Akash Network: A decentralized AI computing power protocol that coexists narrative hype and value investment

Original title: "Akash Network: A decentralized AI computing power protocol that coexists narrative hype and value investment"

Original author: Firehand, Kevin, Charlotte, Metrics Ventures

1 Introduction: The AI track has become the core narrative of this cycle

The AI track may no longer be as popular No more details are needed - the price performance is enough to overshadow all words. On February 23, 2024, Nvidia's stock price exceeded US$800, and its market value exceeded US$2 trillion, becoming the fastest company in history to grow from a market value of US$1 trillion to a market value of US$2 trillion. On the Crypto track, AI track tokens have performed well in the past few months. Leading tokens such as RNDR, TAO, and FET have all gained more than 3 times. Every important event in the AI field will lead to the completion of related tokens. A rapid growth.

AI has become the most important human technological revolution in this cycle, and accordingly has become the number one track for financial speculation. Blockchain and artificial intelligence are actively exploring the possibility of integrating each other. The Crypto world will benefit from the important progress of AI technology, driving the rapid rise of related leading tokens. Perhaps a few months ago we were still discussing the feasibility of combining AI with blockchain, but now this discussion seems less important.AI has become the core narrative of this cycle, and market sentiment and financial enthusiasm have overwhelmed it. everything.

In our previous overall analysis of the AI track (starting from V God’s article, what are the subdivisions of Crypto×AI worth paying attention to? Dao?), reviewed the four directions in which Buterin divided the AI track:

· AI as a participant: AI games, AI prediction competitions

·AI as interface: various AI applications

·AI as game rules: Autonomous Agent underlying protocol, zkML/opML

·AI as goal: go Centralized data protocol, decentralized computing power protocol and decentralized AI model

"AI as a goal" represents Crypto's decentralization of AI In terms of narrative transformation, it is the most attractive and has room for speculation. In terms of implementation, although it is currently unable to compete effectively with centralized businesses, many innovative projects with feasible business logic have been born, among which many innovative projects have been born. Projects that form a moat will become investment targets with strong trends in this cycle.

2 Track Overview: Decentralized computing power is the core direction of laying out the AI track

In Crypto ×Among the many subdivided tracks of AI, decentralized computing power will be the direction that satisfies both narrative hype and value investment.

First of all, the demand for computing power in the AI industry itself is growing rapidly, and insufficient computing power and high costs are becoming problems for the entire AI industry. On the supply side, the production of AI GPUs is being exclusively monopolized by NVIDA. The major giants control the AI computing power, part of which is used for training new models and the other part for leasing. Highly centralized and monopolized cloud platforms are controlling it. Focus on computing power pricing power. On the demand side, the demand for model training and model inference is growing rapidly. Model training competition is intensifying the competition for computing power. Small model training and fine-tuning also require lower-cost computing power support. The large-scale adoption of AI applications is increasing the number of models. The computing power required for reasoning.

Secondly, among the many AI subdivisions, decentralized computing power is the direction that integrates Crypto and AI the most closely and has the clearest business logic. The use of tokens to incentivize the supply of computing power, or the more extensive business logic of DePIN, has already proven its feasibility in decentralized storage tracks such as Filecoin in the previous stage. Whether it is an AI application like Wrapper or the underlying protocol of Agent, the importance of tokens in the entire system is actually not high. In decentralized computing power projects, cryptocurrency has a deep binding relationship with the entire business logic. Crypto has truly played an inspiring role in reshaping the AI landscape.

With the recent NVIDIA conference, decentralized computing power has ushered in a new wave of climax. Leading projects have experienced impressive growth, and a number of computing power-related projects have emerged. new project. The current characteristics of the decentralized computing power track are: a large number of projects, similar project business logic, fierce competition, and leading projects with a moat in terms of computing power resource supply and demand stability.

In terms of business logic, these types of projects are basically similar: using cryptocurrency as an incentive to allow suppliers with CPUs and GPUs to provide computing power , allowing small and medium-sized enterprises to use the computing power provided by lessors without permission, and token incentives make the price of computing power much lower than that of centralized suppliers. At the same time, the requirements for communication and parallel computing for decentralized model training are higher, and the computing purpose is changing from training to reasoning. Therefore, most current projects focus on distributed reasoning, with a high degree of homogeneity.

Although the NVIDIA Conference has driven project growthof a series of GPU concepts, we expect that the future development of this track will be further aggregated and centralized. After the leading projects run away, small projects will decline in the medium to long term. Whether it is the supply of computing power or the users who are willing to adopt decentralized computing power, they are both scarce. When the business logic is highly homogeneous, resources on both ends of the supply and demand will flow to the head projects first. In addition, users need large-scale and stable computing power guarantees, and an overly decentralized track structure will be even more unfavorable to compete with centralized cloud service providers.

In summary, decentralized computing power will be the key direction in laying out the AI track. With medium and long-term investment, leading projects that already have a certain moat will will remain competitive. Under this logic, we believe that Akash will be the core target for laying out this track.

