Opening Remark

Precedence Research reports that the cloud computing market is on track to break the $1 trillion mark by 2028. This surge is mainly due to the growing use of advanced technologies like artificial intelligence and machine learning within cloud computing. Additionally, the development of computing solutions tailored to specific industry needs is creating substantial growth opportunities for the cloud computing sector. These solutions are crucial for storing, accessing, and managing important data, further driving the sector’s expansion

Source: Precedence Research

Yet, in 2024, businesses are encountering rising costs associated with cloud computing, prompting a reevaluation of how they manage their workloads to reduce expenses. Economic analyses and vendor reports consistently indicate an uptick in the costs of cloud services and storage. The January Producer Price Index (PPI), for instance, showed a 0.6% monthly and 3.7% annual increase in the cost of data processing services, including those related to cloud computing. Furthermore, Eldar Tuvey, CEO of Vertice, anticipates an early 2024 inflation rate of 10.6% for cloud-based Software as a Service (SaaS).

Source: Tech Target

In the web3 realm, Aethir is addressing the conventional challenges of centralised cloud computing, including high costs, limited GPU availability, and latency issues, offering a decentralised GPU cloud, and presenting a scalable solution tailored for the rapidly expanding markets of AI and gaming.

Project Overview

Source: Aethir

Aethir is a cloud computing platform that promises to change the game for how GPUs are shared, owned, and used by introducing a scalable and inclusive way to pool distributed computational power. Aimed at sectors like AI, cloud gaming, and machine learning, Aethir allows businesses and individuals to contribute underused GPUs to a collective network, optimizing resources across the board and facilitating access to top-tier computing capabilities for a wide audience.

The project offers a flexible solution to the GPU shortage and underutilization crisis by pooling together new and unused GPUs from various sources, including data centres and cryptocurrency operations. This not only boosts global GPU availability significantly but also democratizes access to computational resources, reducing costs and encouraging innovation.

Aethir rolled out its testnet on Arbitrum in late 2023, now boasting more than 10 games on its beta platform, and the full launch of the live platform along with the Aethir (ATH) token is planned for later this year, although the exact dates are still to be confirmed.

Aethir Network

Aethir’s design integrates an economy that combines on-chain assets, smart contracts, and decentralised rendering services into a unified system structured around three key roles—Container, Indexer, and Checker—operating on the Arbitrum network to optimise the blockchain environment for speed, scalability, and lower fees.

Container

Provide computing power and network resources. It also receives rewards for offering standby resources and running services to users.

Checker

Regularly monitor the availability of resources. It rates (scores) the resources and reports on them, as well as enforce the resource ratings.

Indexer

Catalogues resources by region and organises them by service level. This party also connects users’ requests to the appropriate resources and writes data reports.

Source: Aethir

Aethir Network Workflow

Aethir Network distinguishes itself from typical blockchain systems by adopting a unique operational method, which includes nodes performing dual critical roles:

● Proof of Rendering Capacity: Nodes are periodically selected to validate transactions, ensuring everything is correct. The selection criteria favor nodes with higher token investments, superior service quality, and fewer previous selections.

● Proof of Rendering Work: The network rigorously monitors node performance to guarantee top-notch service, tailoring resource allocation to meet demand and geographic specifics.

Session Dynamics

Each session, lasting 15 minutes, acts as a discrete service period, with costs fluctuating based on network activity.

Container Statuses

Containers, functioning like network hubs, possess various states reflecting their current activities or readiness, ranging from setup phases to active service modes.

Staking and Rewards

Staking in Aethir is akin to depositing money for future benefits. Rewards are distributed based on the container’s performance and the volume of work handled, encouraging optimal operation.

Service Modes

The network supports two operational modes to cater to different needs:

● Wholesale Mode: Offers services in bulk at predetermined rates, optimizing for efficiency.

● Retail Mode: Adjusts service fees dynamically, akin to a bidding system, based on current demand.

Service Fees

Developers compensate containers based on the services rendered, with prices varying to reflect demand and availability.

Slash Mechanism

To maintain integrity, a penalty is applied for inaccuracies, affecting unclaimed rewards. However, a portion of this penalty is reallocated to reward high-performing nodes, with a grace period for early adopters to adjust without penalty.

Aethir’s Advancements in Gaming

Aethir is reshaping the gaming landscape by enabling high-definition 3D gaming on any device through its Distributed Cloud Infrastructure (DCI), which allows for real-time game streaming without the need for costly hardware. It integrates blockchain to enhance both traditional gaming and new ventures into metaverses, tackling common issues like latency and slow access that often hinder other cloud services. With a focus on security and user-friendly launches, Aethir supports game developers by allowing them to use popular 3D engines for creating immersive games without technical constraints.

Source: Aethir

Developers also benefit from Aethir’s flexible tools, such as its SDK for incorporating features like in-game transactions and player authentication, streamlining the gaming experience. Additionally, Aethir’s platform offers analytics tools for enterprises to track player engagement, control budgets, analyse game trends, and visualise data, all aimed at informed strategy development and problem-solving in the gaming industry.

