ICO Analysis: DADI

DADI (Decentralized Architecture for a Democratic Internet) is a platform for decentralized cloud and web-based services. The platform uses a Decentralized Autonomous Organization (DAO) and fog computing to bring you these services in a cheaper, more secure fashion.

The project is attempting to remove the power of the behemoths (Microsoft Azure, Amazon Web Services, Google Cloud) that currently dominate the industry. These companies can have high upfront costs, and with their centralized structure, there’s the potential that they’ll throttle up operational costs once you become dependent on their services.

DADI is ambitious, and there’s a lot of things the team is trying to accomplish. Their technical white paper goes into extensive detail about numerous things, but I’ll just cover a few of the interesting points here.

Decentralized Web Services

DADI uses a decentralized pool of Internet-connected computers to run the network and provide governance, known as fog computing. This has a few crucial benefits for the end-user:

Cost

Like most blockchain systems, the decentralized architecture greatly reduces hosting costs. DADI claims that the savings could be up to 90% compared to Amazon Web Services (AWS), but I couldn’t find any numbers to back that up. Even at half that claim, enterprise customers could potentially save hundreds of thousands of dollars each year on their cloud computing costs.

Reliability

DADI ensures that your online product will be “always-on”. Even if one server experiences issues or has a connectivity interruption, others can take its place. The AWS hiccup of early 2017 that seemingly caused outages for the entire Internet is a great example of why this type of reliability is important.

Miners

There are three classifications of miners on the DADI network:

  • Gateways
  • Stargates
  • Hosts

Gateways contribute bandwidth to the network and are the entry point for consumer requests. They also authenticate and verify responses from Hosts. Stargates are the same as Gateways but also manage domain mapping into the DADI network. Lastly, Hosts supply the computational power needed to run the web services platform.

Put more simply, Hosts help maintain the network through a Proof-of-Work system while Gateways and Stargates operate through something akin to Proof-of-Stake. The latter two need to time-lock DADI tokens in order to announce themselves to the network.

DADI Token

DADI is an ERC20 token that runs on the Ethereum network. 100,000,000 DADI tokens will be created during the ICO and the company won’t create anymore after that. The fixed supply of tokens will circulate through the system in the form of consumer fees and miner rewards.

As a consumer, you need to spend DADI tokens to use the web services. This fee is split five ways:

  1. The Host receives the majority of the payment as a reward
  2. The Gateway that the Host is connected to earns a small percentage that’s taken from the Host’s reward
  3. Another portion is used to support the underlying connectivity of the network
  4. An additional small amount is given to the DADI team
  5. The remaining amount of tokens are burned

Unfortunately, the whitepaper description of this distribution is fairly vague and omits the specific percentages of each split.

The Team

The DADI team consists of 18 full-time members. Joseph Denne leads the team as founder and CEO. Previously, he founded Airlock, an award-winning digital agency that boasts clients like BMW, Disney, and Coke.

Denne brought a good chunk of his management team over from Airlock including Chris Mair (Business Strategy) and Will Lebens (Solutions and Support Team). Lebens has experience as a Non-Executive Director at the open source platform, Symphony CMS. This should help DADI with its initial emphasis on CMS web services.

Although there’s not much blockchain experience on the founding team, they’ve brought in Technical Directors with adequate skill in distributed networks. Directors James Lambie and Francesco Iannuzzelli have over 40 years of engineering experience combined.

The founding team has been working on the DADI project for the past 4 years and has contributed $2 million of direct investment. This is great, but for a project of this scope, it would’ve been more comforting to see a team comprised of ex-employees from one of the cloud computing giants mentioned earlier.

Tokens and Distribution

The DADI crowdsale starts on January 22, 2018, and will last for 30 days or until contributions reach the $29 million cap – whichever is first.

The company will mint 100,000,000 DADI tokens at the ICO, but only 60,000,000 are available for crowdsale participants. The remaining tokens will be split accordingly:

  • 20,000,000: DADI founding team
  • 10,000,000: DADI partners
  • 5,000,000: Referral program
  • 2,500,000: Ecosystem fund (network support)
  • 2,500,000: DADI+ ops (day-to-day operations and key hires)

The 20,000,000 founding team tokens are split among the 18-person team and vest over a four-year period. Assuming an even split and no change in price, this is about $140k salary for each team member.

The crowdsale is split into a presale (10,000,000 tokens for $0.40 each) and public sale (50,000,000 tokens for $0.50 each). The presale begins on January 22, 2018, but registration is already closed, so they’re not accepting additional participants. The public sale begins on January 29, 2018, and you can purchase DADI tokens with Ethereum.

The DADI team plans to use the proceeds from the token sale as follows:

  • 45% – Marketing and partnerships
  • 25% – Research and development
  • 25% – Infrastructure
  • 5% – Indirect costs

Everything seems to be in order with the token distribution. The 20% allocation to the founding team may seem high, but when split between 18 people and distributed over 4 years, it becomes much more reasonable.

The Verdict

DADI is attempting to decentralize the web services market, an over $250 billion industry that’s growing rapidly. To do so, the company is focusing on fog computing and smart contracts to give users a cheaper, more reliable alternative to services like AWS.

The company is primarily targeting Content Management Service (CMS) users but is building out a robust platform capable of supporting all types of web-based products.

The team has a rich history together and ample experience – although this experience isn’t with blockchain technology. A project of this magnitude may see trouble at scale without team members who’ve been through it all before.

Risks

  • Poor Whitepaper. The technical whitepaper is missing critical details regarding the actual costs and fee structure split of the platform. More alarming, portions of it have been proven to be blatantly copied from another project, SONM. The team has since addressed this issue attributing it to an editing mistake, but this should raise flags nonetheless. (-4)
  • Big-time Incumbents. DADI is going up against some of the biggest businesses in the world. These companies have over 100x the resources DADI has – even after their ICO. (-3)
  • Inexperienced Team. No member of the leadership team had previously worked at one of the cloud computing giants. A project like this is bound to hit problems as the network grows and someone with that type of experience would better know how to handle them. (-3)

Growth Potential

    1. Gigantic Market. The web services market is projected to reach close to $400 billion by 2020. If DADI and decentralized hosting become the new paradigm, even a small portion of that would mean big returns. (+6)
    2. Working Product. DADI has something going for it that most other ICOs don’t – customers on a functional product. The company is receiving over $150k of monthly recurring revenues from large-scale clients like Virgin. (+5)
    3. Self-funded.  The founders have operated DADI for four years without taking any outside investment. This commitment brings legitimacy to the project. Combined with the vesting schedule of the founders’ tokens, it’s unlikely that the team will disappear with your contribution. (+3)

Disposition

Our final score comes out to +4 out of 10. This isn’t to say that DADI is a bad project, though. The company has clearly seen some success with clients and sizeable monthly revenue numbers. But this begs the question, “Why the need for an ICO?” Adding a token to an already working system seems like it may just complicate things. If it ain’t broke, don’t fix it.

All that said, this project is a classic moonshot. If the team is successful, the entire cloud computing industry is in for a shakeup and DADI should be standing tall when the dust settles. Like all ambitious projects, though, the risk of failure is high, and I’m just not sure the DADI team are the right people for the job.

Investment Details

The DADI public crowdsale begins on January 29th, 2018 and ends on February 20th, 2018. To contribute to the ICO, you can register here.

Featured image courtesy of Shutterstock. 

Author:
Alex Moskov is a writer and entrepreneur with a passion for building and creating awesome things. Alex has experience in music tech startups, digital marketing, and cryptocurrency investing.