AKASH: The Decentralized Cloud

We are far removed from the days of running a personal dedicated machine to host your website or application. Today, most people and businesses use AWS or GCP as a substitute for running their own servers and data centers. Amazon Web Services, Google Cloud Project, and Microsoft Azure are currently the top three cloud computing providers, and they are ripe for disruption. If AWS, GCP, and Azure are our ‘hotels’ of the cloud computing industry then Akash is the AirBnB of Web 3.0. Akash grants anybody and everybody the ability to rent out their unused computing power at a price of their choice. With Akash, users can create passive income using their old computers and/or utilizing their current computer during the hours in which they would normally leave it off or idle. This crowd sourcing of computer power is an idea that has the potential to alter how we interact with the internet. At any given time, there are potentially millions of machines left unused that could be utilized to power the Akash network. Just as Wikipedia uses human cognitive surplus to build and maintain their website; Akash uses computer cognitive surplus to host websites and applications on the world wide web.

Akash’s mission is to provide a permissionless, sovereign, and open cloud computing service by utilizing the latest in blockchain technology. Akash is a quick, efficient, and most importantly inexpensive way for developers to deploy their website or applications. Akash at the time of publication is running their decentralized cloud computing services 41% cheaper than AWS, 59% cheaper than GCP, and 46% cheaper than Azure. Akash can afford to provide their services for such a heavy discount by leaning on a blockchain governance system of nodes, validators, delegators, providers, and tenants. However, for the end user the product is the same whether the website they visit is hosted by AWS or Akash. End users of the Akash network might not even realize they are participating in a blockchain protocol and more importantly it is not necessary for them to understand blockchain technology to be part of Akash’s ecosystem. This is how web 3.0 will be implemented; Blockchains remain in the background and great user interfaces are displayed in the foreground. What makes Akash the AirBnB of cloud computing is its utilization and democratization of currently wasted or unused computing power. The first 112 days of Akash’s launch saw 100 active deployments and just 26 days after that the number had doubled to 200. Currently there are about 500 active deployments on the Akash network and that number continues to steadily increase.

Who is behind Akash?

Akash was founded by Greg Osuri, CEO and Adam Bozanich, CTO. Both Osuri and Bozanich have impressive histories in tech. Osuri is a founder of AngelHack which created hackathon.io and is responsible for running distributed hackathons globally. Bozanich co-founded Sprouts Tech which is a software development company for businesses. Osuri and Bozanich were also co-founders of Overclock Labs which developed tools, infrastructure, and protocols to make foundational elements of the internet open, decentralized, and secure. Overclock Labs seems to have led them both directly into founding Akash. Akash has raised venture capital from Wakem Capital Management, Chainlayer, and Outpost Capital just to name a few.

The Tech

Akash launched mainnet 1.0 on September 25th, 2020, for the purpose of giving the $AKT token economic value and to allow for staking and governance to begin. This initial partial launch was also to ensure protocol stability and security. Akash then launched mainnet 2.0 with full cloud computing abilities on March 7th, 2021. Akash is a proof-of-stake blockchain protocol meaning all processes are controlled by nodes, validators, delegators, providers, and tenants and all systems are kept secured by the inherent potential for anyone's stake of $AKT to be burned if they act dishonestly. Built using the Cosmos SDK (software development toolkit) Akash has ingrained interoperability with the 255 apps and services currently deployed on Cosmos. The governance token for the Cosmos blockchain is $ATOM. $ATOM is currently sitting around an 11-billion-dollar market cap. Cosmos specializes in IBC (inter-blockchain communication) allowing seamless transfer of assets and data between blockchains. Akash’s native IBC and use of the Tendermint consensus protocol make it stand out among other blockchain protocols. To understand why we must take a close look at the protocol behind Akash

Validators are nodes that stake $AKT for the right to secure the blockchain and finalize new blocks and therefore collect a portion of the fees from new block creation. To run a node or validator $AKT must be staked for no less than 30 days with an option to stake for any amount beyond that up to 1 year.

Stakers are rewarded proportionally to the number of tokens staked, the length of lockup time, and the overall tokens staked in the system. This provides a supply influx that adapts to bear markets and price pressure fluctuations.

Delegators lend validators $AKT to receive a portion of the block rewards. This is usually done by regular investors in the token.

Providers sell their computing power to tenants and also must stake a portion of $AKT relative to their hourly income based on those sales.

Tenants buy computing power from providers for a fair market price using a reverse auction method. This means that the individual tenant requesting cloud computing space sets their requirements and the service providers bid on the lease. This allows tenants to have full control of who is hosting their data and how much they pay for that privilege.

The most exciting and innovative aspect of the Akash network is its ability for payment by tenants to be settled in a multitude of crypto currencies. Lease fees are denominated in $AKT but can be settled using any whitelisted token. Providers whitelist tokens and set a desired exchange rate in relation to $AKT. This exchange rate is kept reasonable by use of the Tendermint consensus protocol. The Tendermint consensus protocol allows all validators to come to a consensus through voting on token exchange rate and calculating those votes using a weighted medium. The use of a weighted medium eliminates outliers and is therefore less susceptible to abuse. Using the Tendermint consensus protocol eliminates the need for an oracle which would slow down transactions and be susceptible to abuse. This system protects providers and tenants from price volatility of the $AKT token which in turn allows for more adoption as risk to users and providers is negated.

Why Akash?

Akash has shown tremendous growth since its fully functioning mainnet went live on March 7th, 2021. Akash's use of a multi-token economic incentive system to win crowdsourced computing is revolutionary in the space. While every interaction utilizes the $AKT token, not everyone who interacts with the Akash ecosystem needs to use $AKT to do so. This has and will continue to speed adoption as Akash grows which will in turn increase the price per $AKT. Akash uses a reverse auction method to ensure end users can access Akash’s web services via the cheapest route. Akash offers an increasingly valuable service at a price point far below its competitors while providing a consistent quality of service. Cloud infrastructure is currently a $32.4 billion industry and is predicted to reach $210 billion by 2022. It’s very easy to see Akash becoming a main contributor to Web 3.0 and capturing a majority of the cloud computing market share.

Why did we invest?

The Akash network easily fits into our investment thesis. The team is highly accredited and backed by smart money. The fact that they deployed using the Cosmos SDK means Akash is already part of a huge and expanding ecosystem. The whitepaper was especially impressive and thoroughly vetted. The ability for users to buy cloud computing with any crypto they choose is a giant plus for future adoption of the Akash network. The growth of Web 3.0 has been very interesting, and we believe Akash has the potential to be a huge contributor to the space. The market cap for $AKT is still sitting around 200 million. If we factor in the growing ecosystem and the potential use cases of the Akash network, it's easy to imagine $AKT moving into the multibillion-market cap category very soon.

What Now?

Now we watch adoption, growth, and other key performance indicators. Currently we believe $AKT is undervalued and is therefore a long-term hold. We believe that $AKT has strong potential for reaching 10X or more of its current market cap resulting in a dramatic increase of $AKT token price. There will only ever be 389 million $AKT created. This low supply should mean big price jumps as $AKT rises in market cap. Akash already has shown steady and rapid adoption. Akash recently announced a partnership with Helium and are working hand in hand on moving Helium validators onto the Akash network. As long as the Akash network and the Cosmos hub keep expanding, we believe the $AKT token will increase in value.

Written by David Coryat, Crypto native and analyst at Istari Capital LP.

This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article or in projects related to this article.