From Cloud Storage to Supercomputing: ARweave’s Evolution

Introduction

ARweave is a decentralized data storage protocol designed to optimize long-term permanent storage through its unique proof-of-access mechanism and token economic model. Recently, Arweave introduced a new product called Arweave AO, which completely changed the direction of Arweave’s development. It has evolved from a decentralized storage-centric platform to a globally distributed parallel computing system with decentralized storage as its foundation.

Project Overview

Basic Information

Website: https://arweave.org/

Twitter: https://twitter.com/ArweaveEco (with 95.5k followers)

Telegram：https://t.me/s/arweaveannouncements?before=108

Whitepaper: https://www.arweave.org/files/arweave-lightpaper.pdf

Launch Date: Token launched in 2018

Project Team

Sam Williams: Founder & CEO. Sam graduated with first-class honors in Computer Science and pursued a Ph.D. in Computer Science at the University of Kent. He has rich experience in designing and implementing distributed systems and previously developed an operating system called HydrOS. Sam’s research focuses on distributed systems and their scalability.

William Jones: Chief Technology Developer. Jones holds a Ph.D. in Computer Science from the University of Kent and has served as an assistant lecturer at the university.

India Raybould: Chief Coordinator. Responsible for coordinating the company to deliver excellent services and products.

Sebastian Campos Groth: Chief Operating Officer. Responsible for promoting Arweave’s products and building the community.

Lan Foley: Director of Business Development, attended UC Berkeley Extension.

From founder Sam’s resume, it is evident that he has been deeply involved in the development of distributed computing and operating systems, laying a strong technical foundation for the launch of AO.

Advisory Team

Jerremy Epstein: CEO of Never Stop Marketing, with 20 years of international marketing experience, focused on making innovative technologies mainstream — former advisor to IOTA and other related cryptocurrency projects.

Jesper Noehr: Co-founder of Bitbucket.

Bruno Meireles de Sousa: Advisor with 20 years of global entrepreneurial experience and skilled business leader.

Julian Lenz: Serial entrepreneur (marketing and technology companies), angel investor, cryptocurrency investor, and Techstars mentor.

Rob Johnson: Techstars mentor, Managing Director of Techstars Berlin, Co-founder of Founders Academy.

Fabian Dudek: Techstars mentor, entrepreneur, and investor; former CEO and founder of Nestpick.

Christian Eggert: Techstars mentor, technical entrepreneur, and product consultant.

AR’s advisory team differs from other blockchain projects in that the advisors’ primary professional experience is concentrated in entrepreneurship and angel investment. They play a crucial role in AR’s understanding of business trends, enabling AR to align with market hotspots quickly.

Funding

Arweave has raised approximately $27 million through three rounds of financing.

• Seed Round: In June 2018, this round was backed by Arrington XRP Capital, 1kx, Bixin Ventures, One Block Capital, and a16z crypto, totaling $8.7 million.
• Series A: In November 2019, this round was backed by 1kx, Andreessen Horowitz, Union Square Ventures, Multicoin Capital, and a16z crypto, totaling $10 million.
• Series B: In March 2020, this round was backed by Coinbase Ventures, Andreessen Horowitz, Union Square Ventures, 1kx, and a16z crypto, totaling $8.3 million.

a16z crypto, Coinbase Ventures, and Multicoin Capital are top-tier investment institutions within the crypto industry. Notably, a16z crypto participated in all three rounds of Arweave’s financing, indicating strong institutional confidence in Arweave’s future.

Development Strength

Arweave was proposed in 2018 by founder, Sam Williams. Arweave’s technology has undergone frequent iterations, with the whitepaper being revised 17 times. Key development events are outlined in the table below:

From Arweave’s technical roadmap, it is evident that the Arweave team has been able to deliver timely results through multiple upgrades. This underscores the strong capabilities of the technical development team led by Sam Williams and William Jones. This lays a solid foundation for the launch of the Arweave AO mainnet and brings Arweave’s vision of evolving from a decentralized storage project to a globally distributed parallel computer into reality.

Operating Model

Arweave achieves permanent data storage and efficient retrieval through blockweave, permaweb, and the SPoRA consensus mechanism.

Following the release of Arweave AO, its decentralized storage business has become a fundamental logic of its operations. Arweave AO is a specification messaging and data processing communication protocol built on top of Arweave. The core goal of Arweave AO is to achieve collaboration among different roles within the network through message passing, thereby creating a computationally scalable layer. Ultimately, Arweave aims to have centralized cloud-level speed, scalable computing power, and scalability within a decentralized trust environment.

