AO: The Nascent AI Blockchain

Introduction

The Actor-Oriented machine, also known as an AO computer, is governed by a set of fundamental rules and procedures called the AO protocol, which has its roots in the decentralized storage network Arweave.

Operating on top of the Arweave network, this new protocol makes sure that each network node follows a core data protocol. It allows the AO computer to operate as a super parallel computing environment in this way. Every process in the AO system uses holographic data, which is stored and recovered by the AO protocol, which builds a strong, decentralized computing platform.

Arweave's most ambitious project to date is the AO protocol, in which Arweave acts as the underlying storage layer and AO as the computing layer. The introduction of AO adds more flexibility and functionality while also empowering the entire Arweave ecosystem. What can be done with the AO protocol and how does it operate?

Key Takeaways

1. Decentralized Computing Power: AO protocol leverages Arweave for permanent storage, enabling extensive parallel processing capabilities.
2. Innovative Architecture: Comprised of Messaging Unit (MU), Scheduler Unit (SU), and Compute Unit (CU), AO facilitates verifiable computations across its network.
3. $AO Token: Introduced to incentivize participation, $AO offers a fair distribution model without pre-mining, aligning incentives for ecosystem growth.
4. AI Integration: AO's design accelerates AI capabilities, supporting complex computations and data-intensive applications within a decentralized framework.

What is AO?

A decentralized computing environment made possible by the AO protocol, in short, is a super parallel computer that permits an infinite number of processes (called smart contracts in the AO system) to operate concurrently in parallel.

The fundamental function of AO is to carry out verifiable computations of any size, which accounts for its exceptional scalability and parallel processing capacity when compared to other blockchains. The Messenger Unit (MU), Scheduler Unit (SU), and Compute Unit are the three main subcomponents that make up the AO protocol (CU). Information is received and processed by MU; scheduling and sorting of information is done by SU; computations are processed by CU. 

The AO protocol uses Arweave's on-chain storage as its permanent host to store data while it is in operation because it is a decentralized computing environment. Any number of parallel processes may operate concurrently with AO, and they communicate with one another by sending messages. AOS is a particular operating system built on top of this parallel computing approach in AO's architecture of a parallel computer. The Lua programming language, which is also used in Roblox and Minecraft and supports smart contracts, can be utilized by developers to create applications for AOS. This will lower the entry hurdle for current blockchain developers because processes on AO will eventually be interoperable with any code that compiles to the EVM (Ethereum Virtual Machine), SVM (Solana Virtual Machine), or WASM (WebAssembly) environment.

The AO protocol is still in use on the test network as of right now. However, the community has shown how excited they are about this new computing platform. With $AOCRED—the test network token—surging about 50 times at its peak price, the AO test network has sent over 211 million messages thus far.

$AO Tokenomics

On June 13, 2024, the AO protocol's native token, $AO, was introduced. A crucial component of a decentralized computing system intended to revolutionize the field of decentralized computing is the $AO token.

Notably, the AO protocol aims to create a trustless, scalable, and intelligent market for compute by emphasizing a fair launch and offering tokenomics incentives. In specifics, there won't be a pre-mine and $AO will launch fairly. The distribution model of $AO, with 21 million tokens altogether and a four-year halving, is similar to that of Bitcoin. Generally, holders of Arweave tokens will receive 36% of the $AO tokens, while assets staked on bridges, such as stETH and SOL, will receive 64%. Every five minutes, $AO tokens will be transmitted to $AR holders and stETH stakers. In February 2024, $AO tokens were distributed. During this time, $AR holders received a constant stream of $AO tokens every five minutes. Crucially, the $AO token will not be transferred until January or February 2025, or until its supply hits 15% of the total.

Currently, more than 1600 depositors have made over 120K stETH ($422M) in deposits to the AO prebridge. Whales on chains appear to be intrigued by $AO emission. Eleven whale depositors, out of all the depositors, contribute more than 2000 stETH apiece. They are growing more than 40% of the total $AO emission all together.

The AO’s Narrative in AI

A new design area for a variety of applications is created by the AO protocol, which is intended to enable trustless and collaborating compute services without practical scale limitations. Less than six months after the testnet went live, AO has established a thriving ecosystem that includes several initiatives, such as ArNS, Autonomous Finance, and PermaDAO, among others.

Interestingly, the AO protocol is built with several ground-breaking characteristics to speed up AI on its network. In accordance with Sam's post, AO can: 

• Entire LLMs (including Lambda 3 and numerous others) operating inside AO smart contracts—capable of rendering financial judgments;
• WASM64 compatibility permits up to about 18 exabytes of RAM at the protocol level.
• WeaveDrive: Provides AO processes with local hard drive access to data on Arweave. 

Practically speaking, there are a number of AI scenarios where the AO protocol can be used, such as data-heavy applications, resource-intensive autonomous agents, complex financial transactions, and machine learning activities. The AO protocols are positioned as a formidable competitor in the crypto x AI storyline due to their unique qualities. Given that its parent project Arweave ($AR) only has a fully diluted valuation of $1.8B, $AO appears to be an early and undervalued bet in this segment. This is because Render Network, the well-known AI and computing platform, sits at a $3B marketcap with a $4.2B fully diluted valuation, and IO, the recently emerged AI and DePIN platform, has a $373M marketcap with a $3.1B fully diluted valuation. This disparity implies that the AO protocol could be the next $1 billion opportunity for investors who see its promise in the merger of decentralized computation and crypto x AI.

Conclusion

The AO protocol represents a pioneering advancement in decentralized computing, leveraging Arweave's robust storage network to enable super parallel processing through its Actor-Oriented machine. With its innovative design, AO promises scalability, interoperability, and enhanced functionality for developers and users alike. 

As it continues to evolve on the test network, AO is poised to revolutionize how computations are conducted in decentralized environments, paving the way for new applications across various sectors.

FAQ

What is the AO protocol? The AO protocol is a decentralized computing environment built on Arweave's network, designed to support infinite parallel processes known as smart contracts. It integrates messaging, scheduling, and computation units to facilitate complex and scalable operations securely.

How does AO compare to other blockchain technologies? AO distinguishes itself with its super parallel computing capabilities and support for a wide range of programming languages, including Lua. Unlike traditional blockchains, AO operates on Arweave's permanent storage, enhancing reliability and accessibility.

What are $AO tokenomics? $AO is the native token of the AO protocol, distributed through a fair launch model with no pre-mine. It features a total supply of 21 million tokens, with distribution prioritizing Arweave token holders and assets staked on compatible bridges like stETH and SOL.