3 Akash Network: Fundamentals and Token Economic Analysis

3.1 Fundamental Analysis

Akash Network is a decentralized cloud computing platform that aims to integrate underutilized computing globally by providing a peer-to-peer based marketplace Resources, establish an open and transparent market, allowing users to freely publish resource requirements, and allow global resource suppliers to bid in real time, reducing the cost of cloud services. According to Messari's report, Akash's cost for the same hardware is much lower than that of other cloud providers.

Akash was founded in 2015 and launched in the Cosmos ecosystem in 2020 Mainnet. Akash initially focused on CPU computing. On August 31, 2023, Akash Network completed the mainnet 6 upgrade and began to support the GPU cloud market.

The supply side of computing power mainly comes from data centers, miners and consumer-grade computing power. After mainstream public chains shift to the PoS (Proof of Stake) mechanism, the idle computing power of a large number of mines has become a problem to be solved. Akash Network is effectively utilizing these idle resources by cooperating with multiple large miners and has obtained a large number of high-performance computing resources of nearly 500 V100 equivalent GPUs. Foundry, the largest Bitcoin miner in North America, has added 48 to the Akash GPU network. NVIDIA A100. Personal computers scattered around the world also contain a large amount of underutilized low-end computing power. Currently, there are over 17,700 CPUs and 258 GPUs in the Akash network, and that number is growing. In addition, Akash has also launched specific incentive programs, such as a $5 million pilot incentive program, aimed at attracting more computing power providers to join the platform.

On thedemand side, Akash Network is committed to attracting more developers to join by establishing its own open source community, which not only helps strengthen the moat of its ecosystem, but also brings continuous innovation and development momentum to the platform. In addition, Akash is also actively seeking cooperation with other decentralized AI protocols to expand its service scope and improve the competitiveness of the platform. Currently, Akash has reached a partnership with two major decentralized first-level protocols, Gensyn and Bittensor. This not only brings a large amount of fixed demand to Akash, but also proves the attractiveness of its platform in the decentralized computing power market. and strength. After the introduction of GPU in August 2023, Akash's daily rental volume has also increased significantly. Currently, 162,700 rentals have been completed, and the daily revenue from rentals is also growing.

atTo match the supply and demand sides, Akash uses the reverse auction mechanism, that is, the user creates an order, the computing power supplier bids for the order, and the user completes the selection based on the supplier's bid and other information, and Sign the lease.

In terms of specific business, Akash Network’s computing power is mainly used for data preprocessing and model reasoning, but attempts and development of model training are currently underway. Starting in August 2023, Overclock Labs will begin training basic AI models with ThumperAI, and will eventually work to create an open source artificial intelligence model named "Akash-Thumper" and share it on Huggingface. If the training of the model can be completed successfully, the use will be defined Distributed computing training model process, and attract the demand for Akash network, improve utilization.

GPU is available and the price is attractive, so development is prevented There is only the last threshold left for users to use Akash: Crypto Barrier. Akash Network has adopted a series of measures to reduce the difficulty for users:

·Develop Cloudmos Deploy and  ;Akash Console, developers can manage instances in the network without friction;

· Integrated Cosmos Swap on Metamask, users can authorize AKT transactions on Metamask ;

· Support stable currency payment, Noble will soon launch Cosmos native USDC, which can also significantly lower the entry barrier for developers.

3.2 Token Economics Analysis

AKT token plays multiple key roles in the Akash ecosystem: Enhanced as a staking medium The benchmark for network security, governance, lease settlement units, and market pricing.

By staking AKT, users can participate in the governance of the network, with voting weight determined by their stake The number and duration of tokens, thus promoting the decentralized decision-making process of the network.

AKT is mainly used to pay leasing fees, and Akash sets different Handling rates (such as 4% handling fee for AKT payment and 20% for USDC payment) and an annual inflation rate of up to 13% are used to regulate supply and demand, while a part of the inflation and handling fee income is allocated to the community pool for use Use of public funds, incentives and possible token destruction to ensure the sustainable development and value circulation of the ecosystem.

According to Coingecko data, as of March 20, 2024, the circulating supply of AKT is 230,816,799, All AKT tokens have been fully unlocked, so they no longer face high unlocking selling pressure. The current major increase in circulation comes from inflationary incentives, with the maximum supply being 388,539,008. Annual inflation is still currently around 15%, according to Stakerewards data. Approximately 133.49m AKT was used for pledge, accounting for 57.8%, which is a relatively high pledge ratio.

In terms of liquidity, Akash’s main liquidity is concentrated in KuCoin and Kraken and Gate among the three central exchanges. It is worth noting that AKT has not yet been listed on major first-tier exchanges such as Binance, resulting in its relatively low visibility in the Chinese area. However, AKT has been listed on leading US exchange Kraken for some time and is already listed on Coinbase. Historical cases show that projects such as Bonk and Ondo often experience price rediscovery and significant growth after entering Coinbase's Roadmap. Based on this trend, the launch of AKT will stimulate market enthusiasm and investor interest, thereby driving up its price and market value.

