1. Home
  2. Analytics
  3. Investment Rating

Akash Network Rating Review

Risky+

Investment Rating

Expiry date 16 Nov 2018 16 Aug 2018

Based on the analysis performed, we decided to assign Akash Network a “Risky+” rating.

The project has the following strengths:

  • It participates in a significant and fast-growing market (cloud computing).

  • The project creates the opportunity for companies to utilize idle server capacity and earn from the marketplace.

  • An auction-driven market, which encourages competition and leads to more affordable prices.

  • The transparent structure of Akash Network promotes a healthy ecosystem for its users.

However, there are still some risks linked with this ICO:

Competitive industry and commercial risks

The biggest risk for the Akash Network project is the competitive environment of the cloud services market, which is expected to grow even more in the near future. Since the majority of Akash Network’s competitors have scheduled their product launches for 2018-2019, we think that potential investors should consider the commercial risks of the project before making an investment.

Given the level of competition and the current oligopoly in the cloud computing market, the project will have to start small and develop a strong marketing strategy and partnership plans.

Incomprehensive roadmap

The project roadmap presented on the project’s official GitHub profile does not contain any information about their marketing and business development plans. There are also no details about the project’s partnership plans either.

Team composition and competence

We note that none of the project advisors list their advisory roles to Akash Network on their LinkedIn profiles.

The core team all work at Overlock Labs too. The team seems to have relevant experience in cloud infrastructure, but they appear to also have a lack of experience in the blockchain sphere. Furthermore, there is only one technical specialist in the project team.

The Akash Network website states that the project is funded by the following investors and funds: CrunchFund, Hone Capital, Auren Hoffman, and the founders of LiveRamp and Life360. However, there were no press-releases available confirming their investment in the project found.

Incomprehensive whitepaper

When it comes to the technical features of the project, we note that Akash Network has a comprehensive and detailed whitepaper and light paper. However, we feel that the following issues are present:

  • An absence of direct competitor analysis.

  • No proceeds allocation scheme

  • Details about the use of funds in case the Hard Cap is not reached are unclear.

There are also no forecasted marketing and business development plans, or any details on partnership plans.

Unclear project economy

The team does not publish a detailed forecast on the use of proceeds from the ICO, and the fee structure for platform services and revenue streams are unclear.

Low marketing activity

We note that token sale is scheduled for August 2018, however, official Telegram group has slightly more than 5,000 members what means that the project awareness is very low in the community. We also note that blog posts and updates are sporadic and not very often.

Based on our analysis and taking into consideration all of the risks associated with the Akash Network project, as of August 2018, we decided to assign a “Risky+” rating to Akash Network. We would like to note that once the major issues are resolved by the team (i.e. marketing strategy and partnership plans elaborated, more technical specialists are added to the team, etc.), the project rating will need to be reassessed as the risks linked to it may change.

The Akash Network proposes to build a secure, transparent, and decentralized cloud computing marketplace that connects those who need computing resources (clients), with those that have computing capacity to lease (providers).

Website: https://akash.network

Light paper: https://docsend.com/view/yvgseww

White paper: https://docsend.com/view/fygzt3g

Token Economics & Terms: https://akash.network/terms.pdf

Telegram: https://t.me/AkashNW

LinkedIn: https://www.linkedin.com/company/ovrclk/

Facebook: https://www.facebook.com/akashnw/

Twitter: https://twitter.com/AkashCloudNet

Blog: https://blog.akash.network/

GitHub: https://github.com/ovrclk/akash

GitHub (MVP): https://github.com/ovrclk/akash

We note that the Akash Network project has a legal entity, Overlock Labs, which is registered under US law and located in San Francisco, CA. According to the information presented on the project’s official GitHub profile, the project team has filed Form D for exemption under Regulation D’s rules 506(b) and 506(c),.

There is also a project marketplace prototype available on GitHub, which is presented by single node and multi node environments.

