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Alpha opportunity in DePIN & AI - Become a Aethir validator node

Alpha opportunity in DePIN & AI - Become a Aethir validator node

Key Takeaways

  • Aethir is part of the DePIN (Decentralised Physical Infrastructure Networks) sector. These are blockchain protocols that incentivise decentralised communities to build and maintain physical hardware with token-based incentive. This is one of the hottest and most promising sectors in crypto.
  • Aethir is a decentralised computing infrastructure network that aims to connect underutilised GPU supply with users that need GPU compute, using a novel approach to cloud computing infrastructure, focusing on the ownership, distribution, and usage of enterprise-level GPUs. 
  • With the AI revolution taking place, we are witnessing a shift from CPUs to parallel processing driven by GPUs. However, GPUs are in a massive shortage worldwide. This is one of the biggest catalysts for Aethir as it offers a direct exposure to invest in GPUs, arguably the most valuable and most disruptive asset in history.
  • One critical characteristic of Aethir is its focus on repurposing existing potential resources, rather than requiring participants to purchase new hardware.
  • The team behind Aethir is strong and experienced, well-positioned to execute their mission properly.
  • Aethir also joined the Nvidia inception program in November 2023. This is a big add-on as this program is designed to help start-ups during critical stages of development and provides the access to custom sets of ongoing benefits from the Nvidia ecosystem.
  • Its main competitors are Render, who currently sits at an FDV of $5 billion, and Akash, who has a current FDV of $2.2 billion. However, Aethir's total GPUs power is much bigger than those two projects combined and is also delivering its service at a fraction of their cost.
  • The Aethir Alpha opportunity gives investors the ability to buy a share of Aethir validator nodes. This is the best way to get exposure to Aethir expected growth.

Market Overview

In November 2022, OpenAI took the world by surprise when it launched its first generative AI bot, ChatGPT. We all remember how mind-blown we were when we first interacted with this bot. 

No wonder this application set the record for the fastest growing user base, hitting 100 million users in 2 months. In contrast, it took Instagram ~1,000 days to hit that same milestone. Looking back, it is fair to agree that it was an “iPhone” like moment. 

N. of days to 1M and 100M users by technology

In less than two years, AI moved away from a niche R&D area and became one of the biggest investment priorities for companies. Right now, it seems evident that this technology is bound to have a lasting impact on our world. Yes, the AI revolution is no joke and this technology is on an exponential curve.

OpenAI codebase next word prediction
Source: ar5iv.labs

But AI is not only about the code. AI is resource-intensive and requires specific physical infrastructure. This accelerated the move from CPUs (central processing units), to parallel processing with GPUs (graphics processing units). With high memory bandwidth, GPUs evolved to tackle other calculations and were proved to be really efficient for tasks such as training, refining and improving AI models. 

Given the strong demand for GPUs, there has been a massive supply shortage and as mentioned by AWS CEO, “demand is outstripping supply and that is true for everybody.” Hence, this is creating an arms race for hardware and computing power.

Cloud computing

As discussed, AI developers rely on hardware to run their models. Typically, they have two ways to get this hardware capacity: they can either run GPUs locally; or rely on cloud providers. The first solution often proves to be too expensive and not economically worth it, and over time cloud providers will prove to be an interesting alternative.

When we look at the expected growth of the GPU market, it seems that the market opportunity for cloud providers is a no-brainer.

Graphic processing unit market size

Currently, the market share of cloud computing is dominated by centralised institutions with a lot of resources to acquire and operate these powerful hardware. However, those centralised institutious face many critics: they can be expensive, computing power is not distributed in an efficient and fair manner, and their centralised nature causes security problems.

Having said that, crypto has a role to play in providing access to those multi-node supercomputers in a more efficient, more secure, and decentralised way. This is part of a subfield of crypto called DePIN, or Decentralised Physical Infrastructure and it's going to be one of the key sectors to participate in the AI revolution.

DePIN - Rewriting the rulebook of cloud computing

Decentralised Physical Infrastructure represents decentralised hardware networks incentivised by token. The primary goal of this subfield of crypto is to replace monopolised cloud institutions with better access to cloud computing services for all, and to transform every user into essential stakeholders of the network using native token incentives.

DePIN - Rewriting the rulebook of cloud computing
Source: Binance Research

What does DePIN bring to the table?

• Reduces costs: As there is a more efficient distribution of cloud computing resources and less take rates from middlemen (unlike centralised services), DePIN projects are able to provide cheaper service.

• Rewards network contributors: With blockchain , value flows to the extremities of the network (users, validators, and computing providers) and does not stagnate in the middle (compared to the current centralised cloud computing models). Contributors to the networks are incentivised to engage actively and are rewarded in a fair manner.

• Scales easily: The architecture of DePIN makes scaling easier as there is no barrier to entry and less friction. 

• Enhances security and resilience: Decentralised nodes means that there are no central points of failure making the network much more robust.

What DePIN brings to the table?