4 Competitive Landscape Analysis

Based on the previous article, competition in the decentralized computing power field is fierce, and the leading projects have high moats. We believe that the two core competitive indicators of the decentralized computing power track are: Computing power supply and computing power demand.

The importance of computing power supply is self-evident. Having a larger number and higher quality GPUs can process more stably and efficiently. More complex computing tasks will become the moat of the platform when computing resources are extremely scarce. The demand for computing power is equally important. Coinbase’s latest research report pointed out that although the supply of computing power in decentralized platforms has increased significantly, platform revenue has not increased at the same time. Therefore, the market demand for decentralized computing has been raised. doubted. The supply and demand of computing power will serve as a positive flywheel, driving the rapid growth of the entire ecosystem.

In this track, the leading projects with Akash include Render, io.net, and Gensyn. Among them, Akash and Render were born earlier and were not born for AI computing. Akash was initially used for general computing, Render was mainly used for video and image rendering, and io.net was specially designed for AI computing, but in AI, computing power will After the demand has been raised to a higher level, these projects have tended to develop in AI. While Akash, io.net and Render focus on AI reasoning, Gensyn focuses on AI model training. Gensyn is trying to establish such a verification layer to ensure the correctness of calculations through probabilistic learning proofs, graph-based precise positioning protocols and incentives. .

From a computing power supply perspective, Akash currently has 17,700 CPUs and 258 GPUs. In contrast, Render has not disclosed hardware data to the outside world, and io.net has more GPU computing power. As of March 20, 2024, io.net has 51,738 GPUs and 10,206 CPUs. It has also reached agreements with Render and Filecoin. Cooperate to obtain the right to use 4458 GPUs and 197 CPUs from Render and 1024 GPUs from Filecoin. The quantity and quality of computing resources far exceed Akash. However, it should be noted that io.net is using extremely attractive The airdrop incentives attract computing resources, and the number of GPUs on the platform is changing rapidly. We still need to observe how much computing power can remain on the io.net platform after the airdrop ends. In contrast, Akash's computing power comes from a relatively stable and cooperative relationship, and its computing power resources have been in a process of steady growth.

In terms of the use of computing power, Render has not yet disclosed relevant data, but its current business focus is still on image rendering. In addition, it has established a computing client to Promote the use in the field of artificial intelligence, that is, provide an API to allow other projects to access Render's GPU network to support AI reasoning, training, fine-tuning and other use cases. Projects that have been connected to Render include io.net, Beam, FedML, and Nosana. , Prime Intellect and Exabits are on the ballot.

io.net’s overall network usage is around 30%-40%, and the computing power connected from Render and Filecoin is almost unused.

GPU usage of Akash network maintained At around 40%-60%, this is a relatively advanced level among decentralized computing power platforms. In recent days, due to the substantial increase in GPU computing power supply, the usage rate has temporarily declined. CPU network usage also remains at a high level of 50-60%.

(Data source: calculated based on Akashstats )

From a valuation perspective, Akash’s current FDV and MC are both 1.2B, RNDR’s FDV is about 5 times, and MC is about 3 times. io.net and Gensyn have not yet issued tokens. Among them, io.net’s latest round of primary financing was valued at 500M. However, with the market sentiment for io.net rising, the price of secondary tokens after the opening is expected to far exceed this. A value.

5 Conclusion

Based on the above analysis, Akash will be a target that fits the core narrative of this cycle and has medium and long-term investment value.

From the perspective of narrative themes and fundamentals, the AI track has become the main track of this cycle, and decentralized computing power is the key to this track. The core direction, on the one hand, comes from the attention and hype on computing power brought by external NVIDIA, and on the other hand, comes from the close integration of crypto and AI in the DePIN concept. Akash is the leading project of decentralized computing power. In the next round of AI sector rotation, the direction of decentralized computing power will definitely be one of the focuses, and Akash will also be sought after by funds because of its competitiveness and moat.

From a financial perspective, Akash has completed the unlocking of all investors and teams, and will not face huge selling pressure in this cycle. At the same time, the token The pledge ratio exceeds half. Calculated based on the current token circulation and an inflation rate of 15%, 94,609 AKT will be unlocked every day, with a currency price of $5 and a daily unlock volume of approximately $500,000. The inflationary selling pressure brought about is not large. In addition, Coinbase has listed AKT on March 20, which will open up the US market for AKT and enhance liquidity. However, AKT has not been listed on Binance, and there are still high expectations for listing.

We should continue to pay attention to Akash's development in attracting computing resources and expanding customer relationships in the future, and be especially wary of the risk of insufficient competitive advantages between Akash and similar projects, including io Projects including .net and Render are strong competitors of Akash, especially io.net, which is currently attracting a huge amount of computing resources due to the expected airdrop. Akash is a CPU computing person. Can he obtain sustained computing power on GPU? The expansion of human resources and the continued and stable use cases and customers are the core of its competition with other projects.

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