 

PRIVATE PRE-SALE

ICO (PUBLIC SALE)

Start date

No data (ongoing)

TBA (August 2018)

End date

No data

No data

Stage cap

USD 5 million

USD 15 million

Token

ERC20

Token supply (for sale/total)

400,000,000 AKSH / 1,000,000,000 AKSH

Soft cap

Not specified

Hard cap

USD 20 million

Estimated market value

USD 60 million

Token price

ETH 0.00010345 (USD 0.06)

Bonus

Specified in table below

Lock-ups

Six months

Minimum investment

1 ETH

Maximum investment

-

Currencies accepted

ETH, others not specified

Restricted list

US, North Korea, Sudan, Crimea (Ukraine), Cuba, Syria, and Iran

KYC procedures

Yes (Shufti)

Country of legislation

US

According to the project’s blog, the private pre-sale is currently ongoing. There is also a discount schedule published in the Token Economics & Terms paper, which says that 65% of tokens will be distributed with discounts. All investors (pre-sale and public sale) will be locked into vesting tokens for six months, with one-sixth of tokens being distributed to one’s wallet every month. The discount schedule is as follows:

There was also an announcement from the Overclock Labs, dated November 22nd, 2017, saying that the project had already raised a USD 1.3 million seed round from a number of Silicon Valley angel investors and CrunchFund. Besides, it is noted on the Akash Network website that the project is funded by investors including, CrunchFund, Hone Capital, Auren Hoffman, and the founders of LiveRamp and Life360. However, there were no press-releases available which confirmed their investment in the project.

According to the Akash Network Token Economics & Terms paper, 40% of the total token supply will be sold to the public. Any unsold tokens will be held by the company, in order to be sold at a future date. 30% of the tokens will be used as rewards for users of the network over the next 10 years and 20% of tokens will be distributed to the founders, employees, and early investors, with a vesting period of 24 months with a one-year lockup. Tokens for advisors will have a vesting period of over 12 months. The rest of the tokens, 10%, will be held by the network for a future use.

It is worth noting that although it is stated that funding will be used to launch the Akash Network, build services, and market to the world, however, currently no proceeds allocation scheme has been published.

Also, no information about the bounty program could be found. According to the team, it is included in high-level categories mentioned above, also bug bounties might be introduced in the future, but as of now no details have been provided.

Akash Network is a cloud infrastructure platform whose resources are provided by independent datacenters. The project aims to leverage the underutilized capacity of the companies’ data centers around the world and repurpose them to host containerized applications at a dramatically reduced cost. The auction-driven marketplace matches companies (known on the Akash platform as providers) with idle computational capacity, with tenants that wish to use the providers’ resources.

Providers and tenants will interact within the Akash network, which will consist of three major functional components:

  • Marketplace – A blockchain-based computing auction.

The Marketplace includes a public procurement auction and a matching algorithm. Firstly, a prospective tenant submits a description of the desired infrastructure, which is called a deployment order, and it is stored on the blockchain. Deployment orders can specify requirements in terms of memory, CPU, storage, bandwidth, location, and the price the prospective tenant is willing to pay for a fixed number of compute units over a specified period of time. Then it is put up for auction in the procurement marketplace.

In turn, providers submit fulfillment orders to bid on the available deployment orders. As the marketplace operates as a procurement auction, the lowest bid wins. When the auction time is up, the fulfillment order with the lowest price is automatically matched to the deployment order and a new lease is created, where both the tenant and the provider proceed to the Mirror component.

  • Mirror - Peer-to-peer sharing of the workload and configuration.

The Mirror ensures that information is securely transferred from the tenant to the provider. For this phase of the process, users describe their desired deployment in a declarative file, called a manifest, which contains the container’s image location, configuration parameters and connection rules for the deployment. A hash of the manifest is stored on the blockchain.

After the tenant has sent its deployment information to the provider, they progress to the Overlay stage.

  • Overlay - Secure inter-workload communication channels.

During the Overlay stage different container workloads communicate securely with each other by defining the connection topology within the manifest. Providers use this topology to configure firewall rules and to create a secure network between individual workloads. To secure cross-data center communications, providers expose workloads to each other through the mutual Transport Layer Security (mTLS) tunnels. In order to establish a tunnel, providers need to generate a TLS certificate and exchange certificates with their peers.

The Akash Network is using Tendermint powered by the Byzantine Fault-Tolerant (BFT) consensus protocol, which has the following features:

  • It tolerates up to 1/3 of machines failing without notice including explicitly malicious behavior.

