🤔 What is Golem Network?
Golem network is a decentralized marketplace for computing resources.
It follows a similar model, like Airbnb where providers loan out their computer’s spare computational resources to those in need.
💡 What role does GLM token play ?
GLM is an ERC-20 (Ethereum-based) token. It is the basic utility token for Golem network used to transfer value.
GLM is used as currency in Golem market. All the transactions in Golem ecosystem are conducted in GLM token.
GNT to GLM migration
GNT was the native token at time of launch of Golem network in 2016. ERC-20 standard was not well established back then, hence GNT was not built as ERC-20 token. However, Golem team has decided to migrate GNT token to ERC-20 token ie GLM. This will enable Golem to leverage all features of Etherium like:
- Layer 2 solutions
- Defi, etc.
📝 Origin of Enjin
Aleksandra Skrzypczak, Julian Zawistowski and Piotr Janiuk co founded Golem in 2016 in Switzerland.
The team raised 820,000 ETH (roughly $8.6 million at the time) by selling 820M GNT(82% of total supply) in December 2016.
They launched Golem network on Etherium mainnet on 10 April, 2018.
Founders of Golem
- Aleksandra Skrzypczak: Originally from Poland. She earned Bachelor’s degree in informatics and a Master’s degree in mathematics from University of Warsaw. She joined Red Ocean in 2013 as Software engineer & Deployment Specialist where she developed applications for government institutions.
- Julian Zawistowski: He earned Masters in International Politics and Economics from the Warsaw School of Economics in 2004. He has been Vice President/Chairman at the IBS- Institute for Structural Research. He presented the idea for Golem in Devcon 2014.
- Piotr Janiuk: He is MSc in mathematics and computer science from University of Warsaw. He has worked as software developer at Lightcraft and Imapp before confounding Golem in 2016.
😌 What problems does it solve ?
- Everyday routine tasks do not use more than 10% of CPU power. Rest of the CPU computation resources sit idle. Providers can loan out these idle computing resources in Golem market and earn a passive side income.
- Cloud market is dominated by just a handful of players:
Golem will increase the number of buyers & sellers in the marketplace, making it more efficient.
- Prices will come down because:
- There will be no middle-man like Amazon AWS etc
- Using spare computational resources from idle computers is much more efficient than running large data centers with may not run at peak capacity all the time.
- Providing spare computation resources to Golem is a better way to earn side income than mining because:
- CPU is doing useful work, instead of solving random puzzles.
- User is compensated in case his CPU is being used for a computational task.
- Golem network will be used in:
- CGI Rendering
- Data Analysis / Big Data etc
🤖 How does it work ?
GLM is an ERC-20 token. Golem network is built on Etherium smart contracts. It creates a decentralized marketplace where sellers rent out computational resources to buyers in exchange for GLM tokens.
Various players in Golem marketplace are:
- Requesters: Represent demand side of Golem market. They buy computation resources from Golem marketplace.
- Providers: Represent supply side of Golem market. They provide computation resources to requestors and receive GLM tokens in exchange for their services.
- Golem network comprises of providers running Golem network protocol. Providers list their prices and computational resources in Golem marketplace. Requestors in need of computation resources buy these resources from Golem marketplace.
- Depending on the complexity of the task, Golem network breaks it into subtasks and distributes to providers using IPFS(Inter planetary file system).
- All the providers compute their assigned subtask and submit results to Golem network. Golem protocol stitches results from all the provider to form completed task.
- Requestor receives completed task using IPFS and pay GLM tokens to providers using Etherium smart contracts.
⚙️ Working Demo
- Tutorial for installing Golem on windows and renting out computation resources:
- Tutorial for using Golem network to render Blender files:
🏛️ Governance model
Golem team maintains and develops Golem protocol. The project’s governance lacks decentralization. The team can be a single point of failure in terms of government crackdown, changing protocol like increasing the token max supply, differences among founders etc.
Crypto projects competing with Golem are:
Centralized cloud solutions like Google and Amazon AWS have the option to join Golem network and earn GLM tokens instead of competing.
