IO Net - Next GPU Blue Chip?

IO Net is positioned to be one of the blue chip GPU rental projects. They have raised $30 million, have a large community and claim over 70,000 GPUs on their network. Their token is launching any day on centralized exchanges (they will announce in their discord a couple days before listing). The only thing they are missing is customers… and tokenomics might hurt them in the short term too. Lets take the deep dive! (golden nugget is in the conclusion)

Age: 7 months (started October 2023)

Current Market Cap: tbd

Circulating Supply: reported to be 300,000,000 at launch, but tbd

Total Supply: 800,000,000

Whale Holdings (> 5%): tbd

What is the project?

• Decentralized Physical Infrastructure Network (DePIN) built on Solana

  • Solana offers lower transaction fees and is a fast network

    • It is important to note Solana has recently had issues around failed transactions due to high traffic, which means it is popular. Unfortunately, a portion of this traffic comes from bots and meme coins

• Sister project bc8.ai 

  • AI image generator

• Architecture (see diagram below)

• Utilizes a mesh VPN network to link GPUs

  • More decentralized than other VPN networks

  • More scalable than other VPN solutions

  • They make no mention of the GPUs being decentralized on the blockchain, therefore I must assume the network is not truly decentralized on-chain.

Products (customer side)

• GPUs

  • AI inference and training capabilities

  • Capable of other common GPU tasks

• CPUs

• Cloud Storage

  • Lower cost than AWS and other computing networks

    • Note on this, they have to be cheaper because AWS offers more functionality than IO Net

  • Keep in mind, decentralized cloud storage services are underutilized, so I do not expect this product to contribute to their market cap

Computing Supply

• GPUs (70,000 verified, 22,000 ‘workers’)

  • Personal GPUs (individuals)

  • Small data centers

  • Old mining GPUs

  • Render (partnership)

• CPUs (19,500 verified, 5,000 ‘workers’)

  • Same as above

• Cloud Storage

  • Filecoin partnership

Computing supply thoughts: I am unsure of the definition between ‘verified’ and ‘workers’ and I don’t understand why they have 3 different categorizations of GPUs and CPUs on the network (explorer). The only count that matters is the number of GPUs and CPUs that are available to rent at anytime. It just feels to me like they are either unsure about that number, or trying to increase their numbers for marketing reasons. Either way, I don’t like the obfuscation.

Revenue

• $220,000 in annualized worker earnings (~$600 /day average)

  • Only 6-10 GPUs have been working when I visit the explorer

Revenue thoughts: They have a lack of customer interest despite the shortage of GPUs plaguing AI companies. But I don’t know why. Is it their architecture? Are their rentals too pricy (I don’t think this is the case). Either way, proof is in the pudding as they say. Until they get higher utilization, I’ll be wary.

Tokenomics

• 800 million total supply

  • 300 million to be released on a schedule

    • Emission schedule will cause significant dilution, see chart below

  • Burns will occur regularly via income

    • Problem: you need revenue to fund burns. Where is the revenue?

• Token launching on CEX soon

  • They will announce in discord and most likely X (Twitter)

• Allocations & Lock-up

  • 50% to community

  • 34% to Investors and team

    • Investors locked for 13 mths, then waterfall (very good)

    • Team is locked for 13 mths, then waterfall (very good)

Team & Community

• Team seems very strong

  • Built out LI page with employees listed

  • AMAs are done weekly, they answer questions thoroughly

• Discord community is very strong

  • Regular announcements

  • Team communicates in Discord

• Geographically strong

  • Participants all across the work, discord channels for 26+ countries

• Note, there is some controversy over Amhad Shadid. I’m not here to tear anyone down, but want to mention it so you can do your own research before investing. There are a couple videos on YouTube if you’re interested.

Financial Partners

• $30 million raised in 2 rounds

  • Series A was raised at a $1 billion valuation

  • Seed round prior to Series A

  • 6+ total investors

Catalyst

• Large GPU supply

• Strong team that executes on problems quickly

• Frequent & transparent community interaction

• Good financial backers

• Strong community following

Downsides

• 80%+ tokens held by large wallets

  • these should be distributed after token launch and air drops

• Tokenomics

  • strong emission schedule and unknown burn rate means large dilution risk to token holders

  • remember, burns are funded by revenue and currently, revenue is $600 a day

• Late stage token sale

  • limited upside, could enter the market at a blue chip valuation

• Network underutilized by customers

Scores & Market Cap Prediction

Scores & MC Thoughts: The speculative potential is low because it is a late stage token launch, aka, not as much upside. The staying power is strong because the team has proven they can execute and react to at least some of the community’s concerns. Reputation takes a hit due to multiple failed projects from one of the founder’s past. Now, past success doesn’t guarantee future success, so the opposite can also be true. A strong team can be the difference, and IO does appear to have a team that can execute.

Conclusion

Here is my golden nugget on this project. Remember, this is not personalized financial advice… Because this project has a large and loyal community, I expect this project to start off at a healthy market cap. But, because of high emissions in the first couple years, token holders will be diluted unless there is VERY strong utilization of the GPUs on the network (aka, revenue). I expect the market cap and the price of the token to decay (go down) until they are able to get customers to utilize over 80% of the GPUs they claim to have on their network. I think the project will have trouble attracting a significant number of new investors for these reasons as well. That is how I see it, but I could be wrong. Only time will tell.

*This content is not intended to be personalized financial advice for the reader