Source: Aethir

Team, Foundational Support and Strategic Partnerships

Aethir was established in 2022 by founders Mark Rydon and Daniel Wang. Alongside CTO Kyle Okamoto and CRO Paul Thind, the project boasts a strong team well-versed in both Web2 and Web3 technologies.

In the middle of 2023, Aethir wrapped up its Pre-A funding round, bringing its total funds raised to more than $9 million and reaching a valuation of $150 million. This round featured major investments from well-known groups like Sanctor Capital, Hashkey, Merit Circle, and CitizenX, with extra support from Arthur Hayes’ Maelstrom, Mirana Ventures, and Animoca Brands, among others.

Aethir has formed several significant partnerships recently:

With Impossible Finance, the collaboration focuses on revolutionising cloud infrastructure to make advanced computing widely accessible, setting new standards for security, transparency, and efficiency in the Web3 space.

With GAM3S.GG, aimed at redefining Web3 gaming, this partnership makes blockchain games more accessible globally, facilitating seamless gaming without the need for heavy installations or high-end hardware, thanks to Aethir’s cloud infrastructure. The goal is to improve the gaming experience and foster a more inclusive gaming community.

With APhone, together, they are launching decentralized cloud smartphones to enhance Web3 app accessibility. By leveraging Aethir’s low-latency decentralized cloud technology, APhone intends to circumvent the restrictions of centralized app stores, providing a seamless, unrestricted mobile experience.

Competitors

In the realm of decentralised computing, the market is segmented into key areas like AI, GPU services, cloud computation, and data storage. Aethir sets itself apart by focusing primarily on delivering specialised cloud computing resources for the gaming sector, establishing an almost unique position in the competitive landscape.

Source:Tomb Heads

Tokenomics

Currently, the Aethir (ATH) token is yet to be launched, but its development is confirmed. A token generation event (TGE) is set for later this year. The $ATH token will be central to Aethir’s operations, serving a variety of purposes:

Daily Transactions

The $ATH token is the currency of Aethir, used by anyone who needs computing power to pay node operators.

Broad Uses

Beyond simple payments, $ATH’s scope is expanding, with future uses like merge mining and marketplace transactions in the works.

Decisions and Direction

$ATH token holders will soon have a say in Aethir’s future, thanks to a shift towards decentralised governance, enabling them to propose and vote on changes.

Trust Through Staking

New operators must stake ATH tokens, demonstrating their commitment and helping to protect the network’s integrity.

Mining rewards, a major part of ATH’s distribution, are there to motivate node operators and maintain service excellence. These rewards, for both active service and standby capacity, are designed to attract and retain providers.

ATH’s mining rewards are distributed with a plan in mind: start strong to draw people in, then gradually decrease incentives to keep the ecosystem stable and rewarding in the long term.

Source: Aethir

Bullish Fundamental Factors

● AI and gaming markets are expanding rapidly, increasing the demand for cloud solutions. Aethir is poised to meet this demand with scalable solutions for these two rapidly growing sectors.

● Aethir (ATH) tokens are set to launch later this year, although exact dates are still to be determined. Continued market growth could positively impact the token’s value.

● Aethir distinguishes itself in the competitive decentralised computing market by focusing on gaming, offering a unique advantage.

● By distributing its network across various locations, Aethir aims to decrease latency and improve gaming quality through edge computing.

● Aethir has secured a significant annual contract with the world’s largest telecom, expected to grow to an eight-figure sum by Q2 2024. Additionally, it has signed three cloud gaming contracts, with over ten more expected in Q1 2024, including deals with the world’s leading gaming company, which has over 150 million monthly active users and a 22% conversion rate. More information here.

● As a prominent member of NVIDIA’s Inception Program, Aethir has access to an impressive array of H100 chips, a technology also sought after by major companies like Meta (Facebook) for their high-value projects.

Bearish Fundamental Factors

● Being a part of the crypto market brings inherent risks due to its extreme volatility and the short attention spans of many participants. Even without significant fundamental changes, the Aethir token could see a drastic decrease in value.

● Aethir is still in the early stages of proving its performance. Decentralising gaming introduces scalability issues, and it’s unclear how well Aethir will manage these challenges.

● The high resource requirements for decentralised cloud infrastructure have so far limited its adoption to large corporations. While Aethir’s solution promises a bright future, widespread adoption could take years, similar to the slow start of GameFi.

● The varied regulations on crypto and digital assets across different countries create a complex legal environment that could deter investment, stifle innovation, and slow global adoption.

Closing Thoughts

In today’s closing remarks, I would like to remind everyone that nothing we share is intended as financial advice. As professionals deeply involved in understanding this industry, we closely monitor numerous newcomers in the space. Sharing our research with you doesn’t necessarily imply our endorsement or disapproval of the projects discussed.

We are a team of professionals, each specialising in different sectors of markets and finance, and this report should not be considered as containing all the information necessary for making investment decisions.

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