🤑 How much money does Golem project have for future development ?
- The Golem team raised 820,000 ETH (roughly $8.6 million at the time) by selling 820M GNT(82% of total supply) in December 2016. ETH has appreciated quite a lot since then.
- 12%(120 million) of GLM tokens are held with Golem team to fund future development.
- However, Golem does not have any profit model: ongoing source of income.
- Rising demand: Technologies like CGI Rendering, ML/AI, Data Analysis / Big Data etc are on the rise which require huge computing resources. Golem project has the potential to scale and fulfill market demand for these computation resources.
- Competition: Golem is an old project which has undergone several bear markets. It was first in the market and none of its competitors has made as much progress.
- Network effects: A large number of computation resources listed in Golem market will attract buyers. Large number of buyers looking to buy computation resources in Golem marketplace will attract more sellers. This positive feedback loop has potential to cause exponential growth.
😨 Risks and challenges
- Golem is built on Etherium smart contract. Etherium has limitations in terms of block space and throughput. This limits adoption of Golem project which requires micro-transactions.
- Golem computations take place inside a sandbox on provider’s computer. Still, there is a possibility that provider’s computer gets compromised because of running malicious code.
- A malicious requester can buy computation resources in Golem marketplace and use them to launch cyberattacks like DDOS.
- Golem project was launched in 2016. However, it has made little progress in terms:
- Integrating with services and applications.
- Market adoption.
- Golem leverages existing projects like Etherium and Filecoin. This exposes Golem to external risks outside its control.
- Existing centralized cloud solutions like Google and Amazon AWS provide 1 stop cloud solution:
- CDN etc
However, Golem only provides cloud computing option to its users.
- Following handicaps may limit Golem’s speed(as compared to centralized cloud solution like Google cloud):
- It has to record every transaction on blockchain.
- Break computation problem into small subtasks, distribute them to nodes and compile results of all the subtasks before submitting the final result to the requester.
- Golem team holds a sizable amount of funds. However, they do not have a profit model that generates revenue. Golem is a long-term project whose growth can be affected by lack of funds.
- The project’s governance lacks decentralization. Golem team maintains and updates Golem code base.
Golem project has fix max supply of 1 billion GLM tokens. These tokens were distributed in 2016 as follows:
- Public sale: 82%
- Golem fund for future development: 12%
- Golem team: 6%
Golem supply schedule
GLM token does not have any inflation because all of its fixed max supply is already in circulation. Hence, its inflation is 0.
Token’s price increases due to demand pressure.
Demand pressure on GLM token will come from:
- Requestors: They will acquire GLM tokens to pay for computation resources.
- Speculators: They will buy GLM tokens in anticipation of price appreciation and selling at a higher price.
Supply pressure on a token decreases its price.
Supply pressure on GLM tokens will come from:
- Early investors: They have made a generous profit and will sell part of their holdings to lock in their gains.
- Providers: They are paid GLM tokens for providing their computation resources. They will also sell part of their earnings to cover their operational costs.
Cloud computing is a multibillion dollar industry growing at an exponential rate:
GLM token has tremendous room to grow even if Golem network is able to capture a small share of overall market.
🧐 Indicators to watch out for
- Google trends show searches related to” Cloud computing” is increasing:
- Their YouTube channel is growing:
- Their Twitter following is increasing:
- Growth of providers:
👋 Final remarks
Golem project has excellent tokenomics:
- All the tokens are in circulation.
- Inflation is zero.
However, I would rather wait till:
- They make more partnerships.
- There is a clear trend showing growth in number of providers and requesters.
- Project plans to decentralize governance in the future.
I expect future projects will use Filecoin, Golem network like building blocks to build a decentralized solution like Google Cloud and Amazon AWS, which provides all the solutions like storage, computing resources etc on a single platform, just like defi projects building on stablecoins, synthetic, DEXes etc
😊 Do further research
You can continue your research by using following resources: