This research report has been funded by GEODNET. By providing this disclosure, we aim to ensure that the research reported in this document is conducted with objectivity and transparency. Blockworks Research makes the following disclosures: 1) Research Funding: The research reported in this document has been funded by GEODNET. The sponsor may have input on the content of the report, but Blockworks Research maintains editorial control over the final report to retain data accuracy and objectivity. All published reports by Blockworks Research are reviewed by internal independent parties to prevent bias. 2) Researchers submit financial conflict of interest (FCOI) disclosures on a monthly basis that are reviewed by appropriate internal parties. Readers are advised to conduct their own independent research and seek advice of qualified financial advisor before making investment decisions.
GEODNET: Enabling Ubiquitous Autonomy
Key Takeaways
- Goednet is the world’s largest RTK network by both the number of base stations and coverage area, providing hyper-precise positioning data to web2 customers.
- RTK networks are critical to enabling a world of ubiquitous autonomous drones, vehicles, and industrial robots. We believe the GEOD token enables both a cost and product advantage for the GEODNET RTK network, which will allow it to out-compete multi-billion dollar incumbents Trimble and Hexagon.
- Importantly, the RTK market opportunity is sufficiently large today, at about $5 billion dollars annually, and we’re at the cusp of this market rapidly expanding as autonomous technologies are hitting an inflection point.
- Two years into its life, the GEODNET network is generating ARR, and unlike crypto native revenue streams that are inherently cyclical and volatile, GEODNET’s revenue is fundamentally untethered to the cyclical nature of crypto markets. This ARR has the potential to be highly diversified across a number of trailing, leading, and bleeding edge web2 industries, which is especially attractive to TradFi investors.
Real Time Kinematic Networks
GPS technology is ubiquitous. It is integrated into everyday life and industries worldwide, powering navigation systems in cars, smartphones, and wearable devices, and critical operations in logistics, construction, aviation, agriculture, and emergency services.
However, GPS is inherently limited due to its inaccuracy, as ionospheric and tropospheric errors cause distortions in satellite signals when they travel from space to Earth. The margin of error on a GPS signal ranges from 1 to 3 meters normally, and while this level of inaccuracy might be acceptable for trailing-edge use cases like tracking a fleet traveling on highways between cities, or directing iPhone users to the nearest coffee shop, meter-level inaccuracies are unacceptable for leading and bleeding edge use cases, such a drone delivery & drone fleet management, autonomous vehicles, industrial robotics, and ag tech & precision farming. Real Time Kinematic networks (RTK networks from hereout) are the critical enabling technology for these leading and bleeding edge use cases, as they require centimeter-level accuracy to function.
RTK networks are ground-level private networks that enhance the accuracy of GPS and GNSS data by 10-100x, reliably achieving centimeter-level positioning accuracy. RTK networks leverage ground-level reference stations, strategically installing these stations across geographies where network operators foresee demand for RTK-level accuracy. These hundreds or thousands of stations act as network nodes that deliver real-time positioning correction data through a process called "correction streaming." Devices within roughly 20 kilometers of one station can receive this data, enabling them to achieve the centimeter-level positioning accuracy referenced above.
Bleeding-edge autonomous technologies are at an inflection point, acting as a natural growth engine for the RTK market. Drones have applications in logistics & delivery, emergency response, media, construction, agriculture, and much more. Importantly, in 2023, the FAA cleared Zipline, a startup drone delivery company, to fly drones without human line-of-sight monitoring, a critical first step for drone proliferation in the United States (you can read more here). Since the approval, its drone deliveries have exploded. The market for drone-enabled services should continue to expand given the speed and efficiency enabled by this new tech. Autonomous vehicles are becoming normalized in some localities and are set to expand across the US as the new administration is set to ease regulations. Precision agriculture is critical to scaling farm output, and is expected to grow at over 2x the rate of US GDP going forward.
The Legacy RTK Market
RTK networks are traditionally built, maintained, and owned by large international legacy networking & technology companies. Trimble and Hexagon are at the forefront, particularly through Hexagon's subsidiary, Leica Geosystems. Trimble is renowned for its comprehensive portfolio of RTK solutions, selling into numerous end markets such as construction, land survey, telecom, asset tracking, mapping, and government. Hexagon's Leica Geosystems has established a strong presence with advanced RTK GNSS systems known for their precision and accuracy of geospatial solutions across aerospace, defense, security, construction, and manufacturing. These giants have dominated the geospatial market, with combined market caps of nearly $40B and annual revenue of nearly $10B.
GEODNET’s Wedge
Unlike, say, GPU dePINs, which find it challenging to compete on product with centralized cloud providers across many workloads today, GEODNET’s GEOD tokenomic system facilitates both a cost and product advantage versus incumbents, who are trapped in their legacy systems.
The GEOD token facilitates a cost advantage. Incumbent RTK networks are extraordinarily capital intensive - where a single base station can cost $25,000, with an annualized rent cost per base station of $5,000. In contrast, a single GEOD miner costs only $700 and has a rent cost of zero due to the community nature of the project. This enables GEODNET to lower prices per drone or autonomous vehicle connected to the network. The incumbent annual price for a single RTK-connected device for a constant stream of high precision data averages to around $2500, whereas comparable contracts offered by GEODNET range from $20-$400, depending on the device and volume.
