Introduction
NovaResearch is excited to present an in-depth analysis of one of the leading projects in decentralized physical infrastructure (DePIN) - the Akash Network.
Akash Network stands at the forefront of this domain as a groundbreaking cloud computing platform. Its primary mission is to establish a decentralized marketplace for leasing computing resources, challenging conventional cloud service models.
Since its inception in September 2020, Akash Network has been making notable strides. Central to its ecosystem is the native cryptocurrency, AKT. As of the 22 of November data, AKT's market price stands at approximately $1.65 per token. With a circulating supply of around 221 million tokens, this translates to a total market capitalization nearing $366 million.
A testament to its growing impact and adoption, Akash Network boasts over 137,000 leases. The network's capacity is impressive, featuring over 5.7K CPUs, 160 GPUs, 32TB of memory, and 264TB of storage. This showcases the platform's robust infrastructure and its potential to revolutionize the cloud computing landscape.
Leadership and Fundraising
Akash Network successfully secured $2 million on March 30, 2020, in its venture round, marking a key fundraising achievement. This round was bolstered by the backing of seven investors, with Cypher Capital taking the lead role. Alongside them, contributions flowed from notable entities such as Digital Asset Capital Management, Zokyo, Genblock Capital, and others, underscoring the investment community's confidence in Akash's vision.
While distinctions between Seed and Private Rounds remain unclear, the Private Sale was noted by the founder to have a token price of $0.15. Further capitalizing on its momentum, Akash conducted an Initial Exchange Offering (IEO) on Bitmax (now AscendEx) in October 2020, attracting significant attention with the final auction prices standing at $0.3773/AKT for the standard auction and $0.7673/AKT for the uncapped auction.
Visionary Leadership
At the helm of Akash Network is Greg Osuri, the co-founder and CEO, whose journey in cloud architecture and entrepreneurship traces back to 2008. Osuri's repertoire includes founding several companies and serving in key roles at industry giants like IBM. His entrepreneurial spirit is perhaps best exemplified by the creation of AngelHack and Overclock Labs, the latter of which is Akash's core contributor.
Partnering with Osuri in leadership is Adam Bozanich, the co-founder and CTO. Bozanich brings a wealth of software engineering experience to the table, having held senior positions across various tech domains. His expertise, combined with his co-founding ventures with Osuri, notably Sprouts Tech and Overclock Labs, solidifies the technical foundation of Akash Network.
The Symbiosis of Overclock Labs and Akash Network
Overclock Labs played a pivotal role in bootstrapping Akash Network, setting the stage for what has evolved into a decentralized cloud protocol. While Overclock Labs retains a significant contribution to Akash's codebase and development, it does not wield controlling power over the network's validators, thus ensuring the integrity of AKT transactions remains decentralized.
Since its inception, Akash Network's GitHub has witnessed an uptick in commits from developers outside of Overclock Labs, signaling a diversifying contributor base. This increase in external developer activity not only indicates a thriving project but also reflects a decentralized ethos in the true development of the protocol.
Exploring the Decentralized Cloud Revolution
Akash Network emerges as a groundbreaking force in the cloud computing industry. It is an open-source and decentralized cloud computing platform, crafted using the Cosmos software development kit (SDK) and implemented on the Cosmos blockchain. This integration subtly underlines its advanced technological framework while focusing on its core functionalities and benefits.
At its core, Akash enables the deployment of any cloud-native application, enhancing scalability and performance for decentralized applications and organizations. It's designed to be compatible with a wide range of existing cloud services, allowing businesses to seamlessly integrate into the decentralized cloud computing market.
One of Akash's primary advantages is its ability to efficiently distribute underutilized cloud capacity. This approach offers more effective and economical cloud services compared to centralized alternatives. The network’s dedication to open-source technology significantly reduces costs, making it a competitive alternative to established cloud providers.
What sets Akash Network apart is its decentralized, censorship-resistant, and permissionless structure. This contrasts sharply with traditional, centralized cloud services, offering developers fewer restrictions and more freedom. Its decentralized nature not only enhances security, making it more resistant to common threats faced by centralized data centers but also fosters a more open and inclusive cloud environment.