The workflow of Arweave AO involves processing requests from users or other processes through message passing. When a user or another process sends a request to a particular process, the Message Unit (MU) receives and forwards the message to the Scheduling Unit (SU). The SU assigns a slot number that increments atomically to the message and ensures that the message is uploaded to Arweave. During this process, the SU may also choose to cache messages to improve system responsiveness and efficiency. Meanwhile, the MU sends requests to the Computation Unit (CU) to obtain the computation results of the message. The CU retrieves the required message from the SU or directly from Arweave, performs the necessary computations, and sends the results back to the MU. Throughout this process, the MU checks if the message needs to be pushed and, if so, sends the results to the original creator of the message, i.e., the user or another process, as shown in Figure 1–6–1.

Figure 1-6-1: Schematic Diagram of Arweave Network Operation

It is particularly important to note that the functionality of Arweave AO revolves around presenting verifiable data states, with the ultimate verifiability ensured by consensus data on Arweave. Data within Arweave AO nodes does not necessarily require computation to achieve consensus status. In theory, as long as relevant data is stored on the Arweave network, every state change must be recorded. Therefore, more accurately, data on Arweave AO can be written into the network without computation, with computation being just a part of data transformation.

In summary, with the release of Arweave AO, Arweave’s project narrative shifted from decentralized storage in Depin to a public chain. Arweave AO, by adopting the Actor model and through the collaboration of MU, SU, and CU, stores the holistic states of various processes on the Arweave mainnet, providing Arweave with infinite computational resources and transforming it into a high-performance parallel public chain.

Components of Arweave AO

1. Process: Processes are computational units within the network, typically consisting of interaction logs stored on Arweave, containing informational data items. When initializing a process, the computational environment needs to be defined, including virtual machines, schedulers, memory, and necessary extensions. The state of a process is computed by computation units meeting the demands and achieving consensus. Besides receiving messages from user wallets, processes also receive messages from other processes via messenger units. Developers of processes have the freedom to determine the credibility of these messages.
2. Message: Each interaction with a process in Arweave AO is represented by a message. Fundamentally, messages are data items compliant with the ANS-104 standard. Users and processes can send messages to other processes on the network via scheduling units. The semantics of messages lie between UDP and TCP: ensuring they are sent only once, but if a message is never forwarded by a messenger unit or the recipient never actually processes it, it is as if the message never occurred.
3. Scheduling Units (SUs): Scheduling units are responsible for assigning atomic increment slot numbers to messages sent to processes, similar to the nonce in Ethereum. After allocation, the scheduler ensures that data is uploaded to Arweave, making it permanently accessible to others. Processes can freely choose their preferred sorter, which can be decentralized, centralized, or even user-hosted.
4. Computation Units (CUs): Computation units are nodes that compute process states, with inputs derived from information provided by users and messenger units. Scheduling units only sort process messages; additional computation units are required for state computation. This creates a peer-to-peer computing market, where computation units provide services for computing process states and compete with each other. Once state computation is complete, the computation unit returns a signed output proof to the caller. Computation units may also generate and publish signed state proofs, which other nodes can choose to load.
5. Messenger Units (MUs): Messenger units are responsible for message delivery within the AO network, facilitated through a process called Cranking. When messenger units process a message within the system, they send the information to the appropriate SU for processing. The information is then delivered by the SU to the CU for computing output before being returned to the SU. This process is repeated continuously by messenger units. Users and processes can also pay fees to MUs to subscribe to a process and handle any messages generated by its scheduled interactions.

Figure 1–7–1: Schematic Diagram of Arweave AO Operation Principle

Since its launch on the testnet on February 27, 2024, there have been a total of 57.11 million transactions and 56.7 million messages left on the testnet. The number of processes in Arweave AO has reached 52,176, with 250 models. From these data points, it’s evident that the Arweave AO testnet has been very active since its inception. In just two months, there have been 57.11 million interactions, reflecting the robust computing power of Arweave AO. Currently, there have been no reports of bugs in the Arweave AO testnet.

The official plan is to launch the Arweave AO mainnet by the end of 2024.

Arweave has transformed its project narrative into that of a public chain by introducing Arweave AO. Based on the characteristics of Arweave AO, it’s evident that Arweave is now more suitable for projects in DeFi, projects sensitive to transaction fees, and those requiring frequent interactions, such as GameFi, SocialFi, and projects in the AI algorithm and model race track.

