Ok, hear this. Last week, before I even knew anything about Akash Network, I was traipsing through the internet when I came across the following statistic.
2/3 of Ethereum nodes (computers) are on 3 major cloud providers. In fact, 50% of ETH nodes are on Amazon Web Services cloud infrastructure.
That’s not looking very decentralized!
What if Amazon decides it doesn’t like Ethereum and shuts its nodes down? After all, they have done this with other things they don’t like.
This is where the hero of this article, Akash Network, enters to save the day.
Akash Network is a marketplace that connects cloud compute providers to customers. What’s special about Akash is that it uses a blockchain and its Akash Token(AKT) to do this.
BTW I am going to be using the term “cloud compute” quite a bit. Cloud compute refers to the on-demand availability of data storage and computing power spread across data centers in many locations.
I you are thinking, “ok, this sounds techie. I’m gonna pass”, I invite you to read the rest of this exploration. The devil is in the detail and this project is way more exciting than you first think.
What I really like about Akash Network is that, in a similar fashion to Helium, they set out to solve a problem, and only later did they conclude that blockchain would be the way to go.
(If ya don’t know what Helium is, check out What is helium mining)
But they didn’t start off with a blockchain.
In contrast to many projects that try to fit a blockchain into a solution, Akash didn’t know it needed a blockchain until later in its development.
First things first though.
To understand Akash you need to understand cloud computing.
The whole cloud thingie explained
Ok! Picture this.
Imagine you are dreaming.
In your dream, you are in your garage tinkering with a new product that no one has ever thought of before. You are about to take over the world with a new online store where anyone can buy anything they want.
Oh, sh*t man! You’re Jeff Bezos!
You ARE Jeff Bezos and it’s 1994 and Basket Case by Green Day is playing on CD and you have just launched an online bookstore called Amazon.com.
Now, in your dream, you fast forward a few years.
Your online book store has conquered the world and you are now selling anything from laptops to hand towels.
To store and manage all of this data you need servers. A looorra of servers.
Why do you need so many servers? Let’s pause and think about this. Rewind all the way back to when the internet was invented.
How the need for servers and cloud infra arose
The Internet started off as a military project. It was designed to be distributed so that there would be no central point of failure for critical US defense and other infrastructure.
As a result, they developed this decentralized peer-to-peer network where each computer could talk and send information to one another.
However, as the internet became more popular it grew these choke points in the middle. It was no longer the case that your computer would serve all requests but, rather, there would be a data center in between.
A data center is a machine housing other machines with cooling, network, and security. You can think of it as a beefed-up home laptop.
However, it is way more secure than a laptop because your critical data on a laptop at home can easily be compromised.
Hence, you probably want to have good security.
And if the data is accessed a lot you probably want to have a good network layer.
Back to the dream
So you buy sh*t loads of servers. You want to have enough capacity to manage peak loads on Black Friday and Christmas and whatnot.
But you realize that most of the time you’re using like 5% of the capacity. What do you do with all the spare capacity in non-peak periods?
And that’s when it hits you.
“What if I sell the extra space when I don’t need it to others?”
Bezos my man! You’ve hit the jackpot!
And then you wake up. You’re not Jeff Bezos. The dream wasn’t real.
But Amazon Web Services is.
Amazon Web Services rakes in more than $60 Bn in revenue per year. It makes up ~15% of Amazon’s revenues with many estimating it might be worth more than 1 Trillion dollars over the next few years.
And Amazon is not alone. Together with Microsoft Azure, Google Cloud, and Ali Baba Cloud, they cover 70% of the market.
So how exactly do these guys make money? And what does all this have to do with Akash?
Read on. Your mind is about to be blown.
How cloud businesses make money
The cloud industry is massive. We’re talking TRILLIONS of dollars.
Being able to buy compute power on demand means that companies nowadays do not have to set up data centers of their own. Instead, they can just pay as they go.
This is absurdly more efficient.
Imagine how awesome this is for a start-up.
