Taking on Google and Amazon: How Akash aims to Decentralize the Cloud Market

Cloud technology is ubiquitous, allowing us to access the majority of internet-connected services nowadays.

The importance of Cloud technology cannot be underestimated. It digitalizes the user experience and the way services are provided by eliminating the “need for users to have product-specific hardware so that providers can deliver the same product through the internet”.

Previously, companies needed extensive hardware and data centers to host their services.

Now, they use cloud technology for storage, data analytics, and software development.

This paves the way for the monopoly of the big cloud providers starts: running cloud infrastructure is expensive, creating high barriers to entry, that only economies of scale can overcome.

To give a perspective of the Cloud Cartel, as of Q4 2022 Amazon AWS, Microsoft Azure, and Google Cloud collectively hold about 65% of the market.

AND, the cloud market is only getting bigger, expecting a CAGR of 13% from 2023 to 2030, especially for Software as a Service.

Thus, it’s challenging for centralized providers to compete with these giants.

Yet, there might be another approach.

For those who have been in crypto long enough, projects like Golem have already tried to launch a decentralized cloud marketplace by leveraging unused CPUs from network participants.

Despite its promises, Golem failed to reach a critical mass and to get traction.

Now, Akash is building on their spoils.

The Akash Network

With a significant portion of the market controlled by a few, many crypto companies rely on centralized cloud providers.

This poses concerns about centralization and the ability to maintain their services due to a single point of failure.

Furthermore, the State of Cloud report published by Flexera estimates the current annual public cloud waste at 28%: roughly one-third of cloud capacity is underutilized (read: wasted).

Furthermore, the omnipresence of cloud services also leads to escalating hosting costs for providers.

Coupled with the need for proper security and specialized resources, managing cloud expenses is a major challenge for businesses.

Akash seeks to address these inefficiencies by introducing a decentralized alternative to traditional cloud providers: the Akash peer-to-peer Deployment Marketplace.

A Decentralized Cloud Marketplace

In the Akash marketplace supply and demand meet organically:

1. Users (tenants) specify a price they are willing to pay to deploy their software
2. Providers rent out their excess computer resources

Akash employs reverse auctions, where Tenants set deployment terms and Providers can bid on them.

• A tenant creates orders
• Providers bid on orders
• Tenants choose winning bids and create leases

Deployment and price parameters are published in a “manifest”, written in Software Definition Language (SDL), “a human-friendly data standard for declaring deployment attributes”.

However, Akash is more than just a marketplace, as it can host and manage deployments and assist projects with cloud management services.

Aside from decentralizing the process of meeting demand and supply, Akash Cloud offers more competitive rates than its centralized counterparts.

What is the difference between Akash and other decentralized cloud platforms?

While Akash is not the only cloud provider offering open-source software and an open marketplace, it stands out because of their use of “containers”, that allow users to run any cloud-native application on all the environments they want — container software will always run in the same way, regardless of the infrastructure.

“A container image is a lightweight, standalone, executable package of software that includes everything needed to run an application: code, runtime, system tools, system libraries, and settings”.

With Akash:

1. Users have control over costs and what’s included in the package
2. App developers can seamlessly lease and deploy apps regardless of the environment

The Akash Infrastructure

The Akash journey began with its Whitepaper, as far back as 2017, with network development starting in 2018.

Significant progress occurred in 2021 with the integration of the Cosmos SDK. In fact, the Akash blockchain employs a Tendermint consensus, and the Cosmos SDK to customize several aspects of its platform, running as an app chain.

Validators in the DPoS consensus operate competitively based on their stake, encouraged to either acquire AKT tokens or collaborate through delegations.

The Akash Network has been developed with extensive support from Overclock Labs, its core contributor. Since the beginning, Overclock has tried to take a step back and ensure that Akash can take off as a decentralized protocol.

This is reflected in their lesser presence in the validators of the Akash network, as well as the increase in non-Overclock repository commits in the Akash Github.

The Akash Token (AKT)

The AKT token’s roles include:

1. Security: Validators stake AKT in order to secure the network
2. Governance: AKT holders voting on protocol decisions
3. Settlement and Value Exchange: all records of requests, bids, leases, and settlement payments are stored on-chain using AKT
4. Incentive: to be used on the network as it has a lower take fee than USDC (more info in the following chapters) and to incentivize providers to offer lower prices.

Some data about AKT:

The Mainnet 6 Upgrade — Making Akash an AI Supercloud

The main upgrades of Mainnet 6 involve:

1. Being able to offer GPU resources to deployers around the world, targeting growing demand in AI/ML sectors
2. Access to USDC settlement for both providers and deployers to ensure stable transactions
3. At settlement, the Akash network will begin capturing value via Take Rates on both USDC and AKT (as a source of protocol revenue)

1. GPU

With mainnet Upgrade 6 Akash is now able to offer GPUs on their marketplace.