  • It replicates deterministic state machines written in any programming language.

  • It supports thousands of transactions per second.

  • Its gossip protocols and peer discovery are secured via Tendermint's authenticated encryption system.

However, it can be pointed out that as Tendermint is using the classical BFT consensus protocol, it is limited in its terms of scalability (it cannot be scaled beyond 100 nodes). The node validators are selected based on the stake they put into the system, and limiting the number of nodes to 100 could lead to the risk of centralization. If the set of validators does not exceed 100 nodes, then the bottlenecks do not appear. Currently Tendermint uses a validator set of 100 nodes but has plans to extend it to 300 nodes in the future.

We note that Akash Network has a comprehensive and detailed whitepaper and light paper when it comes to the technical features of the project. However, we feel that these documents have the following issues:

  • An absence of direct competitor analysis.

  • There is no proceeds allocation scheme.

  • It is unclear how funds will be used if the Hard cap is not reached.

  • There are no forecasted marketing and business development plans, nor are there any details of partnership plans.

The team provides the following project roadmap:

At the time of writing (July-August 2018) a project marketplace prototype was available on GitHub, which was presented by single node and multi node environments. The team claimed to have released the testnet successfully, however, it is not publicly available. We note that the team is going to publish updated ICO documentation as of August 15th, 2018.

We would like to draw your attention to the fact that the project roadmap, presented on the project’s official GitHub profile, does not contain any information about their marketing and business development plans or any details regarding their partnership plans.

5.1 Market analysis

Given the industry review in the project’s whitepaper, by 2020, cloud infrastructure providers will be responsible for 53% of all global internet traffic, out of which Amazon, Google, and Microsoft will deliver 80% of the payload. The promises of flexibility and low costs are often given as reasons why one should adopt cloud computing, but the reality is that the products offered by cloud providers are overpriced, complicated, and lock clients into ecosystems that limit their ability to innovate, compete, and have control over their infrastructure needs.

According to a report provided by Forrester on cloud computing, in 2018 the global cloud market is expected to reach USD 178 billion and will continue to increase by 22% annually. Currently, 76% of all cloud platform revenue belongs to the three biggest companies: AWS, Google Cloud, and Microsoft Azure.

Considering the decentralized nature of the Akash Network platform, it has a clear advantage over the centralized cloud architectures, which ultimately default to single points of failure.

For the purposes of analysis of the macro-level factors affecting the Akash Network project, a modified PESTEL framework will be used. The PESTEL framework analyzes the Political, Economic, Social, Technological, Environmental and Legal factors. As far as blockchain projects are concerned, the Environmental and Social factors are usually not applicable or at least have a relatively small impact.

Political – Infrastructure blockchain projects like Akash Network usually do not bear any political risks.

Economic – The market niche of infrastructure blockchain platforms is significant and projects concerned with this niche usually perform well in terms of economics.

Technological factors – Given the youthfulness of the blockchain market in general, the development of infrastructure blockchain platforms is a good idea as the market needs such solutions at its development stage.

Legal – Infrastructure blockchain projects like Akash Network usually do not bear any legal risks.

5.2 Competitive landscape

We will use Porter’s Five Forces framework to perform an initial competition assessment for the Akash Network project.

Threat of new entrants - High

The overall threat of new entrants is high, as new infrastructure projects in blockchain come out quite often and the market is not yet full. The level of competition is gradually rising and whoever captures the platform possesses a greater chance of becoming a future blockchain giant.

Threat of substitutes - Medium

The threat of substitutes is medium, as new infrastructure platforms are often released, however, transitioning from one platform to another is not an easy process.

Bargaining power of customers - Low

The bargaining power of customers is relatively low as clients would prefer to use Akash because of its lower cost, usability, the flexibility to move between cloud providers, and the performance benefits of global deployments.

Bargaining power of suppliers - Low

The bargain power of suppliers can also be assessed as low since there are only providers, who can use Akash to earn profits from either dedicated or temporarily-unused computer capacity. Tenants, and maybe node holders, are on the supply side of the Akash Network project too.