Innovation Compared to Projects on the Same Track

Since the release of Arweave AO, the project narrative of Arweave has changed from being a decentralized storage project to aspiring to become a globally distributed parallel computer, this transformation implies that Arweave is primarily functioning as a public chain now. Consequently, Arweave has shifted its track from decentralized storage to public chain, with competitors now including Ethereum, Solana, and other public chain projects.

1. High Inclusivity: Arweave AO introduces the SCP paradigm, envisioning SCP as a never-ending Turing tape machine. SCP is responsible for uploading data to the blockchain, while Arweave AO provides the functionality of a state machine. Every state change can be stored on Arweave, validated, and achieved consensus by Arweave nodes. Consequently, Arweave AO is inclusive not only to smart contracts on the Arweave network such as Warp but also to smart contracts employing mechanisms like EVM, as long as data format consistency is maintained.
2. Super Parallel Computing Capability: In Arweave AO, any number of processes can achieve parallel computation, and applications are built from any number of communication processes. Each process in Arweave AO has a holistic state, disallowing the sharing of memory between processes but allowing them to communicate through local message-passing standards. This design enables each process to fully utilize available computing resources without interference.
3. Permanent Storage: Although Ethereum, Arweave’s main competitor, has just undergone the Cancun upgrade, significantly reducing fees by introducing Bolb, Bolb is designed to store data for only one month and will be automatically deleted after that period. Arweave employs a novel blockchain-like data structure called blockweave, aiming to provide scalable and sustainable permanent on-chain data storage.
4. Infinite Computing Resources: Arweave AO’s infinite computing resources mainly manifest in its ability to support parallel execution of any number of processes, which can utilize computing resources without restrictions. Specifically, AO allows hosting these parallel processes in a decentralized environment through the Arweave network, regardless of process size or form. This design enables AO to handle large amounts of data and execute complex computational tasks while maintaining high flexibility and scalability. According to the official introduction of Arweave AO, it is capable of running large language models for AI.
5. Automated Contracts: In traditional smart contract environments (such as Ethereum, Solana, Polygon, etc.), contracts must be “awakened” to execute computations upon user transaction requests. In this environment, programs are not “active” unless interacted with by users, thus reducing the scope of applications that can be built on them. Arweave AO eliminates this limitation by allowing contracts to eliminate this limitation by allowing contracts to be awakened automatically through scheduled tasks, which can automatically wake up and execute computations at set intervals. Any user or the process itself can pay fees to a node to “subscribe” to a process, thus triggering computations at the appropriate frequency.

In conclusion, with the release of Arweave AO, Arweave has changed its project’s basic narrative. Leveraging its original decentralized storage business as the underlying layer, along with the clever design of Arweave AO, Arweave has become a public chain that boasts low fees, high-speed computing capabilities, permanent data storage, and a very friendly environment for contract deployment and status enforcement. This gives Arweave a significant advantage in the competition among public chains.

Project Model

Business Model

Since Arweave’s narrative has shifted from decentralized storage to becoming a public blockchain, while still retaining its decentralized storage functionality, the Arweave economic model consists of four roles:

• Miners: Miners in Arweave are maintainers of the network and providers of storage space. They uphold the security of the Arweave network by adhering to the SPoRA consensus mechanism. The key success factors for miners lie in having sufficient hardware storage space and maximizing the storage of data, as the probability of mining blocks increases with the amount of data stored.
• Application Developers: As Arweave’s narrative has shifted towards being a public blockchain project after the launch of Arweave AO, public blockchain projects must have a sufficient number of projects and users participating in the ecosystem. Based on the characteristics of Arweave AO, it can be concluded that Arweave is now more suitable for projects in Defi, which are sensitive to transaction costs and require frequent interactions, such as Gamefi, SocialFi, and projects in the AI algorithm and model competition track.
• Blockchain Application Users: The gas fees paid by users on the Arweave network are one of the main sources of income for Arweave.
• Storage Users: Despite its advantages in permanent storage, low storage costs, etc., Arweave still attracts some users with a genuine need to store their data. The storage fees paid by storage users are also one of the main sources of income for miners and Arweave.

From the above analysis, it can be seen that Arweave’s revenue includes:

• Gas fees are paid by application developers and storage users.
• Storage fees (net of rewards given to miners).

Token Model

According to the whitepaper: The total supply of AR is 66 million, with 55 million tokens generated in the genesis block. These 55 million tokens are allocated to the team, pre-sale, ICO, and investment institutions, while 11 million are produced through mining. The mainnet went live in June 2018, with 5.5 million tokens mined in the first year, halving every year thereafter. Starting from June 2021, the annual token output is 687,500. The current circulation of AR is 65,454,185 tokens, with a circulation rate of 99.17%.