As a start up you don’t need to worry about the high upfront capital expenditure of a data center. Instead, you can scale to meet demand and can react fast to seasonal or viral spikes. For an example look no further than Pokémon Go. The mobile phone game went extremely viral in 2016.
They wouldn’t have been able to match the spike in demand if they weren’t using cloud infrastructure. Heck, Google Cloud even has a case study on them.
For Amazon, it isn’t the compute per se that makes the money. In fact, AWS may even be providing this below cost. However, they offer more than 250 add-on services.
When using the cloud you need other infra services like databases and caching services.
Most people don’t want to hire an engineer to maintain these in-house. So Amazon comes along and says we will manage MySQL or Postgres and a bazillion other services on your behalf.
And that’s how they lock you in.
Most of Amazon’s cloud revenue comes from managed services.
As Greg Osuri, the mastermind behind Akash, says in his interview with Crytocito: “You come for the burgers but the money is in the fries.”
Given those stats what is a blockchain to do? To check transactions and produce new blocks, validators need to spin up nodes and the easiest way to do this is to host them on cloud infrastructure.
But how do you address the centralization issue when the market is controlled by 4 players?
Let’s examine what Akash does.
What is Akash Network?
Akash Network is a peer-to-peer marketplace that connects demand for cloud compute to supply. And the way it does this is via a blockchain.
Wait, what?! How does that work?
The best way to understand Akash is to think of it like an Airbnb for cloud compute.
When you are planning a vacation, you can either book a standard hotel such as the Hilton or you can go for a more custom experience like the ones that Airbnb offers.
Those who book the Hilton do so because they seek a familiar experience and similar pricing to what they are used to.
But if it’s variety you seek, you go to Airbnb. On Airbnb, anyone can offer up their space for others to rent.
In a similar fashion, on Akash, anyone with compute can offer those resources to anyone that needs them.
Akash estimates that there are 8.4 million data centers globally and that they are operating way below capacity.
By tapping into this market, Akash offers a range of options from low latency high-quality compute to super slow super cheap compute.
Today, there are 56 providers you can choose from on Akash Network.
All Akash does is provide you with the info on a diverse set of capabilities and pricing for you to make the decision.
DYOR: Do your own research
This also means that you will be screening the providers.
If you go to Amazon or Google, i.e. the Hiltons of the cloud space, you don’t need to investigate compliance. You know what you are getting.
With Akash on the other hand you need to be an informed user. You need to make sure you are comfortable with the provider you have chosen.
For people familiar with the core tenets of Web3 this is familiar territory.
For example, when you fund a liquidity pool on Uniswap it’s up to you to do the research. Anyone can list on Uniswap so it’s up to you to decide whether you will invest or not.
On Akash Network anyone can be a provider. And because we are talking about a permissionless set up it is up to the provider what information they want to reveal with respect to offerings and attributes (locations, name, email, etc).
This means that you can verify some of the technical specs such as memory or disk but you can’t always verify location or compliance.
Now if you’re crunching numbers for a machine learning algorithm you might not care about compliance that much. It’s just a bunch of numbers anyway.
On the other hand, if you do care about privacy and compliance with local regulations then you might choose something like Equinix.
These guys are massive and any developer worth their salt would be familiar with them. Heck, even Amazon uses them.
Point is, there is a full range of options on Akash and you need to do your own research to choose from them.
At the end of the day, the question is: do developers like having a wide range of choices?
The answer is Hell, yes!
Let’s take a look at who is using Akash Network currently. Get ready to be impressed.
What projects are using Akash Network
You realize the potential of Akash when you look at some of the names that use it.
There are more than 100 entities that are hosting on Akash Network.
This includes major blogging platforms such as WordPress, Drupal, and Ghost; major games such as Minecraft, Pac-man, and Super Mario; and many well-known DeFi projects such as Uniswap, Bancor, and Curve.
For a full list check out this GitHub page.
So why have all of these guys ported over to Akash?