Industry rivalry - High

As of August 2018, Akash Network had some direct competitors in the blockchain market and some indirect competitors too. We have constructed the following summary table below to illustrate this:

 

AKASH NETWORK

ANKR NETWORK

SONM

DADI

GOOGLE CLOUD

Project type

Infrastructure

Infrastructure

Infrastructure

Infrastructure

Infrastructure

Key functions / features

Containerized applications, auction-driven marketplace, DevOps toolset.

Proof-of-useful-Work, native authenticated data feed and multi-chain Plasma.

Fog computing, P2P networking stack, overlay networking, kubernetes.

Stargates, Gateways and Hosts.

Serverless computing, hybrid cloud, speed and security.

Consensus

Tendermint

PoUW

PoS

PoS

N/A

Key users

Developers, users, enterprises

Developers, enterprises

Developers, users, enterprises

Developers, users, enterprises

Developers, enterprises

Development stage

Deployment prototype release.

No MVP.

Arbitrage and various features pack (former v0.5 “VIRT”).

Beta release: Mainnet.

Released.

ICO status

Upcoming ICO

Private sale ongoing

ICO ended

ICO ended

n/a

Capitalization

(as of ICO date/Hard cap)

No data/ USD 20 million

No data/ USD 15.95 million

USD 42 million / n/a

USD 29 million / USD 29 million

n/a

Project valuation

USD 60 million

USD 53.2 million

n/a

USD 58 million

n/a

Market capitalization

n/a

n/a

USD 20.9 million

USD 5.5 million

n/a

Product launch

Q1 2019

No data

Q3 2018

Q4 2018

n/a

 

As of August 2018, the market for Akash Network was very competitive.

The ANKR Network introduces an innovative blockchain solution based on Proof of Useful Work (PoUW) and using the Plasma protocol, however, there are still a lot of unanswered questions about PoUW.

Among the strengths of the SONM project are its market pricing for computing capacities and potential huge computing capacity, but there are some drawbacks in processing speed and security.

While DADI has demonstrated versatile and diverse use applications for its web services, switching over vital infrastructure from well-established and reliable tech. services poses a lot of risk for enterprises.

Compared to decentralized cloud computing, Google Cloud is one of the top three centralized platforms, and it is also the fastest among those three, however, its Cloud Datastore is very feature-limited and hard to switch out.

Given that so many competitors are all trying to solve the same problems related to blockchain technology and cloud services, Akash Network aims to provide the following advantages for its main users:

  • Providers: The Akash Network marketplace will give providers the ability to sell surplus capacity, allowing them to monetize a depreciating asset. Providers can be any company with spare computational capacity.

  • Customers: An increasing marketplace of compute providers drives greater competition, which in turn leads to more affordable prices.

  • Application End Users: Low-latency edge deployment results in better performance for web-scale applications, which improves the user experience.

Considering the consensus mechanisms used by Akash Network’s competitors, PoUW provides unequal access to rewards and as a result the ability to compete is not the same. Furthermore, the PoS consensus mechanism also has its problems, such as the “nothing-at-stake” problem and long-range attacks. The Akash Network is using the Tendermint consensus mechanism, which provides a better safety threshold (⅓ of validators) and the consistent replication of applications on many machines and others. Although, there is a scalability limitation, currently it cannot be scaled beyond 100 nodes, but Tendermint has plans to extend it to 300 nodes.

It is worth noting that none of the advisors list their advisory role to Akash Network on their LinkedIn profiles.

The team comes from Overlock Labs and seems to have relevant experience in cloud infrastructure, but, they appear to have a lack of experience in the blockchain sphere. Furthermore, there is only one technical specialist in the project team.

