Alex Sunnarborg is the founder of Lawnmower, a blockchain investing and market data platform founded in 2015. Here Sunnarborg takes an in-depth look at the imminent crowdfunding effort by Golem, an ethereum-based market for computer processing power, which launches today.
This publication is not intended to constitute investment advice. Please consider all blockchain investments with caution.
Golem, one of the latest ethereum-based projects and blockchain assets, is set to begin its public crowdfunding today.
Often described as “Airbnb for computers”, the Golem team intends to use the funding to build out a network for renting unused computing power (CPU or GPU cycles) amongst users, existing as decentralized, open-source software on the ethereum blockchain.
As a two-sided market, Golem allows users to either:
- Sell unused computational resources (CPU or GPU time) to others, or
- Buy unused computational resources (CPU or GPU time) from others.
As consumers’ and businesses’ requirements for processing power differ greatly, Golem looks to take advantage of the varying needs of end users and tasks to create an alternative cloud computing network and market.
As an example of the stark contrast in computational needs, imagine someone who uses their computer primarily for Facebook and email as compared to someone who frequently uses one for work or research related to resource-heavy fields and tasks like high definition image rendering, stock market simulations and back-testing, DNA analysis, machine learning or big data.
The Facebook and email user likely uses their computer’s CPU or GPU to nowhere near their capacity, and could use Golem to sell processing time directly to a user who likely often needs to shop around for additional computational resources during periods of heavy analysis, and currently may turn to services and corporate giants like Amazon, Google, Microsoft and IBM.
The marketplace is anticipated to include individuals, organizations, data centers, and more, and allow for complete flexibility and customization for both buyers and sellers on terms including price, time or task, and amount or percent of resources.
The upcoming crowdfunding is for a token on the ethereum platform called the Golem Network Token (GNT), intended to be core to Golem and “ensure flexibility and control over the future evolution of the project and attributed to a variety of functions in the Golem network following the first major release” (including being the only type of payment permitted for buying computing resources).
The crowdfunding for GNT will last three weeks, or until 820,000 Ether (ETH) is raised. If less than 150,000 ETH are raised in three weeks, the crowdfunding will be deemed a failure and the ETH will be returned to the original owners.
Given the popularity, consumer demand, and speed of successful recent public blockchain asset crowdfunding efforts (especially on ethereum), it’s an interesting time to look at some of the similarities and differences in the structuring of the assets in this new trend or alternative fundraising paradigm.
Instead of birthing a new asset and blockchain with an initial genesis block and the subsequent start of competitive mining like with bitcoin (BTC), litecoin (LTC), or more recently, Zcash (ZEC), 100% of the supply of GNT to ever exist will be allocated and distributed immediately following the closing of the crowdfunding – similar to Digix DAO (DGD), SingularDTV (SNGLS), or First Blood (1SŦ).
As ethereum-based blockchain assets with public crowdfunding projects this year, the demand for these tokens are extremely relevant data points. Further, DGD, SNGLS, and 1SŦ had maximum fundraising caps similar to GNT:
- In March, DGD received $5.5 million of ETH in 12 hours
- In September, 1SŦ received $5.5 million of ETH in 5 minutes
- In October, SNGLS received $7.5 million of ETH in 15 minutes
- In November, GNT will attempt to receive $10 million of ETH.
Given the massive demand and blazing speed for these crowdfunding efforts, GNT may similarly see enormous initial interest and an extremely small time window in which Ether deposits will be accepted in exchange for an initial GNT allocation.
For some additional data points, many ethereum based projects have alternatively opted to raise funds with no concept of a maximum cap:
- In late 2014, ethereum (ETH) itself raised $18.4 million in 41 days
- In late 2015, Augur (REP) raised $5.3 million in 45 days
- In late 2016, Iconomi (ICN) raised $10.6 million in 35 days.
Further crowdfunding attempts in the blockchain space are not only carried out via ethereum. Both Lisk (LSK) and Waves (WAVES) actually compete with ethereum as decentralized app platforms upon which developers can create and deploy software, and each also had their own uncapped public crowdsale earlier this year.
- In early 2016, Lisk (LSK) raised $5.7 million in 28 days
- In mid 2016, Waves (WAVES) raised $16.1 million…