Akash's innovative model allows both cloud service providers and clients to enter into flexible and secure lease agreements. This marketplace is not only more cost-effective but also opens the door for various entities, beyond large data centers, to participate as cloud service providers. For traditional cloud providers with surplus capacity, Akash presents an opportunity to capitalize on these resources, maximizing their efficiency and output.
The ecosystem is powered by the AKT token, which serves multiple purposes including governance, security, and as a medium of exchange within the network. AKT incentivizes participation and ensures the smooth operation of the Akash marketplace.
In summary, Akash Network, leveraging the strengths of the Cosmos blockchain, represents a significant shift in the cloud computing paradigm. Its blend of efficiency, security, and decentralized structure offers a compelling alternative to the traditional cloud computing model, marking a new era in the industry.
Understanding the dynamics of the Akash Marketplace
At its core, the Akash Marketplace is an open-source, peer-to-peer cloud marketplace. This innovative platform bridges the gap between users in need of cloud services and infrastructure providers who have excess computing resources to offer. It stands out for its efficient hosting and management of deployments, leveraging Kubernetes to run various workloads seamlessly.
The Akash ecosystem revolves around two primary user types:
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The Tenant: This is the party that deploys applications. Typically, tenants are developers looking to deploy Docker containers on the cloud. These containers are designed to encapsulate an application's code along with its dependencies, ensuring consistent operation across different computing environments. This means the application will run the same, whether it's developed on a laptop, tested in a controlled sandbox environment, or finally deployed in the cloud.
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The Provider: This entity hosts the applications deployed by tenants. Providers can range from individuals with spare computing capacity to large data centers.
The Akash Marketplace operates on a reverse auction model. This model empowers tenants to set their prices and specify the resources they require for their deployed containers. Providers, on the other hand, bid to host these deployments. This setup is analogous to how Airbnb hosts offer their extra space. Providers, especially those with underutilized computing resources, bid on hosting opportunities, thereby renting out their surplus capacity.
Cost-Effectiveness and Accessibility
One of the most striking aspects of deploying containers on Akash is its cost efficiency. The costs associated with using Akash are approximately ten times less than what one would incur with major cloud service providers like Amazon Web Services, Google Cloud, and Microsoft Azure. This significant cost reduction opens up cloud computing to a wider range of users and uses, democratizing access to high-quality cloud services.
Updates and Milestones: Charting Akash Network's Progress and Future Vision
Akash Network has achieved remarkable results over the past two years. Below, we recap some of the main highlights.
Overclock Labs Acquires Cloudmos to Boost Akash Supercloud
In a strategic move on August 15, 2023, Overclock Labs (the company behind Akash) acquired Cloudmos, a key player in the Akash Network community, to further develop the Akash Supercloud. This acquisition, following months of collaboration with the Akash Community, aims to enhance the network's capabilities and foster a richer ecosystem of developer-focused projects.
Cloudmos, known for its flagship application Cloudmos Deploy, has become an essential tool within the Akash ecosystem, enabling users of varying technical backgrounds to manage deployments easily. In recognition of Cloudmos' value, Overclock Labs committed $300,000 in AKT to open-source its entire codebase, aligning with Akash Network’s vision of an open-source, decentralized Supercloud. This investment includes $200,000 from the Akash Community Pool, supplemented by $100,000 in AKT from Overclock Labs.
The community supported this initiative with a 94.4% 'Yes' vote for the proposal. This partnership marks a new era in open-source cloud computing, expanding the features and reach of Cloudmos Deploy, and paving the way for Akash to connect with more developers globally. By joining forces, Overclock Labs and Cloudmos aim to simplify building on Akash and accelerate the development of the Supercloud to meet the world's increasing computing demands.
Mainnet 6 Launch and GPU Marketplace
In the first week of September, Akash Network successfully activated Mainnet 6, a significant milestone marking the debut of the first decentralized GPU marketplace. This advancement was largely driven by Foundry, a key decentralized infrastructure operator, which brought online a substantial cluster of 48 NVIDIA A100s. Soon, an additional 16 NVIDIA H100s are expected to join the network.
Although the GPU network is in its nascent stage, the potential for expansion is immense. Currently, the GPU count might seem modest compared to established startups like CoreWeave, which has over 45,000 GPUs. However, the success of decentralized networks, as shown by Livepeer with its 70,000 GPUs, suggests a promising future for Akash.