 

Greg Osuri

Adam Bozanich

Position

Founder & CEO

Founder & CTO

Total experience

13+ years

12+ years

Relevant experience

8+ years (Founder, CEO, CTO)

5+ years

(Founder, CTO)

Previous experience (positions)* - years

3+ years (Founder and CEO of Overclock Labs)

5+ years (Founder of AngelHack, Gridbag and SBILabs Corp)

2+ years (Co-Founder and CTO at Overclock Labs)

1+ years (Co-Founder and Tech Lead at Sprouts Tech)

Relevant education

Yes

Yes

Professional achievements

1 publication

1 patent

LinkedIn

Yes

Yes

Connections

500+

392

Endorsements / Recommendations

Yes

Yes

 

 

Aaron Stein

Nick Alesandro

Position

Software Engineer

VP of Product

Total experience

2+ years

17+ year

Relevant experience

2+ years

(Software Engineering)

17+ years

(Product Management)

Previous experience (positions)* - years

10+ months (Software Engineer at Overclock Labs)

2+ years (Software Engineer at Narvar and Rockwell Collins)

2+ years (Head of product at Timshel / The Groundwork)

3+ years (Senior Technical Product Manager at GoGrid)

Relevant education

No

(Chemical Engineering)

No

(Nutritional Science)

Professional achievements

-

1 patent

LinkedIn

Yes

Yes

Connections

243

500+

Endorsements / Recommendations

Yes

Yes

 

 

Allison Silber

Position

Head of Operations

Total experience

9+ years

Relevant experience

9+ years (Project Management)

(Software Engineering)

Previous experience (positions)* - years

8+ years (Founder, Creative Director and Lead Planner at Engaged & Inspired)

2+ years (Software Engineer at Narvar and Rockwell Collins)

Relevant education

Yes

Professional achievements

2 publications

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

 

Advisor

 

Auren Hoffman

Steven Fan

Position

Advisor

Advisor

Total experience

22+ years

16+ year

Relevant experience

Yes

Yes

Previous experience (positions)* - years

9+ years (SEO and Co-Founder of LiveRamp)

2+ years (Executive Director at Tencent)

6+ years (VP of Corporate Development at Yahoo)

Relevant education

Yes

Yes

Professional achievements

1 patent

-

LinkedIn

Yes

Yes

Connections

500+

500+

Endorsements / Recommendations

No

Yes

 

 

Charles Songhurst

Jaron Lukasiewicz

Position

Advisor

Advisor

Total experience

17+ years

10+ years

Relevant experience

Yes

Yes

Previous experience (positions)* - years

4+ years (Board Member at Proteus Digital Health)

4+ years (CEO and Founder OF Coinsetter)

Relevant education

No (Economics)

No (Economics)

Professional achievements

-

-

LinkedIn

Yes

Yes

Connections

500+

500+

Endorsements / Recommendations

Yes

Yes

 

 

Brandon Goldman

Position

Advisor

Total experience

11+ years

Relevant experience

Yes

Previous experience (positions)* - years

5+ years (Investor & Advisor at Brandon Goldman)

Relevant education

Yes

Professional achievements

-

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

* - only selective experience is shown

The total token supply is fixed at 1,000,000,000 AKSH, 40% of which is planned to be allocated to the public sale and private pre-sale. The Hard cap is USD 20 million. Although there is no information about dates for the pre-sale and public sale in the whitepaper or on the website, according to the team, the private pre-sale is currently ongoing, and the public sale is due to start on July 15th, 2018. The whitelist is open and can be accessed through the project website.

Akash tokens are to be used as the marketplace currency to pay for the leased computational infrastructure on Akash’s decentralized network. Therefore, it can be concluded that AKSH is a utility token. Also, the Akash token is expected to fulfill the following functions:

  • Staking. As there are no selecting or approval processes for compute providers, the amount of stake reserved of Akash tokens is considered to increase providers’ reputation score, which can be used as a deployment standard by tenants. This system was developed as a monetary disincentive for bad actors.

Also customers need to stake tokens in order to use Akash Network’s services.

  • Global payments. Akash tokens are used as a means of payment between tenants and providers with the aim to lower the risk of foreign exchange that can arise from cross-border payments. When a tenant is matched with a provider, the tenant pays the Akash platform using the tokens, and they are then transferred to the provider.

Validators and auditors can also be rewarded with tokens for running checks on providers and for running proof of providers’ computes respectively. Delegates may earn tokens for writing updates to the chain.

Upon completion of the project, the Akash network will charge a minor fee.

We identified the following key factors that may affect the token price:

FACTOR

DESCRIPTION

PRICE EFFECT

Development and release of new products according to the roadmap

We note that the team plans to launch the mainnet by the end of 2018, and then extend its functionality gradually between 2019-2020 which may increase the demand for the service and cause the price to go up.

