decentralized physical infrastructure networks, or DePINs. It occurred to me that DePINs might catch the eye of commodity banks and their customers. After all, the word “physical” is right in the name. But what are DePINs? You can think of DePINs as being akin to crowdsourcing. They are a way to incentivize a blockchain community to share existing physical assets or contribute to the development of new ones. DePINs have been used to share resources like surplus server space, computing power on GPUs, decentralized wireless networks, and decentralized energy grids for renewable energy producers. DePINs come in two types. They might be physical resource networks, dealing with real-world assets (“RWAs”) that are tangible—like raw materials, equipment, or transportation. Or, they might be digital resource networks, which deal with intangible resources—things like data, information, and software. Adding AI to a DePIN can make each even more powerful and useful. Observers anticipate that the practical applications of DePINs will continue to expand.