Distribution of the 55 million tokens from the genesis block is as follows:

Token Empowerment:

According to the whitepaper, the use cases of AR in Arweave are as follows:

1. Mining Rewards: Miners on the network receive AR tokens for mining new blocks, which requires them to store and provide data. A wallet owner may be both a user and a miner.
2. Transaction Fees: Users conducting transactions on the blockchain will need to pay transaction fees in AR tokens.
3. Governance Participation: Holding AR tokens allows participation in the governance of the project.

AR’s Value Assessment

According to the whitepaper, there are no scenarios of centralized or periodic destruction of AR in the Arweave network.

A significant drawback of the Arweave project is the limited empowerment of AR. It does not incorporate a staking mechanism in its design, thereby reducing the key point of increasing the project’s value through locking AR tokens. Additionally, with the circulation rate of AR tokens at 99.17%, almost fully circulated, the majority of AR’s value increases come from the intrinsic value of the Arweave project itself.

The recent 350% increase in the AR token over the past two months is attributed to the launch of Arweave AO, transforming Arweave into a public blockchain. This increased the potential value ceiling of the Arweave project itself, while also providing a grand narrative that many current public chains lack. Consequently, the market has reassessed the valuation of Arweave.

The future trend of AR will depend more on fundamental factors of the Arweave project, such as whether the Arweave AO testnet can meet expectations, internal ecosystem development, and the launch of the Arweave AO mainnet.

Token Price Performance

According to Coingecko statistics, AR has surged over 11 times in the past year since May 2023 (from a low of $3.78 to a high of $43.54). Its primary trading venues include Binance, OKX, and HTX, among other top-tier exchanges. Market expectations include a listing on Coinbase in the second to third quarter of this year. Its current market capitalization stands at $2.48857 billion.

AR’s daily trading volume is $141 million, with a circulating market capitalization of approximately $2.488 billion, resulting in a daily turnover rate of only 5.6%, indicating a relatively low level of turnover.

Project Data Performance

Number of Contracts Signed

From Figure 3-1–1, it can be seen that the business scale of Arweave has been consistently on the rise.

Data storage costs

It can be seen that although Arweave’s revenue from data storage fees has fluctuated significantly in the past two months, it remains at historically high levels, indirectly reflecting the flourishing development of Arweave’s storage business.

Risk of the Project

1. The AR token, besides serving as Arweave’s governance token, is also used for rewarding miners and paying storage fees. Although the storage insurance fund mechanism collects storage fees equivalent to 200 years from users, subsidizing miners when mining costs exceed mining revenue to some extent achieves a locking mechanism for certain tokens. However, since Arweave’s storage tasks are still relatively limited, this design has a minor impact on the circulation of tokens. There is no design for AR token staking in token economics, which is not conducive to price appreciation.
2. Although Arweave caused a stir with the release of Arweave AO, leading to a revaluation by the market, Arweave AO is still in the testing phase. The effects of its launch on the mainnet are still unknown. Whether Arweave AO is as powerful as advertised remains uncertain at this stage.

Conclusion

Firstly, Arweave is a decentralized data storage protocol designed to optimize long-term, permanent storage through its unique proof-of-access mechanism and token economic model. As a decentralized cloud storage project, it pioneered one-time payment, permanent storage, and the SPoRA consensus mechanism, enabling Arweave to achieve low-cost permanent storage, far below other storage projects like Filecoin in the same category. Secondly, the launch of Arweave’s new product, Arweave AO, has changed the fundamental narrative of Arweave, shifting its main narrative from decentralized storage to a public chain. Arweave AO has advantages such as low fees, high-speed computing power, permanent data storage, and friendliness towards contract deployment and state implementation, giving Arweave a significant advantage in public chain competition.

Arweave’s token economy itself is too simple. Although the token is currently almost entirely in circulation, there is no good staking mechanism, resulting in high token liquidity, indirectly affecting price increases. Although Arweave also has a storage insurance fund mechanism, its impact on token locking is minimal due to the relatively few storage tasks on Arweave at present. Moreover, the testing period of Arweave AO is not long, and its specific effects remain to be seen.

In summary, the Arweave project has fundamentally changed the way data storage and access are handled through its unique technical architecture and products, giving it a certain advantage in the decentralized storage arena. With the addition of Arweave AO, if it can realize all its promises, Arweave will also have an absolute technological advantage in the public chain arena.