What is Akash (AKT) & How Does it Work?

What is Akash?

Akash is a decentralized cloud computing marketplace that connects compute buyers with compute sellers. The Akash platform is used for hosting and managing deployments and contains cloud management services that leverage Kubernetes to run workloads. Akash, also called Akash DeCloud, consists of two main components: the network and the platform. The Akash Network is an on-chain decentralized marketplace for leasing computing resources. While the Akash Platform is an off-chain deployment platform used for hosting and managing workloads and is a set of cloud management services. The Akash Network is a Tendermint-based blockchain application built with Cosmos SDK.

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What is the Akash Network Marketplace?

The Akash Network Marketplace is a platform that helps cloud providers match with compute-hungry users on a unified platform. The Marketplace lets users set a price they are willing to pay to deploy their software, while providers with extra compute bid to host the user’s application. Akash’s marketplace for underutilized compute functions in a similar fashion to popular web2 marketplaces like Airbnb and Uber, essentially acting as a matching engine between providers and users.

Akash vs. Big Tech

Akash takes advantage of the 85% of underutilized cloud capacity in 8.4 million data centers by letting anyone buy and sell compute on the Akash marketplace, providing a layer of blockchain-based via a decentralized and trustless environment. By leveraging an enormous amount of latent computing power, deploying containers on Akash costs ~10x less than the ‘big three’ cloud service providers shown below:

Akash vs. Other Decentralized Cloud Providers

Akash is not the only blockchain project vying to disrupt the half-trillion-dollar cloud computing market. Its competitors include Internet Computer, Ankr, and Cudos, with Cudos being the most similar to Akash.

Internet Computer is not a direct competitor to Akash’s marketplace for underutilized compute as it’s a system for node operators to pay data centers to host nodes while cloud providers get compensated for contributing compute capacity that facilitates network activity. Despite similarly making use of excess compute, Internet Computer does not generate market activity for cloud computing like Akash.

Ankr initially set out to use idle data center compute to build an open-source cloud, which would have made Ankr a near replica and direct competitor to Akash. However, Ankr pivoted to focus on specifically providing access to web3 infrastructure via RPCs that are used for making requests to servers.

Cudos plans to offer a similar product to Akash with a marketplace that would connect cloud providers with underutilized resources to builders wishing to deploy WASM containers and virtual machines. However, despite connecting idle compute power with builders, Cudos has no plans to operate its marketplace with a reverse auction or open-source its code like Akash.

Akash Token ($AKT)

AKT is a utility token with multiple uses in the Akash protocol including security, rewards, network governance, and transactions. Akash is one of the few web3 protocols that actually generate revenue, which, in theory, will drive value to the AKT token. Per Web3 Index, as of writing this Akash has generated $62,055 in total fees, $10,905 over the past 90 days, and $2,535 over the past 30 days, with a 30D trend of -42%.

Web3 Infrastructure Q3 2021 Revenue (10/12/21)

7D Demand-side Protocol Fees (5/19/22)

Security

Node operators can only validate transactions on the Akash mainnet and receive in-kind rewards if they have a total stake that places them among the top 100 on-chain AKT holders. This stake total includes the amount the validator allocates itself combined with the amount delegated to them since Akash uses a DPoS consensus algorithm.

Rewards

Akash mentions in the white paper but has not yet implemented, its plan to charge a “take fee” for every successful lease. It would then send the fee to the Take Income Pool to be distributed to holders. The take fee is tentatively set to be 10% for AKT transactions and 20% for when other cryptocurrencies are used. Akash also plans to reward holders for the time lock0up of their AKT holdings. Holders who stake for longer periods of time will be eligible for larger rewards.

Governance

Similar to how Akash requires its node operators to have “skin in the game,” it also stipulates that only AKT holders can participate in governance. This includes submitting new proposals and casting votes. The cost of submitting a proposal is a non-refundable deposit of 1,000 AKT. For passed proposals that require code changes, validators must update the codebase to avoid penalties and continue validating the network.

Transactions

AKT acts as the ecosystem’s reserve currency, used for gas fees and as the default medium of exchange in transactions between providers and tenants. The Akash whitepaper details a yet-to-be-implemented settlement option to lock in an exchange rate between AKT and a settlement currency that’s meant to counter AKT price volatility in marketplace transactions.

AKT Token Distribution

AKT vesting data via Messari Research (3/29/22)

AKT Vesting Schedule

Investors

• 34.5% of the total supply or 34.5M AKT
• One year cliff then ~17.3M AKT unlocks, ~8.6M AKT unlocks every six months.

Team and Advisors

• 27% or 27M AKT
• One year cliff then 11M AKT unlocks, 6M AKT unlocks every six months.

Decentralized Cloud Foundation

• 19.7% or 19.7M AKT
• 1M AKT unlock at TGE
• 8.9M AKT unlock one month after TGE, 4.1M AKT unlock after the next six months, then ~2.1M AKT after the following 11 months after two more six-month periods

Ecosystem

• 8% or 8M AKT
• 2M AKT unlock one month after TGE, 1.5M AKT unlock six months after TGE, then after the following 11 months, and then after two more six-month periods

Testnets

• 5% or 5M AKT
• 800k AKT unlock one month after TGE, 1.05M AKT unlock six months after TGE, then after the following 11 months, and then after two more six-month periods

Vendors and Marketing

• 4% or 4M AKT
• One month cliff then 800k AKT unlock, another 800k unlock six months after TGE, then after the following 11 months, and then after two more 6-month periods

Public Sale

• 1.8% or 1.8M AKT
• 100% unlock at TGE

Akash Outlook

Akash – with its focus on web3, cloud computing and artificial intelligence – has some serious secular tailwinds behind it that should drive protocol growth and adoption, but only if the team continues to execute on their ambitious roadmap. The recent release of Akash’s Testnet 3 on March 7, 2022, shows that the team is centering its development efforts on a few key features:

• Persistent storage so that workloads containing large data sets such as blockchain nodes will be able to persist data between restarts. If deployment drops or reinitializes, data will not be lost.
• Fractional uAKT will remove the simplicity minimum cost of deployment (one uAKT per block). Fractional uAKT will keep prices more consistent and resource consumption more accurate to the cost.
• Inflationary curve will be an automatic curve mechanism that autocorrects when the inflation differs from the whitepaper specs. This will remove the need for human intervention where governance proposals were previously needed to implement a fix.
• AuthZ so users can authorize a wallet to spend a set number of tokens by another source’s wallet exclusively on deployments. This reduces security concerns when big teams work together on deployments without using large shared wallets. It allows new community members to spin up deployments without access to a faucet.

The full list of development Akash is planning for 2022 can be found on the website. In sum, Akash appears to have a bright future ahead of it as cloud computing continues to proliferate and compute-hungry companies and individuals seek out the lowest cost of compute, a service that Akash is well-positioned to provide. 

Additional  Resources on Akask (AKT)

• Akash Website (Link)
• Akash Twitter (Link)
• Messari: The Dawn of Web3 Network Revenue (Link)
• Messari Akash Research Report (Link)
• Akash 2022 Roadmap (Link)
• Akash vs Cloud Giants (Link)
• Akash Demand-side Protocol Fees (Link)