I’d like to preface this by stating that this is in no means financial advice, nor is it meant to criticize the decentralized application in discussion.
The following article is a collection of subjective personal opinions & objective observations of public information (of which have been objectively verified by the EMC Foundation), in regards to the Accumulator Neurons SNS Voting Criteria, which can be found in the resources below.
Accumulator Neuron SNS Voting Criteria
SNS Proposal Discussion
Protocol Documentation Relevant to Analysis
Edge Matrix Computing (EMC) is a Layer 2 blockchain that aims to provide a decentralized marketplace for computational power, specifically with a focus on the training & utilization of Language Learning Models & other AI applications.
Main Net dApp
Is the dApp live and operational? Has the development team demonstrated technical competence specifically regarding the Internet Computer Protocol?
The EMC Protocol can not be considered a traditional dApp, but instead a Layer 2 Blockchain built on-top of the Internet Computer Protocol.
With this being said, the EMC Protocol currently has a functioning testnet, with over 1300+ computing nodes, and a handful of applications running. It appears as though the main net is pending the generation of an SNS DAO, as it will be utilized as the governance tool for the protocol.
In regards to the teams technical capabilities revolving around the Internet Computer, the team has demonstrated a few conflicting misunderstandings in regards to knowledge of the protocol within public discussions. Most notably, it has been cited that the SNS is required now, “because the token is ICRC-1 protocol and can only be generated through SNS”.
With this being said, the white paper shows a different perspective of the EMC Foundations technical understanding - offering an in-depth view of how the Internet Computer is leveraged within the EMC Protocol.
With these facts laid out, miscommunications can be plausibly attributed to a language barrier between the EMC Foundation, and parties engaging in dialogue (this statement is not intended to carry negative weight, as some have perceived it in previous dialogues).
The EMC Foundation has pledged themselves to a thorough understanding of the Internet Computer, and have insisted that they’re actively learning about the Internet Computer, and in the process of on-boarding the developers of their team to its unique functionalities.
Is the dApp fully on-chain, meaning both the front end and back end of the protocol are hosted in Canister smart contracts?
The EMC Protocol is not a typical dApp, and therefor results in a unique architecture. Notably, EMC is a layer 2 blockchain that leverages the Internet Computers infrastructure.
As such the blockchain itself operates independently of the Internet Computer, while leveraging Canister Smart Contracts to manage the Nodes, Computing Power Marketplace, dApp Store, Agent Management, and to record transaction history.
With this being said, the components that do leverage the Internet Computer, are currently in Canisters being utilized within the testnet, with the exception of the dApp store & Computing Power Marketplace, as they’re not yet complete.
Does the dApp rely on third-party dependencies, such as off-chain providers, fee-gated APIs, or other mechanisms that rely on intermediaries? If so, is there a plan to transfer these dependencies to Canisters and the SNS? Additionally, is there a plan to fund these mechanisms independently, without solely relying on the SNS Treasury?
From my understanding of the protocol, the only external dependency faced, would be the Node Providers & Computing Power of the Network.
With this being said, this is a dependency that every blockchain faces, and is something that is inherently decentralized in nature - as anyone can become supply computing power, or operate a node for the network, as long as they fulfill the hardware and $EMC requirements.
Can the dApp, in its current form, be considered a complete product that fulfills its intended purpose? If the development team were to suddenly stop building, would the dApp still be able to function and achieve its objectives?
Presently, the EMC Protocol does not fulfill its intended use - being the provision of a decentralized computing power marketplace & dApp store.
However, this may be attributed to the fact that the Protocol is premature, and is still under active development, before being proposed to the SNS.
In accordance to the roadmap, governance occurs after the creation of a computational power marketplace. As such, by the time the SNS Sale occurs, I would have to assume the Computing Power Marketplace, and in turn the entirety of the Protocol, will be available.
This could result in one of the more complete Protocols we’ve seen brought to SNS to date. Upon launch of main net (assuming it aligns with governance), in accordance to the roadmap, it seems as though there will be very minimal team intervention - as the entirety of the product will be completed to their vision.
However, it should be noted this is rather subjective, depending on the timeframe to complete pending functionalities, in regards to the timeframe of the SNS Sales’ occurrence.
If the marketplace & dApp store do not come before the sale, I would have to say no, it could not fulfill its objective - however if it did, the inverse would apply.
Editing Note: Upon review by the EMC Protocol, it has been stated that it is intended for the Computing Power Marketplace & dApp store to come post-SNS.
Is the protocol open source?
While it is stated EMC is an open source protocol, currently, only the frontend of the protocol can be located within the Github, which can be found below;
Has the team provided a clear white paper that details the protocol comprehensively? Additionally, is there technical documentation available that explains the underlying mechanisms, functionalities, and concepts of the protocol?
