RNDR – index play on Metaverse?
WTF is rendering?
Video by Pixar should help
Introduction to rendering (video) | Khan Academy
It's a process of taking raw information (lighting etc.) from a 2D or 3D image/scene and running a simulation on a computer to get to the final output i.e., a photorealistic image or a movie scene. This computation is heavily used in animation, gaming, simulators, and special effects in film and TV.
Rendering the Metaverse
Metaverse will require real-time rendering of sensor data, real-world 3D objects, virtual world, avatars, holographic content, gestures, high fidelity audio, and much more ( our imagination atm might be limited). This simulated environment will require data transfer at extremely high bandwidth with very low latency.
Assuming that Metaverse will have millions of users interacting, lt will require the most significant computational requirement ever in our history. I don't think at the current stage, our computing, storage, and networking infrastructure today is there yet.
One critical technical infrastructure project that will help is Render Network; it provides P2P decentralized GPU-based rendering solutions – that will allow creators to tap into intensive computation required for their content (animation, motion graphics, etc.) beyond their doorstep at a higher speed and lower cost.
The network connects users looking to perform rendering jobs with available or idle compute power systems. This way, the network leverages idle GPUs and creates an incentive system via RNDR token, which is a utility token used to pay for computing. This coordination and incentive could lead to the formation of a solid network effect (similar to Helium) and lead to the formation of a globally distributed network just for rendering.
GPU Arbitrage
Why not just rent GPU from cloud providers like AWS? Two things first, it's an oligopoly – they dictate the pricing based on the current market power. Second, paradoxically – there is also an issue coming from hardware producers. For example, Nvidia will not allow its consumer graphics cards to be deployed with cloud providers. Instead, they force them to buy enterprise-grade hardware (e.g., RTX A6000 or Quadro RTX 8000). Lol. These can be 10x expensive, but marginal gain is 20-25% more computational power.
Thesis
The thesis for RNDR is that you are getting index-level exposure to Metaverse and playing the arb thanks to hardware providers. Additionally, through the blockchain and the ledger-based storage protocol of the network, the network stores a hash of all assets the system uses, which means creators can store and access their designs and creations. So it's an IP play as well. One short-run catalyst could be with ETH 2.0 merge idle GPU of crypto native miner could be tapped for RNDR – Noice!
Founder- Market Fit
Jules Urbach - OTOY's founder and CEO. For the last decade, OTOY has been building the content creation tools and rendering engines that has led to the creation of zillions of digital object. All the major movie studios, including Disney thousands of artists, including Beeple, Pak, and FVKRNDR, use software created by OTOY. I can't find a better founder for this job. If I were a VC – my jaw would drop to fund them!
Him delivering his vision at Breakpoint 2021
Product - Market Fit
Octane is the most extensively used 3D rendering software in the world. OTOY creates this software, so the demand side for RNDR is already strong. Users also love the product. Enough said
Render is also building a marketplace in partnership with Metaplex, which could enable one-click, frictionless flows for NFTs, 3D assets, and services made using The Render Network and improving UX experience further. Attractive optionality that can allow even better product-market fit, more demand, and consequently escape velocity.
What I don't like
The thesis is good, execution is strong, the team is strong, and you also have a token to incentivize adoption. But as an investor, what am I buying at $1.3 billion FDV amidst a geopolitical conflict?
RNDR is a utility token used to facilitate peer-to-peer transactions for rendering jobs on the network between users and node operators. There is no incentive to stake the token or have a demand sink that reduces the velocity of this token within the network. For example, if node operators earn RNDR for computation – they will most likely sell it and book revenue.
There is an indication from the project this will token utility will improve "The updated tokenonomics will introduce staking features that will create a new incentive layer and unlock a much wider range of users to contribute to the network." Once this kicks in – RNDR is a strong buy – hopefully, the valuation is also lower by that point to create even more asymmetric R/R.
