Web3 Insights
Arweave – Reinventing Data Storage

Written by EmergentX Insights team (insights@emergentx.io)

April 8, 2022 | 3 Min

HIGHLIGHTS

• Arweave is a decentralized storage network (DSN) and management protocol that enables users to store data permanently, securely and with a single fee. The protocol connects users with extra hard drive space with those who need to store data long-term.
• AR is Arweave’s ecosystem utility token which is used to incentivize miners for validating transactions on the network and to pay network transaction fees.
• Future project-specific drivers include partnerships for layer 0 overlap with key ecosystems, expanding DSN use cases (e.g. NFTs) and further listings and wallet support. Key industry driver is increasing decentralized storage network (DSN) demand.

PROFILE

The Arweave network connects users with extra storage space with those who require long-term data storage. The protocol provides users with unrivalled data permanence and protection, and financial incentives for those who store data, all without the involvement of an intermediary.

MOTTO

Pay once, store forever.
Store data, permanently.
A collectively owned hard drive that never forgets

SELECTED PARTNERS

Solana, Polygon, ColdStack

KEY INVESTORS

Andreessen Horowitz, Union Square Ventures, Coinbase Ventures, Muliticoin Capital

MANAGEMENT TEAM

Sam Williams
CEO & Co-Founder
Jesper Noehr
CTO

CORE TECHNOLOGY

Arweave is based on four fundamental technologies that work together to provide low-cost, high-throughput, long-term storage on a new blockchain:

BLOCKWEAVE
The core value proposition of Arweave’s permaweb is “blockweave”. Blockweave is a variant of blockchain technology that links each block to both the previous block, and a random older block.
Arweave users maintain a block hash list and a wallet list to enable nodes to participate in the network.

PROOF OF ACCESS
Arweave utilizes both Proof of Work and Proof of Access consensus mechanisms. Succinct Proofs of Random Access (SPoRA) lessens network energy consumption and incentivizes miners

WILDFIRE
Wildfire solves the problem of decentralized data sharing by making the rapid fulfilment of network data requests as an essential participation requirement.

BLOCKSHADOWS
Blockshadow enables high transaction throughput, which allows rapid block consensus and significantly reduces data wastage.

PERMAWEB
The permaweb sits on top of the basic Arweave data storage layer. The permaweb is a collection of interconnected documents and apps, similar to the internet, except that all data is permanent.

VALUE PROPOSITIONS

Arweave resolves these pain points of current data storage systems through its technology

Overcoming Storage Restrictions

• Existing pain point: Most blockchains have hefty transaction fees and slow transaction speeds due to data storage issues.
• Arweave integrates third-party blockchains to offer a decentralized, low-cost, scalable data storage platform.

Censorship Resistance

• Existing pain point: Centralized platforms store data in centralized servers which are exposed to hacking, copying, and loss.
• Arweave utilizes a distributed data storage architecture, with benefits, including increased security, privacy protection, and the elimination of single points of failure.

Greener Alternative

• Existing pain point: Mining is not environmentally friendly for some blockchains.
• Arweave represents a greener way to pay for the mining of tokens, and in the payment model

BUSINESS MODEL

AR is the native token of the Arweave ecosystem and is required for user interactions with Arweave permaweb applications. Users who wish to store data on the Arweave blockchain must purchase AR tokens as payment. The tokens are pooled and distributed to the network over time.

Profit Sharing Communities (PSCs) give creators, contributors, and consumers more authority, for example, members of PSCs can decide to mint Profit-Sharing Tokens (PSTs) as a reward for individuals who help the community.

Transactions on the Arweave network:
1. Users pay fees in exchange for mining benefits.
2. This pool will cover future payouts for miners over the longer term.

GLOBAL DATA STORAGE INDUSTRY

Arweave is a decentralized data storage protocol set out to disrupt the global data storage industry, with a decentralized cloud storage system powered by Ardrive.

