ICO Analysis: Supercomputer Organized by Network Mining (SONM)

Networked resources have long been a profitable corner of the technology market. Some of the largest online services today are in storage, content delivery management, and large-scale processing. Today, the brunt of the web’s work is conducted by a few major, centralized corporations, including Amazon, Digital Ocean, and Oracle, all of whom profit handsomely when start-ups and others go to them for hosting, processing, and more.

These corporations are able to offer affordable rates through scaling. But what if the scale was market-driven, infinitely expandable and downsizable, and could be contributed to by most devices in the world? And what if you, the daily user, could sell your unused computing resources to a massive decentralized network in order to offset your broadband and other costs, or even to profit? That’s the idea behind the Supercomputer Organized by Network Mining (SONM): a global, decentralized, incentivized cluster of computing power, and one of a few promising plays in the distributed computing market.

The SONM token will be the currency of the Supercomputer, although users will be able to enter the economy with virtually any other payment method, at which time their tokens are immediately converted at the market rate. Then there is a market as to the offerings of providers, the cost of the services, and the like.

SONM will have utility for all types of users, from everyday gamers who want alternative, inexpensive global networking for their gaming (such as the tournament they are running on their platform beginning next week) all the way to tech start-ups, and even Google, Amazon, and the others who may see it as a good way to quickly expand when demands from industries call for it. Although, eventually, it would seem, their centralized model will fall to the decentralized mode. This is the arc of most networked technology, anyway, but there would necessarily be a long period of co-existence. As Professor Ozan Onay recently wrote,

Use of large scale dataflow engines like Hadoop and Spark can be particularly funny: very often a traditional DBMS is better suited to the workload, and sometimes the volume of data is so small that it could even fit in memory. Did you know you can buy a terabyte of RAM for around $10,000? Even if you had a billion users, this would give you 1kB of RAM per user to work with.

SONM will create a corner of the market where the cost of these resources is drastically reduced, distributed amongst many providers, and tailored better to the needs of the customer. SONM and other efforts like it will lead to industry-creating and shifting dominance factors – meritocracy can return to Silicon Valley with a vengeance in terms of service offerings. A small effort can forego a drawn-out funding process and get off the ground with private equity with greater likelihood when the cost of resources can be dropped double-digit percentages.

Moreover, SONM, or an effort like it, will create economic activity all throughout the chain. It will raise any ship it comes into contact with, including currencies it is tradable for, like Bitcoin. People with little means but lots of merit will have renewed opportunities to provide for themselves.

All of this sounds quite utopian, perhaps overly bullish for an analyst, right? Well, that’s because it’s just around the corner.

[…] we are referring to decentralized organizations of computing machine resources, and not decentralized human organizations. Most of the data in the current IoT state of development is being processed by private centralized clouds – i.e. using cloud technologies, like AWS, Microsoft Azure, etc. [… ]Centralized cloud technologies have several weaknesses and can’t be used in [Internet of Everything].

SONM is underpinned by what they call SOSNA:

SOSNA is a global operating system built on the nesting doll principle. It is important to understand the structure of SOSNA in order to internalize this concept. Let’s go from the end-user application to outer-layer infrastructure. SOSNA itself is a top layer envelope that works with the Grid-core (BOINC, Yandex.Cocaine/ Other grid-compatible PaaS) and the infrastructure of SONM smart contracts.

Lots of buzz words in there, but the gist is this: SOSNA makes the the whole thing work. It’s SONM’s blockchain, in a way, and is built from other components.

How the SONM Market Works

Fog computing or fog networking, also known as fogging, is an architecture that uses one or more collaborative multitude of end-user clients or near-user edge devices to carry out a substantial amount of storage, communication, control, configuration, measurement and management.

Anyone with a desire can commit resources to SONM and receive SNM tokens from whitelisted gateways which are called “hubs.” These hubs pay a .5% fee for the privilege, and part of this fee is redistributed to all of the token holders at the end of each month.