Given the recent (and future) “proliferation of LLMs and AI, GPUs are experiencing the highest demand surge in recent history”.

Here’s how Akash compares with traditional cloud providers.

With its “Supercloud”, Akash wishes to solve current industry inefficiencies in GPU distribution:

1. Users of CSPs are forced to accept permissioned access and the risk of vendor lock-in, and this is only if the desired GPU units are even available.
2. Highest-performance GPUs prioritized for reserved instances, in which the cloud service provider “pre-sells” or reserves access to specific quantities of GPUs for a predetermined length of time.

Building the Open-Source Supercloud for AI

Akash addresses these inefficiencies with the first operational Supercloud, a “cloud of clouds,” or a way to permissionlessly access compute resources — including GPUs — from a range of providers, from independent to hyperscale.

2. USDC Settlement

While Akash could use its native token AKT, it is a volatile cryptocurrency.

As such it raises a few challenges, had it become the official currency of the marketplace. In fact, any token with inherent volatility presents a challenge to long-term providers and deployers.

Tenant challenges

1. Lack of price stability: difficulty understanding costs and planning potential spending ahead of time due to price volatility of AKT
2. Holding and liquidating an alternative asset: complexity in acquiring and and liquidating of AKT

Provider challenges

1. Lack of price stability: difficult to reliably forecast revenues due to price volatility
2. Holding and liquidating an alternative asset: complexity in handling, custody, and liquidation of AKT

The value of agreements in the marketplace could be affected by AKT inherent utility, and this is unacceptable for the correct functioning of the protocol as intended.

As such, USDC represents the best alternative as the most solid stablecoin currently available in the market.

3. Take Rates

In order to boost revenue collection and align incentives, the Akash network will introduce take rates paid by tenants to the providers for each lease.

All the proceeds will be allocated to boost the security budget for the network, ensuring a “direct alignment between the usage and security of the Akash Network”.

The take rates can be changed with a governance vote and will be initially set at 4% for AKT and 20% for USDC.

This still ensures that AKT use is incentivized and beneficial, without diminishing its utility.

With many defining Akash as a new paradigm in the sector, it’s important to mention that it does not intend to compete with other Cloud Providers, but rather to improve the overall ecosystem.

But why would the Cloud Giants compete with Akash?

Akash main value proposition is to reduce the unused capacity, and traditional providers could benefit from this as they could tap into the Akash network and rent their unused capacity.

Where is Akash now?

Akash is not limited to hosting specific applications. With AI/ML becoming integral in our lives, cloud computing demand in these areas will surge, positioning Akash at the convergence between crypto, AI, and IoT.

There is a lot of debate surrounding Akash’ ability to support Virtual Machines, with many arguing that containers can’t handle heavy applications like AI/ML.

Currently, Akash does not support Virtual Machines, but “it recognizes the accelerating cloud compute demand for AI/ML and is preparing to handle the potential growth outside of its typical Web3 tenants”.

After a week post-launch, here’s how the network looks:

Currently, Akash comprises 64 network providers, primarily located in the EU and the USA.

And here is some data on the active leases in the Akash network YTD.

Nonetheless, Akash is performing particularly well with regard to initial GPU usage:

Akash is currently the only network offering “high-density chipsets such as NVIDIA H100s, A100s, and V100s. Each H100 is equivalent to 78 NVIDIA 3090 in terms of FP64 FLOPS”.

84 GPUs leased: Almost all A100s listed on the Network are utilized, with significant usage for V100s as well, demonstrating a strong need for these chipsets.

Their current capacity is up to 159 H100s GPU, growing consistently.

All the statistics are provided by

https://deploy.cloudmos.io/analytics

https://akash.praetorapp.com/provider-status

While the initial part of their roadmap has been focused on ensuring a strong supply, the next few months will focus on stimulating enough demand for the network.

This is reflected in their latest efforts:

1. A proposal by Mistic Labs to integrate Akash within Metamask

2. Hackathons

Food for Thought

Many have already tried to capture this market: Is Akash going to make it?

All in all, it’s early days at Akash and the initial usage is promising.

Their first steps have initially focused on offering a strong supply and arguably succeded.

Now it’s time to stimulate demand: We can speculate that it will be hard to educate users and even have them compromise their current security to decide to move to decentralized providers. The benefits will really have to be obvious and overcome security concerns.

Furthermore, Akash will focus on network and software decentralization, with many concerns with regard to the centralization of hardware to remain the same, as most chips and hardware rely on the same manufacturers.

Many have also voiced their concerns with regard to Akash adaptability to support VMs and AI/ML (and the fact that Akash containers will be able to support them) especially since this will become a most important development, with them including in their future roadmap.

Last but not least, some users have made a criticism on Akash strategy to attract GPUs by selling tokens to buy them: with the inclusion of a take fee, Akash has acknowledged its need to generate more revenues and grow their ecosystem so we can expect more to be done in this direction