Hey folks, today I’m going to be doing a deep dive into yet another small-marketcap AI-narrative-driven altcoin $AKT, the native token for the Akash Network, and why I think it might be primed to see a pretty big run up for not only this bull-market, but perhaps for even much longer than that.
What is Akash, and why is it needed?
In a nutshell, Akash is a decentralized form of cloud computing, or in other words, a decentralized version of Amazon Web Services (AWS), Microsoft’s Azure, or Google Cloud. AWS, which by far has the largest market share of cloud services, currently supports many different companies, from everything including McDonald’s to Ethereum node validators:
In fact AWS has been so successful that it has arguably been the only reason that’s kept Amazon afloat post-COVID in 2022:
https://fourweekmba.com/is-amazon-profitable-without-aws/
Apart from all other metrics, perhaps the biggest bull case for Akash is simply its pricing. Compared to its major competitors, Akash offers cloud services for a fraction (on average around 20%) of the cost to the likes of Amazon, Google or Microsoft:
https://deploy.cloudmos.io/price-compare?cpu=1&memory=1&storage=1&memoryUnit=GB&storageUnit=GB
How are these lower prices achieved? Akash creates leases between tenants (those who want to access the cloud) and providers (those who are part of the cloud) through what they call a “reverse auction.” In a reverse auction, the tenant creates an order, different providers bid on the order, and once the tenant chooses the winning bid, a service contract (essentially a lease) is created. Each provider and lease can be tracked through Akash’s Cloudmos’ dashboard, where at the time of writing, you can see that there are currently 619 active leases, which is roughly a 10% increase from just a week ago:
Decentralizaton: As I alluded to before, Akash achieves decentralization due to the fact that anyone can lease their own idle computational power and become a cloud provider. At the time of writing there are a reported 59 different active providers, with the majority across North America and Europe:
https://deploy.cloudmos.io/providers
Now as I’ve mentioned many times in the past, I have no technical background, and from what I’ve gathered from the docs, if you’re interested in becoming a provider yourself, it can be profitable but it does require some significant technical expertise. However if you are interested, I’d recommend you joining their discord to start asking questions, or at the very least to start poking around their docs.
OK, so enough about Akash, what about $AKT?
As I mentioned before, $AKT is the native token of Akash, and currently it’s the medium in which all transactions on the Akash platform are conducted, meaning that $AKT is necessary in order to pay for a lease. What’s greatly interesting about $AKT is that since last summer when they started rolling out $AKT 2.0, there are some big changes currently underway to its tokenomic structure, namely with token incentivization. As outlined in their akt20-prop for $AKT 2.0, various fees and rewards are levied which are ultimately aimed at providing more growth and security to the Akash network:
https://github.com/akash-network/community/tree/main/sig-economics/akt20-prop
A few key items that are referenced in the graphic above:
- Because providers will get incentives for providing high utilization rates on their CPU/GPUs, this will encourage providers to bid even lower on leases driving costs for tenants even further.
- $AKT is an inflationary token, which is actually under current vote to go from 8% to 13% in Prop-240. Besides being used as a measure to offset increased commuity pool tax fees, the rationale behind increasing its inflation is to try to do just that — decrease the price so that it puts pressure on both tenants and providers to transact with lower prices as well.
- And lastly, a portion of the fees also are redistributed to $AKT stakers who are staking with validators that are providing security to the Akash network, which currently at time of writing you can earn an APR of around 11%:
Other factors to consider
This is AI-narrative driven, meaning that like with all narratives, the hype around AI could fade away. Akash provides computational power for machine learning (ML), which AI-related companies greatly need. At any point in time when people start abandoning their AI-related projects, they could abandon Akash as well.
Circulating Supply: Currently there’s only about 57% of total $AKT in circulating supply, with a token unlock schedule that spans out all the way to 2030. Additionally as I mentioned before, inflation will also likely rise from 8 to 13% in Q1 of 2024. This might be worrying to some, but I’m personally not that worried as long as Akash retains product market fit. If you take the last inflation increase that was passed in late July, the price of $AKT was at $0.68, and at that time there was only 21% of total $AKT in circulating supply.
Hurdles will need to be cleared for the masses to come to the blockchain: Even though $AKT is accessible on exchanges like Kraken, I still imagine that it might be a huge roadblock for some to try to access Akash’s computational reserves for the same reason why its a reason to go into crypto — there’s just too many hurdles. The only way to transact on Akash is through $AKT, and that requires either KYC through major CEXes like Kraken, and to also know your way around the Cosmos-ecosystem.
Conclusion
Akash has been able able to do an 8–9x since it’s lows from last summer, but if we zoom out a bit more, I see no reason why it easily can’t blow through its all-time highs from last summer bullmarket when it was averaging around $6–7 dollars. What’s more is that it’s extremely clear that the folks of Akash are one of those teams that were diligently building throughout the bear, creating an ecosystem that has product market-fit as it hits on the absolutely red-hot AI narrative.
Have you been a tenant or provider for Akash yourself? If so, I’d love to hear about your experiences in the comments below.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