In my opinion, the EMC Foundation has provided a transparent white paper for the most part, clearly depicting the void to be filled, and the necessity of the application - while simultaneously addressing the inner workings of the protocol.
The whitepaper offers an extensive understanding of the underlying components of the protocol, specifically; State Machines, Validator Nodes, Smart Router Nodes, Computing Nodes, and other functionalities.
Additionally, the EMC Github offers extensive documentation regarding the technical side of the protocol - seemingly aiming to offer a convenient on-boarding experience for alternative independent contributors.
Is there an insightful overview of the tokenomics provided? Is token allocation responsible & proportionate?
Yes, the EMC Foundation does provide extensive insight into the tokenomics of $EMC, utilizing charts, tables, and equations to depict token supplies, allocations and potential inflation & deflation.
With this being said, something left unclear is the allocation groupings. It is currently unclear as to whether the EMC Foundation has a controlling interest of the treasury, similar to scenarios we’ve seen with DFINITY.
Additionally, other allocation groupings lack definition - leaving many of them up for interpretation of the reader.
Currently, the token allocation of $EMC is depicted as follows;
Node Rewards - 20%
Transaction Rewards - 18%
Treasury - 15%
Team - 15%
Developer Rewards - 12%
Strategic Offering - 10%
Seed / Public Sale - 5%
Advisors / Early Supporters - 5%
With the token allocation laid out, we can break these allocations down into three groups, being “Protocol”, “Insider” & “Community”.
However, it should be noted that these groupings may be inaccurate, as allocation groupings lack definition within the paper. Primarily, I suspect that the “community” allocation could be drastically lower than portrayed - as “Strategic Offering” can imply a number of different meanings.
“Protocol” = 65% of Token Allocation
Node Rewards - 20%
Transaction Rewards - 18%
Treasury - 15%
Developer Rewards - 12%
“Insider” = 20% of Token Allocation
Team - 15%
Advisors / Early Supporters - 5%
“Community” = 15% of Token Allocation
Seed & Public Sale - 5%
Strategic Offering - 10%
This depicts that the “Community Allocation” is 5% less than the “Insider Allocation”, while the Purchaseable Allocation (being the Seed & Public Sale Allocation) is 3x less than what is assigned to the Team (Team Allocation).
With this being said, I don’t believe the token allocation, if left as present, represents a fair & proportionate decentralization sale & token allocation.
Can the team clearly articulate why the SNS is the ideal decentralization solution for their application at this time?
There have been conflicting reports from the EMC Foundation, when it comes to articulating why an SNS is best fit for their protocol.
However, the most compelling reasoning, has been the fact that they’d like to use the SNS DAO as their governance platform, and therefor would need access to sit upon Genesis of EMC Main net.
While I don’t disagree with the sentiment to utilize SNS as the governance framework for the protocol, I would like to note that this is not the only way to create a DAO or black-holed canisters. If the community feels as though it is premature to launch an SNS, I would reccomend that the EMC Foundation explores alternative DAO solutions, to eventually migrate to the SNS DAO.
Is the team publicly known within the ecosystem? Do they have a visible presence in the crypto community or relevant industry events?
While EMC’s Twitter & Social Media channels have gained traction over the recent months, all are very new - with the majority of accounts & branding being created within the last three months.
Created Twitter account March 2023
Created Youtube account April 2023
Created Github April 2023
Created Discord April 2023
Created Forum Account April 2023
As such, prior to EMC’s initial debut & acknowledgement by members of the DFINITY Foundation, the EMC foundation & protocol has not visibly played an active role within the ICP ecosystem.
Furthermore, of the publicly available team (5) members, only two reference blockchain experience within their CVs, being Alexis Zed (NFT Market) & Ping (Cosmos Hub Contributor).
Is the team’s dynamic transparent? Do team members openly communicate and collaborate with the community?
It is stated that the EMC Foundation has 30 active contributors, however of these 30 contributors, only 5 are available to be found within their website, being; Alexis, Alex, Shawn, Ping, and Allen.
However, this has been attributed to what is seemingly a reasonably legitimate fear of state repercussions for engaging with blockchain technology, as many of the EMC Foundation allegedly operates from within China.
Furthermore, given the teams rather recent entrance to the ecosystem there is not a vast history of community collaboration or communication, however the team has notably been making an effort to engage through the Mora app actively.
What is the team’s track record and experience in the relevant field?