DePIN - One of the hottest sectors in crypto

The idea here is simple: AI developers need more GPUs and there is currently a shortage of them. Hence, there is a lot of reason to believe that crypto DePIN projects can help drive new computing power to the market by activating latent resources with token-based incentives in a reliable and decentralised manner.

To dig deeper on DePIN, here is a great general overview of this sector .

As Aethir is an innovative DePIN project focusing on GPU cloud computing, the investment case for this project is compelling: right at the intersection of the AI revolution and a global shortage of GPUs.

Aethir Overview

“Aethir is a bit like Airbnb, where there are spare vacation homes that are being underutilized, and there’s obviously a demand for some of that unused vacation home time. [...] So, at a very base level, we service as a kind of Airbnb for GPU computing” - Daniel Wang

Aethir introduces a novel approach to cloud computing infrastructure, focusing on the ownership, distribution, and usage of enterprise-level GPUs. It functions as a marketplace and aggregator, facilitating the connection between supply-side participants—such as data centres, miners and retail GPU providers—and users and organisations from computing-intensive sectors like AI, ML (Machine-Learning), cloud gaming, and other enterprise grade participants.

Aethir cloud

Aethir achieves this with a two-way mechanism:

  • Resource Pooling: Owners can contribute their underutilised GPUs to Aethir's network, effectively forming a collective pool of potent computing resources. This enables global GPU distribution at significantly reduced costs, democratising access to advanced computational power.
  • Decentralised Ownership: Aethir's model transcends the limitations of traditional ownership structures by enabling distributed resource possession. This lowers barriers to entry for new consumers, opens new economic opportunities, and contributes to a globally diverse and interconnected digital ecosystem.
Source: Impossible Finance

A focus on underutilisation of resources

“There are a lot of older generation GPUs that are severely underutilised, [..] but they haven’t found consistent steady use case and demand for it to be fully utilised” - Daniel Wang

Today, a significant portion of GPUs, particularly those owned by enterprises and individuals, are not used efficiently, often due to misalignment in resource allocation, where high-capacity GPUs are used for tasks that require much less computational power. Some estimates suggest that the capacity of underutilised GPUs range from 50-75%. 

One critical characteristic of Aethir is its focus on repurposing existing potential resources, rather than requiring participants to purchase new hardware.

Team and Investors

The team behind Aethir is strong, experienced and well-fitted to properly execute the project mission. Here’s a quick breakdown of the main leadership positions:

Mark Rydon - Co-founder and CEO
Mark has held key roles at NOTA Platform, Flux Capital, Gaas LTD, Kulture Athletics, Inc., and Bechtel Corporation. 

Daniel Wang - Co-founder and CBO
Prior roles at IVC (Venture Partner), YGG SEA (CIO), Riot Games (Head of International Publishing Mgmt), Riot Games - China (Head of Operations).

Kyle Okamoto - CTO
Kyle has served as the CEO & General Manager at Ericsson's IoT, Automotive, and Security businesses, CEO of Edge Gravity, and Chief Network Officer at Verizon Media.

Paul Thind - CRO
Paul previously co-founded and served as CEO at Triggerspot Inc and was an advisor at Creadits and Trick Studio.

On the investment side, Aethir has previously raised $9 million from a wide array of investors, including venture capitalists and family offices like Merit Circle , Animoca, Maelstrom Fund, and others.

Aethir Team and Investors

Another noteworthy point is that Aethir also joined the Nvidia inception program in November 2023. This program helps start-ups during critical stages of development and allows them to get access to custom sets of ongoing benefits from the Nvidia ecosystem.

Aethir joined the Nvidia inception program
Aethir roadmap
Source: Impossible Finance

Comparative study

When we analyse different GPU cloud providers, both centralised and decentralised, we clearly see that Aethir is an outlier, offering its service at a fraction of the cost of others. Currently, the cost per A100 on Akash is $1.5 while it will be only $0.3 on Aethir. Clearly a game changer.

Comparative study Aethir

If we narrow our focus to the two biggest DePIN projects focusing on GPU computing, we also note that Aethir is in a strong position to become a leader in the sector:

  • Highest number of GPUs by far.
  • Highest TFLOPS (FP32) by far (a measure of computing power).
  • Focused on Entreprise-grade GPU.
bBiggest DePIN projects focusing on GPU computing
Source: Impossible Finance

When we look at the respective FDV of Render ($5 billion), and Akash ($2.2 billion) and given how Aethir is positioned, it is fair to say that Aethir has massive room to grow and represents a billions of dollar opportunity. Indeed, smart investors are realising this and Aethir is one of the hottest projects in the DePIN landscape.

Tokenomics

$ATH will be the token behind Aethir and will be central to the entire ecosystems:

  • It will act as the primary currency for Aethir, facilitating payments for AI applications, cloud gaming, and virtualised computers.
  • $ATH holders will form part of Aethir future’s DAO and will be involved in the ecosystem governance.
  • New GPU compute node operators stake $ATH to participate in the ecosystem.