Greg Osuri, the founder of Akash, revealed that Overclock Labs, creators of Akash, have access to thousands of H100s and A100s, with a utilization target of 70-90%.
Launch of Akash ML
On September 6, Overclock Labs introduced Akash ML, aimed at AI developers seeking GPU spot instances. This initiative plans to offer on-demand access in the future. Akash ML serves as a user-friendly gateway to the Akash Network, maintaining a Web2 interface while utilizing the network's powerful backend. Akash ML positions itself as a formidable competitor in pricing, akin to startups like Lambda. The availability of high-demand GPUs like the H100 through Akash is a unique selling point, especially when such resources are scarce with other providers. The Akash Network faces a critical challenge: convincing AI developers to navigate the complexities of crypto, from wallet setups to acquiring tokens, in exchange for access to premium GPUs at reduced costs. To enhance user experience, Overclock Labs and the community have developed tools like Cloudmos Deploy and Akash Console, simplifying network instance management.
AKT 2.0: Tokenomics Overhaul
Since February 2023, plans have been underway to transition to AKT 2.0 Tokenomics. This update aims to address the original Akash Network Economics' limitations and ensure long-term network scalability and sustainability.
Key Aspects of the New Economics
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Network Security: Leveraging a Proof-of-Stake mechanism, the network's security correlates with AKT staking. The proposed economic model addresses the diminishing rewards over time to maintain staking appeal and security.
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Take and Make Fees: Introducing a hosting fee system, the network allocates a portion of these fees to an Incentive Distribution Pool, reinforcing network security.
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Multi-Currency Support: The network will support multi-token settlements, including stable tokens, to offer predictable hosting costs. AKT users are expected to benefit from significant fee discounts.
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Incentive Distribution Pool (IDP): The IDP, yet to be implemented, will be funded through fees and inflationary rewards. It will support provider subsidies, a public goods fund, AKT stakers, and a community pool.
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Token Burning: As a measure to maintain AKT's value, fees not in AKT will be converted and burned, including the AKT in the pool.
Monitoring Marketplace Performance: A Look at Key Performance Indicators
Understanding the Akash Marketplace's performance and potential for growth involves analyzing key performance indicators (KPIs). The latest data from marketplace monitoring tools paints an informative picture of the network's operational health and user engagement levels.
Lease Activity and Financial Commitment
The marketplace's vitality is partly measured by its all-time lease count, which has impressively surpassed 137,000. This metric not only signifies a robust adoption rate but also a consistent uptick in the platform's usage, with an increase of 0.33% translating to 453 additional leases. The financial stakes within the marketplace are also rising, with total USD spent climbing by 1.2% to over $149,000, signaling a deepening user investment and trust in the platform's value proposition.
CPU and GPU Resources: Demand and Deployment
On the resource front, CPU leasing has witnessed a remarkable 47.69% jump, with nearly 3,000 CPUs now in use. This spike likely reflects the heightened interest triggered by the marketplace's recent GPU capability enhancements.
Shifting focus to GPU utilization, we observe that the Akash Marketplace has integrated GPU leasing to cater to high-performance computing demands. Despite a slight 4.62% reduction in leased GPUs, bringing the count to 62, the network maintains a considerable GPU capacity of 168 units—a slight reduction of 1.18%. These figures are critical as they demonstrate the network's strides into domains requiring substantial computing power, like machine learning and graphic-intensive processes.
Trend Analysis: Steady Growth and Resource Management
Collectively, these KPIs sketch a dynamic and healthy marketplace, revealing steady growth in user activity and resource utilization. The notable increase in CPU and GPU leases confirms the network's capability and readiness to supply the computing power required by modern applications.
The recent spike in CPU leasing can be attributed to the users who are mining Zephyr, a new project. This phenomenon has had a significant impact and cannot be ignored.
The Mechanics of AKT: Akash Network's Native Token
AKT serves as the lifeblood of the Akash Network, a token designed to fuel the ecosystem with a range of utilities from security to governance. Here's how AKT is structured and distributed, along with its functions within the network.
Initial Token Distribution and Inflationary Emissions
At the network's inception, 100 million AKT tokens were allocated as per the distribution graphic, with an additional 289 million AKT scheduled for release as inflationary emissions. Initially, these emissions were intended to halve annually at a 100% APR, but governance interventions have modified the halving period to approximately every 3.7 months. Plans include rewarding cloud providers with emissions and enhancing their role in the ecosystem.
