Arweave (AR / AO): How this project intends to shake up the online storage model

What you need to know 🐳

Arweave is a decentralised storage project that, thanks to an ingenious endowment system, offers unique value on the market by providing permanent storage for a single payment.

The project consists of its network, the Blockweave, and the Permaweb, a layer of permanent decentralised applications on top of Arweave.

As proof of its adoption, nearly a billion transactions were recorded in the project's first five years. Today, that's roughly what the project records every month.

In parallel, the team recently launched the token for a very ambitious side project, AO Computer, a decentralised computer with so-called infinite computing power.

General presentation 🧬

Data is at the heart of the Web as we know it today.

However, the storage of this data is highly centralised on a handful of players such as Amazon or Google, and this configuration entails certain risks.

• An exposure to partial or total destruction of data stored in data centres, as was the case during a fire in an OVH centre in 2021.
• A risk of censorship or restriction of access to information.
• The attempted hacking of data of which the main centralised players are regularly the target.

There is also what is known as digital oblivion. Indeed, contrary to common thinking, data stored on the Internet disappears over time for a variety of reasons (broken links, infrastructure obsolescence...).

Arweave is positioning itself here with a unique value proposition on the market, offering storage space for eternity, in a decentralised and secure way on the blockchain, and doing so by only paying once.

its architecture is divided as follows:

Blockweave: with a similar operation to a classic blockchain, Blockweave is the network of distributed nodes responsible for storing and replicating all the data uploaded to Arweave. This is therefore where the history of transactions and files is concentrated.

The Blockweave mechanism is based on a variant of the classic Proof of Work called the Proof of Access (PoA).

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To validate transactions on the Arweave network, each computer on the network must contain the previous block as well as a randomly chosen older block - the "recall block".

This mechanism encourages validators to keep as much data locally as possible in order to increase their chances of receiving rewards. The distribution of rewards also depends on the hash power of network users, storage capacity and internet connection speed.

The second layer is the Permaweb, where the Arweave ecosystem is based. Here, all information is accessible on a decentralised basis without censorship or unavailability (404 errors). By analogy, we could compare the Permaweb to the HTTP protocol, being a layer of TCP/IP, which would then be Blockweave.

The Permaweb is made possible thanks to "gateways", specific nodes allowing transactions to be indexed in an easy-to-access database.

More than 1,800 dApps built on Arweave can be found there, such as ArNS, a protocol for associating content on Arweave with easily accessible domain names, in the manner of DNS.

In terms of adoption, Arweave is used by many infrastructure projects such as Solana, Avalanche or Near Protocol, which access a permanent storage space, in particular to store their onchain transactions.

In addition, the number of transactions on Arweave has risen from 333 million in 2022 to more than 1.7 billion the following year.

"And today, we're close to a billion transactions a month, which shows very strong growth in terms of usage and adoption," explained one of the co-founders, Sam Williams, in an interview at the end of June 2024.

More recently, in response to the explosion in AI and machine learning, the Arweave team has been developing AO Computer, a decentralised computer, in parallel.

This computer is designed to train AI models by performing simultaneous computations, known as hyper-parallel computations.

Today, it would be too expensive to train an onchain AI model.

The aim of AO Computer is to use the already extensive existing data infrastructure on Arweave to optimise the training of machine learning and AI models.

Financing 💰

There have been several fundraisings at Arweave, amounting to more than $23 million, against AR tokens.

• A pre-seed in October 2017 with a fundraising of $8.7 million.
• A seed a few months later in December 2017 of $5 million.
• An ICO in June 2018 of $1.6 million at a price of $0.132 per token (currently $22.5).
• A strategic fundraising in February 2020 of $8.3 million. This latest round includes Coinbase Ventures, a16z and Multicoin Capital.

For AO Computer, Arweave's decentralised organisation (DAO) received a record investment of $260 million in just 4 days in June 2024.

Team and Community 👾

The project first emerged in 2017 as Archain, renamed the following year to Arweave.

It was co-founded by two computer science PhD students at the University of Kent (UK) - William Jones, specialising in distributed and decentralised systems, and Sam Williams in neural network computing.

The duo chose to abandon their PhDs to set up Minimum Spanning Technologies, the company responsible for developing the project.

William Jones would eventually leave the venture to complete his PhD a year after the creation of Arweave.

As for the community, the project's Twitter account "ArweaveEco" has nearly 100,000 followers, and more than 16,000 members on its main Discord server. There are others like Arweave Miners with more than 6,000 members.