This token is not live yet, and the initial distribution of $ATH will be as follows.

Aethir token distribution
Source: Impossible Finance

Exclusive opportunity - Becoming a node operator

There is a strong case to be made that the best way to capture this opportunity is to become an early node validator of the network.

In addition to contributing to the decentralisation of cloud computing and supporting the build up of a decentralised ecosystem for the largest collection of decentralised AI computational power, a node operator earns rewards in $ATH tokens. The three major forms of revenue for Node Operators are:

  • Service Fee: Compute buyers or demand-side entities pay a service fee to purchase computing power. Payments are converted into ATH tokens, with 80% of the fee passed onto the Node Operator, while Aethir retains a 20% platform cut.
  • Proof of Rendering Work: Token incentives are provided to node operators as an additional reward for completing computing tasks within the ecosystem. This encourages supply-side entities to join Aethir’s ecosystem and provide valuable processing and computing work. Proof of Rendering Work is exclusively distributed to containers upon completing computing tasks.
  • Proof of Capacity: Compute Providers earn Proof of Rendering Capacity for demonstrating readiness to provide compute services. Even in the absence of active work, providers receive rewards to incentivise onboarding onto the ecosystem, thus mitigating participation risks.

In total, there will be 100,000 nodes available and Aethir plans to deliver 15% of its token supply to them over a vesting period of four years.

Vesting schedule

To reward node operators, $veATH tokens are earned as checker work is done. Here is the expected vesting schedule of $veATH token:

veATH vesting schedule to node operators
  • For the first 10% of the token supply allocated to node operators, $veATH tokens are earned as checker work is done.
  • For the remaining ones, 5% will be unlocked at the end of every quarter on a backward based performance.

After being unlocked, those $veATH tokens can then be claimed by users and redeemed into $ATH. When claiming, users need to choose a lock period on the token. Six months is the minimum lock up required to avoid a penalty fee. This process is done intentionally to make sure that incentives are aligned from all network participants.

Valuation and Scenario Analysis

Long term projection

To estimate the potential return on investment of node operators, it is important to understand that the reward for each node is influenced by the portion of nodes that is effectively running and performs correct validation. Therefore to estimate the potential return for this investment we have to simulate a range of different scenarios.

With that in mind, here is a potential return simulation over the whole period: 

Aethir potential return simulation

A Focus on 2024 

At the end of 2024, 20% of the total reward allocated to nodes will be released, and 10% will be unlocked and free to be used by the investors.

Using the same hypothetical initial FDV of $800 million (at 100% operating rate), this is the minimum FDV of $ATH required to breakeven in 2024 under different node operation effectiveness rate:

Aethir nodes operation scenarios

We can see that if the efficiency rate is between 60 and 75%, the $ATH token needs to reach an FDV between 4.8 and 6 billion USD, to break even already in 2024. Aethir’s biggest competitor, Render, currently sits at an FDV of $5.2 billions.

FAQ Aethir Vault

Can you tell me more about rewards? How and where will I receive them? 

By investing in this vault, you become eligible to receive the Aethir token (ATH) rewards for 4 years after the TGE. The rewards will be distributed quarterly, starting with a 6-month cliff from the time of the TGE. The rewards will be deposited into your SwissBorg account. 

What happens to the checker node NFT after four years? 

SwissBorg will sell the NFTs at the best price possible at the end of the period, and the proceeds will be distributed to the investors. Please keep in mind however, that we expect the value of the NFTs to be lower compared to today.  

Top BORG holders need to hold at least 22K BORG. Does that include locked tokens for other Deals (because they’re still shown in the account)? And/or locked tokens for Premium? Or only the tokens “available” in the user's wallet?

All $BORG tokens held in the SwissBorg app (locked for Premium + locked in Alpha Deals + in Thematics).

Are node holders eligible for node airdrops?

It is too early to say as this will depend on the eligibility for the potential airdrops. If SwissBorg receives an airdrop from tokens / NFTs belonging to its users, it will redistribute it.

How often will the $ATH tokens be distributed?

Distribution will occur on a quarterly basis, with a 6-month cliff.


Is the investment in Token or Node?

Node. Please refer to the investment thesis above for a detailed explanation.


Does a successful investment provide you with the option to host your own node?

No. SwissBorg’s partner will operate and manage all the nodes, so the investors do not need to worry.


Is there a min/max investment per user? How much is it?

Yes, all vaults always have a minimum and maximum investment. It will be determined on Thursday morning as the price/node varies with the price of $ETH . Expect the minimum investment to be approximately $100.


What pools are available in terms of allocation?

To see the details of the vault, see the social content on the Today screen in the SwissBorg app or yesterday’s tweet .


What return could be reasonably expected across four years?

Please refer to the investment thesis above for projections.


Is the price for the node the same across all vaults?

No, the public price is higher than for the other vaults. Once the vaults are visible in the app, more information will be shared.


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