Akash Network vs. big fellas like Google Cloud, AWS, etc.
1. Akash Network is much cheaper
For one thing, Akash is way cheaper than any other cloud provider. Like 80-90% cheaper.
Like it or not everything is moving to the cloud which means you end up paying a cloud tax when you use Uber, Netflix, etc.
Lower prices are thus extremely attractive.
Imagine how alluring Akash Network is to a blockchain validator who is now able to lower their operating costs by 2 to 3 times.
2. You reduce the risk of a single point of failure
A more strategic reason to port over to Akash Network is that you can diversify your cloud providers, making your infrastructure more resilient to unexpected events such as someone pulling the plug on you.
Blockchains today can’t afford to have a single point of failure. And when I say blockchain I mean the whole shebang including the web interface.
Take Uniswap for example.
Uniswap.org is registered under Hayden James’s name on a DNS server hosted on Amazon. If you were to remove the website there would be no Uniswap.
Hence, the entire product stack needs to be decentralized. And Akash is the way to do it.
This feature should be very attractive to all blockchains. However, centralized infra is still very comfortable for many people.
As a start up it’s easier to use your credit card.
In fact, the most common argument against using Akash is something along the lines of: “Oh, it’s fine! Amazon works; we don’t think they will go against us.”
Are these people listening to themselves? It’s a massive contradiction to build a blockchain and boast about the number of validators you have if you then just go ahead and host everything in one place.
A number of projects understand this well.
Already ThorChain (What is ThorChain), Chia Network, and Osmosis (What is osmosis crypto) are on Akash. And a bunch of well-known validators are also using them.
3. Ease of use
Akash prides itself on using an open-source technology called Kubernetes which most devs are familiar with.
This allows you to build your app in a container that you can port from one cloud provider to another without any issues.
Akash’s deployment platform is designed for modern developers. So what used to take tens of hours now takes a few minutes.
On top of that, there is no sign-up or verification required.
For those familiar with how Web 3 wallets work it is pretty much the same experience.
You use a Kepler wallet to authorize and boom you see all your operations without needing to enter your email anywhere.
Having said that, Akash is still at an infant stage. Currently, Akash Network only offers cloud compute. They do not support the add-on services that other major cloud providers do.
But they are seeing strong adoption and adds-ons are in the pipeline.
4. Akash Network is ideal for DAOs
Akash is ideal for DAOs that need compute. The way DAOs operate currently is that they need to elect someone to provide and use a credit card.
Akash on the other hand involves no credit cards. It is non-custodial and you have the option to control a wallet by multisig which means that a deployment can directly be controlled by DAOs.
To get a flavor of how the whole thing works let me show you how you would go about deploying on Akash if you were a developer.
Steps to deploy on Akash Network
As a developer seeking to host your app on cloud infrastructure, you can use the command line interface of your laptop or you can download a desktop application in which to code.
There is also a sleek front-end experience that is in beta testing by Cloudmos.io where you just fill in a form to deploy.
In any case, developers are the least fussy about sleek interfaces. All they care about it getting their job done with the least hassle possible.
So here is how the whole thing works:
- In a relatively easy-to-use coding language called Stack Definition Language (SDL), you can specify the resources you need and what attributes they should match as well as the price that you are willing to pay.
- Next, you submit this offer to the blockchain where it enters an auction. In the auction, providers bid on your offer.
- Subsequently, you identify those cloud providers that match your criteria and choose which one you want to go with. For example, you might go with the cheapest or you might go with something more pricey that offers you superior technical characteristics such as faster RAM.
- Once you’ve chosen a provider a lease is created. The provider hosts your app on their cloud infrastructure and gets paid from an escrow account to which you transferred AKT tokens when you started the whole process.
Tell me more about these AKT tokens
Yeah, so AKT is the currency you use to get things done on Akash Network. If you want to deploy an app you need AKT.