AO has 10,000 members on Discord and nearly 31,000 followers after just a few weeks of activity.

AR and AO tokens 🪙

The AR token has two main functions:

• Storage space. To access storage space on Arweave, a single AR transaction is required for perpetual access to this data. This differs from traditional competitors that require a monthly subscription.
• Pay transaction fees. When a user performs a transaction on the network, they have to pay AR fees. However, these fees remain fairly low thanks to a network speed of 5,000 transactions per second.

With regard to the project's tokenomics, the maximum AR offering is 66 million, of which 55 million tokens have been initially distributed. The remaining 11 million are dedicated to mining rewards.

As far as cost allocation is concerned, a portion of the fee is used to pay miners progressively over a period of at least 200 years.

The Arweave protocol calculates the cost of storage based on an annual reduction in the price per gigabyte (a scenario of -0.5% per year).

This implies that if the actual reduction is higher (and it is today, with a reduction of 20-30% per year rather than 0.5%), then the storage period is extended.

The portion described represents only about 10% of the fee. The remaining 90% goes into what is known as a pool endowment.

This cash, enabling returns to be generated with the capital invested, will be held until file storage validation is no longer profitable beyond a period of 200 years or more.

In that case, the endowment pool will be used to make up the difference to incentivise miners to continue securing the network.

As for the AO token, it was launched fully in fair launch on 14 June, with a retrospective mint dated 27 February 2024. The token has a maximum offer of 21 million tokens and a halving that decreases every 4 years.

These tokens have been distributed to AR holders at 36% and 64% on bridges for assets such as stETH or SOL, for example.

The AO tokens will remain locked until around 15% of the supply has been mined (this should happen around February 2025).

Status of Arweave's decentralisation ⛓️

Arweave claims to be comparable to the Bitcoin network, but for data. But what is it really like?

Although Arweave was founded with centralised management, the project has been based on the model of a decentralised autonomous organisation (DAO) since January 2020, with a classic voting and governance mechanism.

Arweave only has around 210 active storage nodes, unlike the leader in its category, Filecoin, which has more than 2,500.

However, it should be noted that on a solution like Filecoin, data is stored on a few specific dedicated nodes.

On Arweave, each node is incentivised to store the data present on the network, which reinforces decentralisation, data security as well as data availability.

Competitors ⚔️

Arweave's competitors include Filecoin, the leader in decentralised storage with a capitalisation approaching $3.5 billion (compared with $642 million for Arweave, second in its category).

Arweave uses a "pay-once, store-forever" model where users pay a one-off fee to store their data permanently on the network.

As for Filecoin and other competitors such as Sia or Storj, this is a model where users pay recurring fees to store their data on a decentralised network, a model that can be up to 1,000 times cheaper than with a traditional solution such as Google Drive.

Here's a more detailed comparison of Arweave's competitors:

Risks and limitations 😬

Although every node on the network is encouraged to participate in storing the data present on the network, there are currently only just over 200 active nodes.

This is still relatively small for a project of this scale.

To contrast this remark, it should be noted that the provenance of the nodes is shared between different countries around the world.

As far as AO is concerned, the project is still very early days, but it would seem that the team may be being over-optimistic in announcing infinite computing power. AO Computer's ability to train large-scale AI models remains to be proven.

Roadmap 🗺️

Sam Williams' intention is to make only minor changes to Arweave, and concentrate more on AO Computer.

With this new project, Sam Williams intends to compete with the biggest projects in the ecosystem: "If we can communicate AO Computer properly, we have a chance of competing with projects like Ethereum as a smart contract machine." he said in an interview.

However, he says he wants to remain cautious and focus first on security before the mainnet is released.

Where to buy the AR token? 🛒

The AR token is available on the vast majority of exchange platforms, including Binance, OKX and Cryptocom, which are regulated in Europe.

The Big Whale's opinion 🐳

Arweave is one of those innovative projects where blockchain is used to its full potential, enabling the security, confidentiality and immutability of stored data to be guaranteed.

It is still early to understand the consequences of digital oblivion on the internet, but it is estimated that more than 90% of existing links will have disappeared within 20 years, a problem that Arweave is trying to solve.

Arweave's value proposition could become increasingly relevant as time goes on and storage costs fall.

We will be paying particular attention to the development of AO Computer, which intends to revolutionise the way in which on-chain artificial intelligence models can be trained.

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