What Is Pi Coin? Definition, Tokenomics, and How it Works

Pi Coin is a unique mobile-focused cryptocurrency project with the stated goal of making blockchain mining easily accessible to anyone with a basic smartphone. Its early stages were remarkably successful, with millions of new users signing up to start earning free tokens. However, Pi Coin’s history has always been marked by controversies, with critics pointing out its faults, slow progress, and controversial monetization strategies.

Critics pointed out that it was little more than a clicking game at the time as it took years for the team to finally build the Pi Network mainnet and launch a tradable token. Pi Coin also faced accusations that it cynically pushed back its full launch to make more money by forcing users to watch ads and extracting their data via its mandatory KYC verification requirements. Despite all of these controversies and accusations, the Pi Network is still relatively popular, and Pi Coin is worth over a billion dollars.

In this guide, we explore Pi Coin’s foundations, the structure of its ecosystem, the mining model, ongoing development milestones, extensive controversies, future prospects, and more.

What Is Pi Coin?

Pi Network is a blockchain project built around a simple mining system that allows users to earn Pi Coin directly from their smartphones. The idea is to vastly lower the barriers of entry that are common in crypto mining, such as expensive hardware, massive amounts of electricity, and extensive technical knowledge.

Naturally, one of the consequences of making such a simple and easy-to-use mining system is that it quickly becomes saturated with miners. This is great for inclusivity and onboarding beginners, but it also likely reduces the potential value of the coin through inflation. For example, if Bitcoin decided to wildly change its mining system and make it so that anyone with a basic phone could mine just as well as warehouses full of specialized hardware, the value of Bitcoin would likely drop precipitously.

It’s important to note that this is very different from what crypto mining means elsewhere in the crypto market. Pi Coin mobile users aren’t directly (or indirectly) validating or processing transactions. They do contribute to the security of the network, but in a different and more complicated way. We will explore the details of Pi’s unique mining system in detail below.

The Pi Network team seems to now be focused on building out its Mainnet with utility and recently launched its own decentralized exchange (DEX). It uses its own Automated Market Maker (AMM) to allow Pi holders to swap their Pi for other tokens on the Mainnet. However, it is only available on the testnet for the moment. Pi Network also has its own wallet and browser app, which it says will allow users to browse and use decentralized applications.

How Does Pi Coin Work?

Pi Coin began as a remarkably simple mining system, but the team has since built a larger ecosystem around it. The main focus seems to be transitioning away from its basic app towards an active, utility-driven blockchain network.

The Pi mobile app still functions as the main access point for new users and a central feature of the main blockchain. However, it uses a vastly different mechanism to secure the network than basic Proof-of-Work (PoW) blockchains like Bitcoin. Users check in every 24 hours by tapping the “Mining” button in the app to prove that they are a real person and not a bot. The app’s KYC requirement is another important feature that protects against botting.

Users also add a few people whom they trust to their “Security Circle.” This is especially important because the app uses this information to make a ‘global trust graph,’ which further helps to distinguish between real users and bot networks. The team claims that this is what allows it to prevent large bot farms from taking over the network instead of using costly, inefficient mechanisms like Proof-of-Work consensus.

As we mentioned above, most Pi users are not actually validating or processing transactions on the network at all. They simply help the system tell which nodes to trust via the trust graph. SuperNodes, which make up a small handful of these trusted nodes and have to meet hardware and uptime requirements, do most of the work of processing transactions.

Most users only interact with either the main Pi app or the Pi Browser, which allows users, dubbed Pioneers, to browse through and use supported DeFi apps. It also has an integrated wallet where Pioneers can store their Pi tokens.

Pi Network is clearly focusing on building out the token and network’s utility. It provides a developer platform that allows third-party creators to build applications using Pi as a native currency. These apps are accessible through the Pi Browser, though there aren’t many available yet, and some may be buggy or unsafe.

Transition to Open Mainnet

Pi Network has progressed through a phased roadmap to build a stable and scalable blockchain. It began with the 2019 beta phase, focused on mobile mining, onboarding, and community growth. This was followed by the Enclosed Mainnet, where users could mine and use dApps, but wallet balances remained locked.

This transitional phase emphasized KYC verification, node setup, and ecosystem testing — laying the groundwork for the next step: the Open Mainnet. Once live, verified users can transfer Pi externally, trade on exchanges, and use the coin in real-world scenarios, such as peer-to-peer payments and DeFi platforms.

The shift to open mainnet could mark a turning point, finally introducing real utility and market-driven value to Pi Coin. However, the blockchain simply does not have many applications or protocols built on it, so its utility is still very limited.