⬆︎⬆︎⬇︎

Demand for the platform

Given that Akash Network is an infrastructural platform, the long-term demand for the platform may raise the token price.

⬆︎⬆︎⬇︎

Sales of tokens by the team, advisors and contributors

20% of all tokens are reserved for the founders, employees, and early investors. We note that there is a healthy vesting period of 24 months, and a one-year lockup for founders/employees/early investors. There is also a vesting period of 12 months set for advisors too, which combined may have an impact the price in the short-term.

⬇︎

Significant bonuses during private sale round

At the time of analysis, the private pre-sale was ongoing with a discount scheme and a 6 months lock-up period. According to the team the total Hard cap of the project is USD 20 million (USD 5 million for pre-sale and USD 15 million for public sale). Assuming the pre-sale and public sale Stage caps are reached, and considering that the weighted-average discounted price is 14% lower than the public price (65% of tokens are to be sold with discounts), this may have an impact on the token price in the short-term.

⬇︎⬇︎

Fixed supply

Assuming that the company develops the platform as intended, market penetration is sufficient and a demand for the service exists and is growing, a limited token supply will result in the long-term deflation of the token price. However, the fact that 30% of all tokens will be reserved as rewards for contributors, to be distributed among users of the network over the next 10 years, may affect the price of tokens in the long run.

⬆︎⬇︎

Volatility and youthfulness of the cryptomarket

Although the token lacks speculative purposes, it is used as an internal payment mechanism within the system, therefore the high volatility in the cryptomarkets may cause traders and speculative investors to trade Akash Network tokens, which may result in price fluctuations or even speculative activities (pump and dump, etc.).

⬆︎⬇︎

Based on our analysis we identified the following risks for the Akash Network project:

RISK

DESCRIPTION

LEVEL

Competitive industry and commercial risk

The biggest risk for the Akash Network project is the competitive environment in the cloud services market, which is expected to grow even more in the near future. Given that the majority of Akash Network’s competitors have scheduled their product launches for during 2018-2019, we believe that potential investors should consider the commercial risk of the project before making an investment decision.

Considering the level of competition and the current oligopoly in the cloud computing market, the project will have to start small and develop a strong marketing strategy and partnership plans.

 

 

Medium

 

 

Incomprehensive roadmap

The project roadmap, presented on the project’s official GitHub profile, does not contain any information about marketing and business development plans, there are also no details about the project’s partnership plans.

 

Medium

 

Team composition / competence

We note that none of the project advisors list their advisory role to Akash Network on their LinkedIn profiles.

The team comes from Overlock Labs and seems to have relevant experience in cloud infrastructure, however, they also seem to lack experience in the blockchain sphere as well. Additionally, there is only one technical specialist in the project team.

It is noted on the Akash Network website that the project is funded by the following investors and funds: CrunchFund, Hone Capital, Auren Hoffman, and the founders of LiveRamp and Life360. However, we were unable to find any press-releases confirming their investment in the project.

 

 

Medium

 

 

Incomprehensive whitepaper

When it comes to the technical features of the project, Akash Network has a comprehensive and detailed whitepaper and light paper. However, we feel that the whitepaper and light paper have the following issues:

  • An absence of direct competitor analysis.

  • No proceeds allocation scheme.

  • It is unclear how funds will be used if the Hard cap is not reached.

  • There are no forecasted marketing and business development plans, nor are there any details about partnership plans.

 

 

Medium

 

 

Unclear project economy

The team does not provide a detailed forecast of the use of proceeds from the ICO and the fee structure for the services of the platform are unclear.

Medium

Low marketing activity

We note that token sale is scheduled for August 2018, however, official Telegram group has slightly more than 5,000 members what means that the project awareness is very low in the community. We also note that blog posts and updates are sporadic and not very often.

Medium

Token price decrease

We note that the average discounted price is 14% lower than the public price, which indicates moderate pressure on the token price. However, the team does not disclose the amount of funds raised during the private pre-sale round, so the actual amount of tokens sold with a discount is unclear.

 

Low

 

 

 

 

The information contained in the document is for informational purposes only. The views ex-pressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.

We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.