This cost advantage enables a product advantage in terms of geographic coverage and, therefore network reliability. For the same $1M in upfront spending, the GEODNET network can deploy roughly 1400 stations covering about 100,000 sq km, whereas incumbents can only deploy 40 stations, covering less than 5000 sq km.
We’re seeing these advantages play out in real time. The largest incumbent RTK networks by Trimble and Hexagon have roughly 5,000 stations, whereas GEODNET has achieved double their coverage with over 10,000 stations across 140 countries.
Legacy RTK networks are loaded with technical debt and are locked into high cost systems, and will likely struggle to compete with next-gen GEODNET on a go-forward basis. The RTK network of Trimble and Hexagon run on, in some cases, decade-old GNSS receivers that are not compatible with the latest Satellite technology. As a consequence, these networks, which began their build out as early as 2000, are likely stuck in the past and unlikely to reach GEODNET’s scale and efficiency. From a cost perspective, these legacy networks leverage older proprietary receiver technology based on customized RF components, and they will not likely upgrade to newer, integrated hardware as they stand to lose control of the core IP that enables their private network, allowing Geodnet’s cost advantage to persist.
GEOD Token
GEOD miners receive tokens for providing consistent high-quality data. Tokens per miner are capped at 24 per day for a triple-band miner. Of the 1 billion possible GEOD tokens, 350 million are earmarked for miners, and are issued on an annual halving schedule. Token allocations per base station are adjusted based on the quality of coverage, which you can read more about here.
Most importantly, the GEOD token model is a BME model that positions the GEODNET foundation for long-term sustainability, while still incentivizing long-term alignment between base station operators and the network at large. The GEOD token model is unique in that 80% of revenues are used to buy and burn the GEOD token, but the remaining 20% flows back to the Foundation treasury. We think this BME burn & return model is favorable as it minimizes the Foundation’s burn and creates a recurring stream of income, enhancing the long-term sustainability of the network, a feature which most dePINs lack. The future is rapidly changing and inherently uncertain, and BME models with full token burn creates long-term risk for dePIN projects.
On the node operator side, the economics are sustainable today. Currently, GEOD miners offer a short payback period, where the upfront cost of a GEOD miner is $700, versus a projected payback of over $1000 in GEOD tokens at today’s prices.
Fundamentals
GEODNET is generating ARR at steady growth rates today, and has landed a number of impressive web2 and web3 partnerships. ARR stands at over $1.8m today, up 40% QoQ and over 400% YoY in October, albeit the latter off a very low base.
GEODNET’s partnerships to date span multiple industries and sectors, ranging from legacy to high growth and emerging technologies. Below we review a handful of GEODNET’s publicly announced partnerships to date.
Quectel, a global IoT solutions provider, leveraged GEODNET to white label the GEODNET network as part of service bundle of a new GNSS module, antenna, and GEODNET’s RTK correction services to enable faster time-to-market for IoT product developers. Propeller is a cloud-based worksite drone mapping & analytics company that leverages GEODNET data to deliver high-precision data to its construction, mining, and waste management industry clients. Sensori Robotics is an autonomous lawnmower company that cites GEODNET’s cost and scale as an enabling factor for the startup. Agri Automation, a supplier of ag tech and ag robotics solutions, partnered with GEODNET in October, noting that prior to the GEODNET network, RTK solutions were not easy or cost effective to achieve in rural Australia and New Zealand where it is based. Deep Sand Tech, an ag tech company, leverages GEODNET’s RTK network in its agricultural automation products, eliminating the need for private mobile base stations when operating autonomous tractors. Wingbits, a crypto decentralized flight-tracking application, is leveraging GEODNET to develop professional grade flight tracking nodes within GEODNET base stations. Lastly, GEODNET use cases even extend to gaming, as Animoca Brands will leverage the network to bring high-precision geolocation data into its mixed reality gaming products.
Given this diverse customer mix of both trailing, leading and bleeding edge Web2 and Web3 companies, we think GEODNET’s revenue has the potential to be highly diversified across industries, creating a stable token burn and source of income for the Foundation, in stark contrast to what is typical of crypto projects today.
Risks
Network reliability. GEODNET has a large and cost-effective network, but, like all dePINs, it relies on hobbyists and community-operation infrastructure, which can pose challenges. Inconsistent connections in a single locality, for example, could greatly impact the network’s ability to land new customers. SLAs will be critical to GEODNET’s success.
Regulatory hurdles. Autonomous technologies face innumerable regulatory hurdles on a locality-by-locality basis. We note that powerful technologies have proven the ability to overcome these, e.g. Uber historically and AVs today. However, there are examples where localities make the wrong choice, i.e. nuclear. Fortunately, GEODNET is closer in nature to the former than the latter.
Tokenomic sustainability. All dePIN token models are inherently exploratory, and halving schedules have historically had mixed results. We hope that GEODNET maintains flexibility with its token model and is responsive to market and community feedback.
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