Vesting Schedules and Allocation
The original 100 million AKT distributed at Genesis in September 2020 were subjected to various vesting schedules:
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Investors: 34.5 million AKT with a one-year lock-up, followed by staggered releases every six months.
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Team & Advisors: 27 million AKT with a one-year lock-up, followed by staggered releases every six months.
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Decentralized Cloud Foundation: 19.7 million AKT with a graded release starting from TGE and continued over several periods.
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Ecosystem: 8 million AKT with releases post a one-month lock-up and subsequent staggered releases.
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Testnets: 5 million AKT with a similar release pattern to the ecosystem fund.
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Vendors & Marketing: 4 million AKT also follows a graded vesting schedule.
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Public Sale: 1.8 million AKT with no vesting schedule attached.
AKT's Role in the Akash Network
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Security and Governance: Node operators are incentivized through AKT to validate transactions and maintain network integrity. To become a validator, operators must rank within the top 100 AKT holders, including both self-staked and delegated tokens.
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Validator Rewards and Penalties: Validators are rewarded for their service but also risk having a portion of their stake slashed for failing to follow consensus guidelines.
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Planned "Take Fee": A future implementation is set to introduce a "take fee" for lease transactions, contributing to the Take Income Pool for distribution to holders.
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Governance Participation: AKT holders have exclusive rights to submit proposals and vote within the network's governance framework, with proposal submissions requiring a 1,000 AKT deposit.
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Reserve Currency and Gas Fees: As the network's reserve currency, AKT is utilized for transaction fees and is the default currency for settlements between providers and tenants.
Countering Volatility
To address the inherent volatility of cryptocurrencies, the Akash whitepaper proposed a settlement option to lock in an AKT exchange rate for marketplace transactions. While this feature is not yet live, it represents a forward-thinking approach to ensuring stability within the network's operations.
Conclusion
Advantages of Akash Network
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Innovative Model: Akash Network's decentralized, open-source model offers a transformative approach to cloud computing. Its peer-to-peer marketplace efficiently distributes underutilized computing resources, making it a more economical option than traditional cloud services.
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Technological Advancements: With the integration of Cosmos SDK and its deployment capabilities, Akash demonstrates significant technological prowess. Mainnet 6 and the introduction of a GPU marketplace are notable milestones that enhance its computing capabilities.
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Cost-Effective and Accessible: The network provides cloud services at a fraction of the cost of major providers, democratizing access to high-quality cloud computing.
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Strong Leadership and Community Support: The visionary leadership of Greg Osuri and Overclock Labs, coupled with robust community engagement and support, indicates a strong foundation and future growth potential.
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AKT Tokenomics: The AKT token serves multiple roles, from governance to security, incentivizing participation and ensuring smooth network operation.
Challenges and Concerns
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Market Competition: Akash Network operates in a highly competitive market with established giants like AWS and Google Cloud. Its success hinges on its ability to continuously innovate and maintain its cost advantage.
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Crypto Complexity: The reliance on cryptocurrency for transactions might be a barrier for some users, particularly those unfamiliar with blockchain technology.
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Volatility of Cryptocurrency: The inherent volatility of cryptocurrencies, including AKT, can impact the stability and predictability of costs in the network.
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Scalability and Adoption Rates: While showing impressive growth, the network needs to maintain and accelerate its adoption rate to compete with established cloud service providers.
Final Thoughts
Akash Network represents a significant leap in the evolution of cloud computing, offering a decentralized, cost-effective, and technologically advanced alternative to traditional models. Its leadership, strong community backing, and continuous technological advancements position it well for future growth. However, challenges like market competition, regulatory uncertainties, and the complexities associated with cryptocurrency transactions need to be navigated carefully. The success of Akash Network will depend on its ability to address these challenges while capitalizing on its unique value proposition in the rapidly evolving cloud computing market.
⚠️ Disclaimer ⚠️ : Nova Research is an independent research entity and is not affiliated with Akash Network or any related organizations. This report is not a paid promotion or endorsement and is conducted solely for research and informational purposes. Nova Research maintains strict adherence to its core principles of impartiality and independence in providing insights and analysis. Readers are encouraged to conduct their own research and due diligence before making any investment decisions or engaging with the mentioned entities.