The team has proclaimed extensive backgrounds, with public facing information being found below;
- Co-founder & CEO
- Master of Computational Mathematics , MSU
- More than 7 years quantitative trading experience in US stocks
- Founder of DGame NFT marketplace
- Co-Founder & Global Partner Market Development
- MBA of Macquarie University
- More than 20 years of Global Market development
- Formerly GM of http://improbable.io/ Greater China
- Formerly GM of Amazon Web Service, Global Account
- Formerly MD & GM of Fosun South East Asia
- Technical Partner & CTO
- More than 10 years experience in Mobile Internet
- Experienced and results-driven Contract Engineer with 15 years of experience in P2P communication
- Responsible for the product development of Telecom’s billion-level concurrent large-scale commercial Applications
- Blockchain Architect
- Founder of Ping.pub
- Early developer of Cosmos hub
- Award of COSMOS GOS hackathon and space race hackathon
- Wanxiang Blockchain Hackathon runner-up
- Product & Technical Advisor
- Founder & CEO of UCCVR Early Stage VC fund and VooX
- Formerly Head of Unity Greater China
- Formerly Head of Microsoft’s Greater China Server business (included the current Azure Cloud business)
With this being said, I have only been able to find accounts linked to 3 of the 5 public facing members of the EMC Foundation. Additionally, it can also be noted there is no reference to KSANA or EMC within these profiles, however, this may be attributed to regional laws & restrictions.
Proof of Valuation
Has the team shown comparable raises within the industry sector?
No, the EMC Foundation has not shown comparable raises, any other reference in regards to the EMC Protocols Valuation.
Does the valuation accurately address the current and potential market shares?
While the EMC Foundation does touch on the potential of the AI Industry within their whitepaper, the team has not provided any form of indication regarding the valuation, or the potential market share of the product.
Has the team provided transparency regarding the valuation? Is the valuation method disclosed, and is the math behind it available for review?
No, the EMC Foundation has not made any of the information regarding the valuation of the EMC Protocol public or transparent. There is currently no reference to the valuation of the protocol within any documentation.
Is a security audit necessary for the application?
I personally believe that a security audit would be beneficial and necessary to this protocol.
As it is a blockchain, managing computing power, it has the potential to open attack vectors on the participants on its network, or itself.
As such, I would recommend some degree of code review.
Has the code received at least some degree of review? Are there feasible in-ecosystem alternatives for conducting a security audit? Is there transparency and disclosure regarding the security measures taken?
With information currently publicly available, there are no indications that the EMC Protocol has received any degree of code review.
In accordance to the original SNS criteria, a few potential solutions to achieving some degree of code review, include exploring the utilization of @infu / Anvil’s Blast Services, or crowdfunding specifically for the purpose of a security audit.
Neuron Fund Allocation
Is the Neuron Fund utilized? If so, what percentage of the sale is the Neuron Fund?
The EMC Foundation proposes that the Neuron Fund contributes 660,000 ICP to the SNS Sale. This equates to ~66% of the sale, assuming it meets its minimum threshold, while representing 33% of the sale, assuming it meets its maximum threshold.
What is the size of the contribution in respect to the size of the Neuron Fund?
Given the Neuron Fund currently consist of 5M Maturity (assuming a 1:1 ICP-Maturity ratio for simplicity), the EMC Foundation has requested that the Neuron Fund contributes ~13% of its resources.
In conclusion, while I value the protocol that the EMC Foundation has laid out, and support their application, the Accumulator Neuron will be voting to “reject to postpone” for the following reasons, as detailed above;
The protocol is not complete; many of the core components are yet to be built, and are reliant upon the EMC Foundation if they’re too be seen through
While the frontend of the protocol is opensource, the backend can not be found within the repository provided
The current distribution of token allocation is not fair or proportionate (in my opinion) to SNS contributors. The team sells ~5% of the protocol for 1-2M ICP, while personally retaining ~15%
Information regarding the valuation has not been provided - 2M ICP for 5% puts the valuation of the protocol 40M ICP / ~170m USD
Lack of security audit within a blockchain protocol leaves potential attack vectors & vulnerabilities unaddressed
Neuron Fund contribution exceeds 60% of sale if minimum threshold is met, while exceeding 30% if the maximum threshold is met. Additionally, requested contributions exceed 10% of total Neuron Fund Maturity.
Additionally, given the lack of internal transparency within the EMC Foundation (I do understand that this is out of a genuine fear of state repercussions), it may help absolve public concerns revolving around the EMC Foundation, if DFINITY were to publish their own due diligence.
It has been stated DFINITY has done due diligence, as members of the foundation have been personally vouching for the EMC Protocol - therefor I don’t think it is unreasonable to ask for insight on how these conclusions were deduced.
I’d again like to reiterate that I see value in a protocol of this nature, and would like to see it flourish on the Internet Computer, however I feel as though it is currently premature to go to the SNS as-is.
Written by accumulating.icp June 21st
Submit to EMC Foundation for review June 22nd
Post Publishing Foot-Note
The EMC Foundation has recently released new information in light of due diligence, which can be found below;