Users can deposit a multitude of currencies, which are then converted to SNM tokens and then used to buy resources. This method of on-boarding allows for a more unified value figure to emerge, but external trading is bound to pick up additionally, which could make some pairings less appealing than others at various times. It may be that the most common way to on-board with SONM will be credit cards, just like any other computing rental situation. That this does not negatively effect the value of the SNM tokens themselves, but rather buoys them by having tertiary metrics to measure them against, is a nice feature of the system.

According to the Business Overview,

The wider the usage of SNM tokens for computational power purchases, the higher will be the market demand for the token on exchanges, and the higher the price in comparison with the initial ICO price.

SONM Team

Sergey Ponomarev is the genesis of the global operating system concept and SONM. One of his handles is JackBekket, whose Github page lists a few cryptocurrency-related projects. One of these is an Ethereum escrow smart contract.

At the helm of the important parts of SONM is someone with the right stuff. Anton Tiurin still works as a senior software developer at Yandex, on the Cocaine project, which is used in the SONM project overall. This experience and placement in the regional software development community (so that he can tap other developers when need be) is a big plus to the project. The right people for the right job cannot be stressed enough. Tiurin is highly active on Github, where he maintains several repositories for Yandex and himself personally.

The whole of their actual development heads have more competancy than several other ICOs we’ve reviewed combined, looking over their achievements and contributions to software. Most seem to be on the innovative side, such as Max Taldykin, who is working on “provable off-chain Ethereum calculations.” If any points are deducted in terms of the software here, it will not be due to a lack of faith in the skills of the team in question.

The Verdict

This is one of the most ambitious, interesting, and promising ICOs we’ve seen in recent times. The token itself is just a vehicle; the platform is what matters in terms of the token’s value. Timing is everything, and the demand for decentralized computing services is going to exponentially increase, well, forever. As more and more millenials enter the job market or start businesses, technology will increasingly become the world’s foremost human-involved industry. As such, the market for less expensive big boy resources will expand with each graduating class. If they were trying to launch this around the time that AWS started taking on more non-enterprise customers or DigitalOcean was launched, they probably would have been too early to the game.

The profitability of the token will rely on the platform, but the platform has good odds of success. In their business overview, SONM addresses the question of how they will ensure their own solvency:

The SONM project, according to the criteria of the classical business, will operate without profit until the project reaches the planned capacity. Capital attracted in the ICO will be enough until at least 2023. […] Thus, the risks associated with the possible bankruptcy of the operating company SONM are eliminated. If the token is not fully bought out during the ICO, the project’s financial security boundary is 60% of the planned volume of placement (156 thousand tokens). In accordance with the DDM model (Dividend Discount Model) with a token price of $ 0.14, it will be 6% more than the price of the token on the ICO. The token price calculations are conducted without taking the speculative influence into account.

So long as the SONM itself is around, regardless of token value, your tokens will have utility. There may be times when you can get more value for the tokens than you could sell them for at market. But the likelihood of you ending up with completely worthless tokens by going in on this ICO is comparably much lower in the spectrum of things. For this reason we are giving the SONM project a 9 on the 0-10 scale of ICO investment safety. The good news for those that want to watch and wait is that SONM will not be the last play in this market. Those looking for a good play in distributed computing can either try this one or wait for an improved version of it to come along.

Disruption is the nature of technology. Technology disrupts nature, after all. The disruption of the cloud computing market by the introduction of fog computing alternatives will be a kingmaking, interesting time for the IT world.

Investment Details

Coinciding with the public test of the platform the SONM ICO will launch on the 15th of June. A formula was used to determine the price of SNM tokens, and the base rate being given on the site is 636 SNM per Ether invested. Bitcoin and direct deposit will also be accepted, and altcoin users can use Shapeshift to facilitate Bitcoin investments.

The ICO will run until July 15th, and based on the percentage of SNM already sold, a bonus is available for early birds. For example, those who buy before the first 10% are sold will receive a bonus of 15%, so 731.4 SNM per Ether invested.

20 million tokens will be withheld from sale and kept with the SONM Decentralized Autonomous Organization. These tokens will be used to award employees and also formulate SONM’s voting power in the DAO. SONM is looking to raise a maximum of around $63 million given the current price of Ethereum, and it will use the funds in this way:

Author:

Website: http://phm.link

P. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link