Industry drivers: The global data storage industry is poised for significant growth, driven by increasing demand for decentralized data storage platforms, expanding data storage use cases and more cost-effective solutions.

SWOT ANALYSIS

STRENGTHS

Fully integrated data storage blockchain powered by blockweave;
High transaction speed with TPS up to 5,000;
Decentralized, censorship resistant and permanent data storage protocol.

OPPORTUNITIES

Strong partnerships: Arweave’s partnership with Solana increases data storage use cases and user reach;
Increasing data storage demand to be safeguarded on a secure platform;
Lack of trust for centralized data storage platforms.

WEAKNESSES

Less user traction than centralized storage peers given its higher price points and relatively niche community;
More complex to use;
Risk of 51% attack: Arweave’s consensus parameters and number of nodes make it relatively susceptible.

THREATS

Competition from cloud storage incumbents may lead to price wars;
Launch of similar projects in the nascent market;
Hacking risk

DATA STORAGE PEERS

Decentralized 

Filecoin, Sia, IPFS, BitTorrent File System (BTFS), Storj.

Centralized

AWS, Dropbox, Google Drive, Microsoft OneDrive, iCloud.

FUTURE DRIVERS

Layer-0 and cross-chain
Project specific Arweave’s layer 0 has overlap with and archives the on-chain data of key ecosystems including Solana, Avalanche, Cosmos, Near etc.

Partnerships
Project specific
Many top projects use Arweave as storage after the protocol’s Solana integration in Sept 2021.

Further listings and wallet support
Project specific Exchange listings and support for new wallets will bring AR to more users. Trust Wallet proposed Arweave support at YE21.

Expanding use cases and Atomic NFTs
Project specific More NFT marketplaces integration and high-profile launch as Arweave solves the issue of centralized storage of NFTs.

Increasing decentralized data storage demand Industry specific The demand for decentralized, permanent and decentralized data storage protocols will rise.

USE CASES

Arweave is an immutable and decentralized data storage platform powered by the blockweave technology with primary use cases in:

Decentralized data storage – Near-instantaneous and immutable data availability at a single fee

Decentralized data sharing – Anonymous uploading and sharing of content, similar to a P2P torrent network

Decentralized data collaboration – Initiation of an immutable decentralized database and opens data to reviewers and collaborators

Decentralized data identity/protection – Decentralized proof of ownership for content including identity documents which are still centrally owned by regulators

Storage of NFT assets – Arweave is a preferred means of storage of NFTs given metadata permanence

METRICS

Arweave’s user and operating metrics indicate that the protocol is on a strong network usage and growth trajectory.

AR TOKENOMICS

AR token supply: AR is the native token of the Arweave Network and has a circulating supply of over 50 mn tokens and a maximum supply of 66 mn tokens (CoinGecko, 2/4/22).
Planned use of proceeds: Funding the ordinary operating activities of the venture and ecosystem development.

KEY PARTNERSHIPS

As one of the leading decentralized storage network (DSN), Arweave has entered into partnerships to increase adoption of its Permaweb and user reach.

Solana – With this partnership, Solana intends to ensure the security and scalability of its blockchain data with storage on Arweave.

Polygon – Arweave’s partnership with Polygon will allow users to pay for data uploads with $MATIC token.

ColdStack – The partnership improves enterprises’ accessibility to the Arweave network, thus, simplifying the migration to decentralized from centralized storage.

CATALYSTS

HISTORICAL PRICE PERFORMANCE CHART

WEB3 TOKENS 

This document is for information purposes only, and should not be considered as, nor relied upon as a basis for investment decisions. whilst the information provided here is believed to be reliable, it has not been independently verified by us. we make no recommendation and accept no responsibility or liability of any kind, with respect to the accuracy or completeness of the information presented here nor for any loss (whether direct, indirect, or consequential) that may arise from any use of the information contained in the document.

Team certification: Emergentx insights team hereby certify that their views about the projects discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.