Is Pi Network Worth All the Hype?

As Bitcoin’s blockchain moved away from GPU mining over a decade ago, and Ethereum fully moved to staking rewards, people have sought simpler and more energy-efficient alternatives that still involve crypto mining.

Hashrate marketplaces and mining providers have popped up, allowing people to pool and send excess processing power to these providers (e.g., NiceHash and CT Pool) to earn crypto in return.

However, there’s been lots of anticipation about the mainnet release of a project claiming to simplify this process further.

Enter Pi Network.

What is it?

Established in March 2019, Pi Network promotes itself as the “first digital currency you can mine on your phone.”

Instead of a conventional mining algorithm such as Proof-of-Work (PoW) – used by Bitcoin, Litecoin, Dogecoin and Monero, to name a few – Pi Network uses an alternative derived from the Stellar Consensus Protocol (SCP), a faster and much more energy-efficient option than PoW.

Despite years of development and testing, the project launched its Open Network mainnet (and PI, its native token) on February 20. I’m surprised Pi Network didn’t wait three more weeks till March 14. Perhaps @PiCoreTeam will make a major announcement that day (or when PI hits $3.14), but I digress.

The migration to this open network reportedly represents the transition to a fully decentralised system. A June 2024 blog post claims that Pi Network had more than 200,000 computer nodes to migrate to a new distributed system. Its roadmap also frequently alludes to decentralisation.

It’s one thing to boast a large number of nodes, it’s another to have a publicly available real-time map to monitor these active nodes. While these stats are readily available for Bitcoin, Ethereum, XRP Ledger, I couldn’t find an equivalent for Pi Network.

The best information I obtained regarding node abundance and geographical distribution was via Hoka News, a news outlet focusing on Pi Network content. A September 2024 article claims that ~60% of active Pi Network nodes are located in China, followed by Vietnam and South Korea at 9% each.
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Besides obtaining the PI token through mining, it also aims to offer a blockchain-based option to Facebook, Amazon, and Alphabet by allowing participants to pool resources via Pi Network and earn a share of tokens in proportion to the value added to the network (see the Utility section of the whitepaper to learn more about this).

Users need to submit ID to satisfy the network’s KYC requirements. Pi Network’s KYC FAQs mention that it uses its proprietary KYC solution to prevent someone creating multiple fake accounts and bots to hoard PI, in addition to satisfying anti-money laundering and anti-terrorism laws.

This sounds like a piece of the large Web3 puzzle many projects want to be a part of, particularly those involved in decentralised physical infrastructure networks (dePIN). As a result, Pi Network needs to offer a superior alternative to products offered by tech giants and outcompete (or at least match) other decentralised projects.

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I usually have a dedicated news and partnerships section. Still, as it’s only just migrated to an open network (its mainnet), there is nothing major to discuss, at least not yet.

Check out its official blog for the latest updates.

Tokenomics

According to Pi blockexplorer, 6.7 billion PI (π) are in circulation, with a max supply of 100 billion.

While two of Bitcoin’s main selling points are its 21-million hard cap and a decreasing inflation rate (this will be <1% by the next Block Reward Halving in 2028), Pi Network has opted for a different approach to encourage more token usage.

“Pi, on the other hand, seeks to strike a balance between creating a sense of scarcity for Pi, while still ensuring that a large amount does not accumulate into a very small number of hands.”

Pi Whitepaper (March 2019) > The Pi Economic Model

Total mining, referral and developer rewards influence the token’s max supply. The whitepaper provides a detailed explanation and formulas for calculating this.

In an Instagram post last June, Pi Network discussed the ongoing (monthly) reduction to its base mining rate to sustain token scarcity “while ensuring network growth and adoption.”

https://www.instagram.com/p/C74sc2boBN8/

With a 50% reduction in base mining rewards in just five months, new holders will be banking on much higher token prices to compensate for diminishing rewards. Alternatively, they’ll need to significantly boost referrals (via an Ambassador role) or be actively involved in the project’s development, which is non-applicable to most people.

PI is only available on a handful of exchanges, including OKX, Bitget, MEXC and Gate.io. I don’t use this, so do your due diligence before considering these options. It is not yet available on DEXes.

Additional thoughts

What’s my take on PI?

I don’t care much about the project, but I believe two things will help it pump: a market-wide rally and a new narrative.

In 2021, we had play-to-earn cryptos, with Axie Infinity (AXS) being a major beneficiary of this concept at the peak of the Metaverse and NFT mania.

Now that PI has hit the scene, it will attract a new legion of followers looking to supplement their income, banking on higher prices in the coming years and the ability to make modest, ongoing profits by mining PI on their phones.

I expect this to become commonplace across various blockchains. For example, Vitalik Buterin has spoken about using “stateless clients” that could (one day) allow for Ethereum nodes to run on mobile devices, which, in turn, can validate transactions to earn ETH.

Will I use Pi Network? I don’t plan on doing so, at least not until I see how it performs in the few years after mainstream usage.

This may be an irreverent and superficial assessment of the project, but I am keen to see whether it lives up to the hype and sticks around.

Call me foolish for not being more open-minded, but I’ve invested in many cryptos over the years. Investing significant amounts in all the projects I cover is unrealistic and likely impractical.

Congratulations to all the early adopters and those who mined or promoted Pi Network in its early years when it was more profitable. Perhaps it’s still lucrative enough for people to justify doing this, I am not interested enough.

It’s one thing to sign up for its network and submit my details for KYC AML, but it’s another to buy some tokens from an exchange I use (once/if they choose to list PI), which I’m open to.

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With an enormous social media presence (nearly four million followers on X), this project has much hype; what percentage of this follower count is human is another story.

It is very wishful thinking if you’re banking on 20x or 50x gains. Unlike most coin/token launches that began with a very low market cap, PI debuted at around $8.8 billion in circulating market cap, on par with several top-20 cryptos.

When accounting for its fully diluted valuation, we’re looking at $220 billion. For comparison, ETH’s circulating MC is around $270 billion.

This isn’t to say it couldn’t eclipse $1 trillion in its FDV one day, but don’t get your hopes up.

Do you believe Pi Network will remain a dominant project in the coming years? Are you interested in participating in this project or buying tokens?

Disclaimers

N.B. None of this is financial advice; I am not a financial advisor. This information is for educational purposes only. You are ultimately responsible for your investments.
My opinions in this piece might not reflect those behind any news outlet, person, organisation, or otherwise listed here.
Please do your own research before investing in any crypto assets, staking, NFTs or other products affiliated with this space.
I don’t own PI at the time of writing.

Featured image by giragraphic at Shutterstock.

Is Pi Network Worth the Hype?

What is it?

Tokenomics

Additional thoughts

Ways to stay in the loop with Pi Network

Disclaimers

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