Benefits and Limitations of Pi Coin

While the Pi Network has attracted a large user base through its novel approach to cryptocurrency mining, it has also faced notable skepticism. Some critics argue that its extraordinarily simple mining system lacks the technical robustness seen in most established cryptocurrencies. They question whether this simplified system can sustain long-term security or facilitate real growth once the incentives shift.

Pi Coin’s slow transition to the open mainnet and trickle of exchange listings also set off red flags for many investors. The mining app launched in March of 2019 and the Pi Network mainnet wasn’t officially released until February 2025. Many crypto projects take years to create their flagship blockchain, but most don’t launch their mining systems roughly 6 years early.

This massive gap between mining and an active mainnet meant that millions of people were generating Pi tokens for years and years without having any use for them. Even now, Pi Coin’s utility is extremely limited. When millions of people are generating your token and have no uses for them other than to sell for other cryptos, it will almost certainly suffer from mass inflation, and Pi was no exception.

It can be a bit confusing to track Pi’s price because some exchanges offered trading on Pi [IOU], a kind of placeholder offered by these platforms to allow price speculation on Pi. The actual Pi token did not exist at this point. Exchanges just allowed trading on these placeholders that would be settled once the token was actually launched.

On Coinbase, Pi [IOU] reached an all-time high of $330 immediately after it was listed in December 2022. If you go by this price, Pi token is now down well over 99.9% from its ATH. Pi [IOU] reached another peak of $208 right before the token officially launched, before crashing down to about $0.80 within a week. This was likely due to mass inflation and a lack of utility, leading to major selling pressure. It has since fallen below $0.20, though it still has a market capitalization of over $1.3 billion.

Another criticism that Pi Network often faces is the KYC requirement it enstated. Anyone who wants to claim the tokens they have been mining for up to 6 years or more has to offer up their personal information. Privacy-minded investors were disappointed by this change, but it also likely had a few beneficial impacts on the project and its holders.

First of all, requiring KYC likely helped prevent widespread Sybil attacks, where users or bots create tons of accounts to mine massive amounts of a token. Secondly, it naturally reduced the amount of Pi in circulation, as many users won’t want to give out their personal information for a handful of tokens. KYC could also be an important step towards full regulatory compliance, which could help it set itself apart from other crypto projects.

Delays in transitioning to the open mainnet have added to concerns, with critics highlighting the absence of exchange listings and a precise market valuation. The platform’s real-time progress is closely watched, and without official market integration or strong adoption by businesses, doubts remain about Pi Coin’s status as a serious asset.

What Is the Future of Pi Coin?

The future of Pi Coin and its larger ecosystem likely rests on whether the team can transition Pi Network into a sustainable on-chain ecosystem with real utility for the token. The blockchain is now live, and Pi is tradable on multiple decentralized exchanges, but the team still needs to build out the infrastructure and utility that make it worth it to mine and use Pi. Attracting top developers to build new apps or port existing popular apps is likely a main focus for the project.

Pi Coin’s supply is in a strange position as much of it is still locked away behind KYC requirements. This could create issues with liquidity, making it difficult for holders to trade or use their tokens. It’s also important to note that the Pi Network team still has control over most facets of the project. While the mainnet is technically partially decentralized, the team controls the infrastructure, validator selection, and especially the development of the protocol. If they make a wrong or greedy move, it may cost the entire ecosystem dearly.

Disclaimer: This article is for informational purposes only and does not provide financial, trading, or investment advice. Cryptocurrency prices can fluctuate wildly, so always do your own research (DYOR), assess risks, and consult a professional before making financial decisions. The author and team are not responsible for any losses from using this information.

FAQs

Ibrahim Ajibade

, 373 posts

See All Articles

I’m a research analyst with experience supporting Web3 startups and financial organizations through data-driven insights and strategic analysis. My goal is to help organizations make smarter decisions by bridging the gap between traditional finance and blockchain innovation.

With a background in Economics, I bring a solid understanding of market dynamics, financial systems, and the broader economic forces shaping the crypto industry. I’m currently pursuing a Master’s degree in Blockchain and Distributed Ledger Technologies at the University of Malta, where I’m expanding my expertise in decentralized systems, smart contracts, and real-world blockchain applications.

I’m especially interested in project evaluation, tokenomics, and ecosystem growth strategies, as these are areas where innovation can drive lasting impact. By combining my academic foundation with hands-on experience, I aim to provide meaningful insights that add value to both the financial and blockchain sectors.