You can purchase AKT on multiple exchanges
Since Akash uses a Proof-of-Stake model this means you can stake your AKT tokens with a validator. Like most blockchains, to start off with, Akash is using inflation to pay out rewards.
The maximum supply of AKT is 380Mn AKT.
Akash began with 100Mn and a 50% APR on staking rewards which decreases every block period. They expect there will be a point where revenue exceeds rewards.
Note that as of October 2022, Akash does not reward token holders with any revenue. The platform is an open marketplace for supply to meet demand but there is no intermediary fee.
This might change as there are plans to implement a 20% taker fee.
This means that 20% of the fee paid by tenants will go to AKT holders. As a commission, this is comparable to Uber (23%) or Apple(30%).
However, while all the code is ready to launch the take rate has not been implemented yet due to regulatory uncertainty and the fact that Akash hasn’t reached mass adoption yet. Akash is waiting to see how regulators will react to Ethereum before they launch this feature.
If you like you listen to the founders’ commentary about take rates below
Who is behind Akash?
The mastermind behind Akash is Greg Osuri. Greg is the CEO of Overclock Labs which is the entity that developed Akash Network.
With 25 years in programming the dude has done some pretty impressive stuff. You may know some of his projects.
In 2011 he founded AngelHack which took hackathons to the mainstream. There are now 150K developers on it.
He has also launched several companies the most famous of which is Firebase which was acquired by Google and has now been integrated with Google Analytics.
How Akash was born
Osuri had been interested in scaling infrastructure from way back. At that time the word “cloud” would only conjure up images of fluffy candy floss in the sky.
But building something and putting it on the cloud to scale in a frictionless way wasn’t so easy.
To address this he submersed himself in a new technology called remote containers. The technology allowed you to build something locally and ship it to a remote server without its behavior changing which had been a massive headache up until then.
In 2014 Google renamed an in-house project they had been working on and made it open source. They called it Kubernetes. Osuri become fascinated with Kubernetes because it streamlined the creation of containers.
He sought to build a solution that he could take to market. His product would make it easy for make any data center to become a fully functioning cloud provider.
He envisioned this multi-cloud system that would leverage Kubernetes.
And then he realized the same issue that Amazon did. That the centers were only going to be utilized 15% if you were lucky. 85% of the time they are not used. And that is how he came up with the idea for a marketplace.
Originally he tried building something very similar to a blockchain using BitTorrent. Then in 2017 blockchains become more acceptable as a data structure.
During this time he stumbled upon Cosmos and the Tendermint consensus mechanism. After 5 years of experimentation, Akash Network went fully operational in March 2021.
Why did Akash choose Cosmos?
Osuri met with Jay Kwon, the creator of Tendermint, in 2017.
At the time, the predominant platform to build on was Ethereum. But Ethereum was not attractive to Osuri because of the high gas fees.
He says, “Imagine updating a blog and paying $100 each time”.
However, Osuri liked the Proof-of-Stake concept which Tendermint uses. Also, Tendermint is written in Golang which the Akash team was fluent in.
Finally, the modular design that Cosmos offered made it super easy to put a blockchain together. Kind of like a Lego kit.
If you want to understand Cosmos better read my in-depth article here: What is Cosmos crypto.
ok people time to wrap things up
Wrapping up Akash Network
Like it or not things are moving to the cloud.
Akash Network aspires to revolutionize the cloud computing market and break up the oligopoly that the Big 4 hold.
Osuri says he is not a fan of oligopolies.
He says, “They tend to ruin industries and don’t innovate. Take airlines for example. Do you like flying on an airplane? They nickel and dime you at every opportunity because it’s an oligopoly.”
Many people identify with Akash because it is censorship resistant. For example, you can’t run Monero miners on Amazon. Akash’s logic is that if you have different political values why should a private company have a say on who can speak?
At the end of the day though people care less about ideology. It all comes down to the user experience, the collaborative features, and pricing.
Given the number of companies and projects that are already using them, I think Akash Network has a sound business model and a bright future.