The initial plan of the company was to route data for LoRaWAN-enabled devices. The aim is to enable IoT devices to connect to the Internet by providing publicly maintained P2P infrastructure (software and hardware). Helium maintains its own distributed ledger and sells pre-build hardware devices called Hotspots. Hotspots act as nodes in the network and have two main roles: (1) provide network coverage for IoT devices and (2) secure the Helium blockchain network (act as mines).
How it works?
Wireless network coverage is provided via purpose-built hardware called Hotspots. The devices are connected to power and to the Internet. Users can buy the certified hardware online and set up the Hotspot at their home or any location worldwide.
The Helium network is a decentralized wireless network that enables devices anywhere in the world to wirelessly connect to the Internet and geolocate themselves.
The Helium data network is managed by a distributed ledger network with a native protocol token incentivizing a two-sided marketplace between coverage providers and coverage consumers. Coverage providers are awarded for maintaining the distributed ledger network as well as providing bandwidth to IoT devices. Consumers (mostly machines in the form of IoT devices) pay for data consumption. The Helium distributed ledger manages all transactions. Powering the network is a purpose build blockchain with a unique consensus algorithm called Proof-of-Coverage. Miners are obliged to prove that they are providing wireless network coverage to devices by submitting proofs which are then audited and verified by miners.
In the Helium network Hotspots also act as miners in their blockchain network. The system introduces a native token called HNT. HNT is mined and distributed between three network stakeholders; (1) Hotspot Owners, (2) Helium Inc., and (3) Investors. The proportions are predefined by the Helium team. In the early stages, HNT tokes were used (and are still used) to facilitate the economy around the Hotspots since no devices were using the network.
The network uses a second token called Data Credits which are non-transferable and non-exchangeable. The price of Data Credits is fixed. This way, devices connecting to the network can use the Data Credits as a medium of exchange while not worrying about price fluctuations. Data Credits (DC) can be acquired with HNT tokens by the process of burning HNT for DC. You can think of Data Credits like mobile minutes someone might purchase for a prepaid phone plan.
After the successful start of the Helium network, the community decided to expand its services. Once proven, the model of incentivizing distributed wireless networks could be applied to any wireless protocol. In October 2021, Helium announced a 5G network coverage only available in the US. However, the 5G hotspots are not cheap. One can easily look at $1500 for a device, and the return on investment is not guaranteed. The first iteration of the 5G network will be launched in Q3 2022. People will be able to use the network with mobile carrier plans.
Helium Chapter 2
Helium uses a decentralized governance mechanism called Helium Improvement Proposal system known as the HIP process. Since the Helium incentive model could be applied to any network type, the community proposed to evolve Helium into a network of networks. The process will streamline the launch of any kind of network on top of the Helium protocol. HNT and Data Credits will become the economic engine for all network protocols. Each network protocol receives HNT based on the size and utility of that network.
"The first new network protocol to launch under this proposed system would be Helium 5G. 5G Hotspot owners would earn a new token, called MOBILE, for providing 5G coverage via a new Proof-of-Coverage system or by transferring data across the network via Data Credits. Existing LoRaWAN miners begin earning a new token, called IOT.", https://blog.helium.com
Over the past two years, users have spent over $250M buying hotspot hardware. While early adopters have enjoyed sizable returns on investment, others have not been that lucky. In addition to that, the HNT token is still used to subsidize the network expansion. With more devices added to the network, many users saw their revenue streams drop. This is also very dependent on the location and density of hotspots. However, the LoRaWAN network hasn't been enjoying the expected adoption numbers. Helium's total revenue is $6.5k/month. Members of the r/helium subreddit have been increasingly vocal about seeing poor Helium returns. On average, they spent $400-800 to buy a hotspot. They were expecting $100/month, enough to recoup their costs and enjoy passive income. However, some earnings have dropped to $10 dollars a month which is mostly the HNT token subsidizing the hosting. Once the network rewards, disappear hotspot owners will be left with the earnings from data usage, which at the moment is almost non-existent.