Arweave - Paying for Permanence

This opinion piece will serve purely to express my views on Arweave and help me practice for further investment-driven theses. Note that I do not represent Arweave and data within this space is updated rigorously so DYOR before investing.

The internet has made the world’s information accessible. However, this information is structured to be stored and curated in a mutable manner by a handful of centralized parties, namely, the tech giants and governments. Arweave aims to solve this issue by storing data in a decentralized and permanent way avoiding the risk of having a single party having so much control. As stated by Sam Williams, Arweave’s co-founder and CEO, “Arweave will act as a network that seamlessly integrates with the world wide web providing a permanent cryptographically verified archive for the internet.”

Below I will be covering the history of Arweave, how their protocol works, their use cases, and ultimately my overall thoughts on the protocol.

Arweave’s History

Arweave, since its launch in 2018, has been undoubtedly proactive in its attempt to become the world’s new permanent data storage system. Below is a timeline of Arweave’s main accomplishments to date:

• June 2018 - Mainnet live

• 2019 - Permaweb launch

• 2020 - ARCA DAO launch on ethereum

Handed control of Arweave (AR) to the community.

• April 2020 - Arweave 2.0 launch

Enhanced the protocol’s data stability.

• June 2020 - Introduction of smart contracts

• December 2020 - Arweave-Solana bridge to house Solana’s transaction history on Arweave.

This is extremely credible for Arweave for the following reasons:

• Solana’s scalability is extremely impressive, meaning that they can process transactions quickly.
• With more transactions, comes more data
• Solana needs to store this inflow of data securely
• Arweave facilitates more data and their ecosystem grows  

• 2021 - Five exchange listings, two on-ramps and a DEX

Binance, Crypto.com, Kucoin, Uphold, and OkEX

Ramp and Transak integration for fiat on-ramps making it possible for anyone in the world to buy AR with a credit card.

everFinance made it possible to buy wrapped AR (wAR) on Uniwap and redeem it for AR on everPay.

How does Arweave work?

Arweave consists of two fundamentally critical layers:

• Blockweave
• Permaweb

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Blockweave

Arweave’s archiving system is achieved by using a blockchain-derivative data structure, called the blockweave acting on a Succinct Proof of Random Access (SPORA) algorithm. The blockweave differs from other blockchains as a node producing a new block has to refer to the previous block and another randomly selected block called the recall block. Moreover, blockweave also stores information about the data being stored.

This unique structure is a part of Arweave’s consensus mechanism:

Succinct Proofs of Random Access (SPORA)

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SPORA incentivizes all participating nodes to store as much of Arweave’s history as possible. The reason for this is that if a node doesn’t have access to the data in the recall block, then blockweave will know that the node is probably not storing all the previously updated data, and as a result, the node isn’t rewarded with a block reward.

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Note that nodes aren’t sure which block will be assigned the recall block, which furthers Arweave’s belief that it is in nodes the best interest to store as much data as possible to higher their chance of accessing the data in the recall block.

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Several factors go into consideration when producing a block:

• How much storage space the node has committed
• How much computing power does the node have
• How fast their internet is

The reason for these factors is to ensure speedy data retrieval for users.

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Permaweb

The permaweb is a permanent and decentralized web built on Arweave, allowing users to access the data stored on the blockweave. Applications created using smartweave smart contracts are live on the permaweb and can be accessed via various gateways.

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Furthermore, Arweave’s protocol uses HTTP, meaning that what is on the permaweb can be indexed from the regular world wide web at scalability of 5000 tps.

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AR - Arweave’s Native Token

Arweave facilitates a currency denoted as AR. This currency is used to pay transaction fees on the network including for storing and retrieving data, interacting with the Permaweb applications, and for sending AR tokens.

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Arweave benefits from the many advantages derived from decentralized currencies:

• Transfers are anonymous
• The system is decentralized
• Transaction fees are minimal

AR maintains fundamental usefulness that underlines the currency's value, which is the ability to store permanent information on the blockweave. Moreover, Arweave introduced Profit Sharing Tokens (PST), allowing token holders to earn a portion of the network fees users pay when interacting with the applications. These features are a few of the reasons behind investment confidence.

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In addition to exchanging value, Arweave allows its users to attach encrypted messages to transactions by using the recipient's public key, creating a secure communication channel.

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Tokenomics

Launch and Initial Token Distribution:

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Max circulation: 66 Million AR

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• 55 million AR were created in the genesis block at network launch on June 8th, 2018
• Another 11 million AR introduced in circulation gradually as block mining rewards

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40% of Arweave’s initial supply was sold across different funding rounds from 2017-2020. These funding rounds accumulated to $22 million and one of their significant deals was with the well-known Coinbase Ventures.

• 3% of AR’s initial supply allocated to the advisors
• 13% to the team
• The remaining of the initial supply was set aside for future use
  

All allocations are based on a five-year vesting period.

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Archiving

Permanent archiving of data acts as Arweave's primary goal. Arweave employs a novel mining system that offers various benefits over previous consensus mechanisms. Arweave's SPORA algorithm incorporates data from a randomly chosen previous block in producing new blocks. This structure means that the amount of Arweave's data a miner has available is directly proportional to the amount of time they can spend consecutively mining and earning block rewards. Thus, it incentivizes nodes to store as much of Arweave's data as possible.

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A user wanting to store data on the weave will submit an internet URL to the network, and a decentralized consensus protocol is employed to agree upon its contents before storage.

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Once documents are stored on the weave, Arweave users will be able to browse between archived resources and standard internet web pages. This functionality allows users to view pages that have been removed from the internet and snapshots of web pages over time. Ultimately, this is where the permaweb comes in, derived from acting as a "perma-net" sibling to the traditional internet.

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Verified internet archiving is beyond censorship's reach, providing academic researchers access to an expansive display of human knowledge. Academics will also benefit as Arweave offers a verifiable way to cite the contents of web pages at a given time. This solves a significant issue in Academia: there's no way to verify valuable data on these pages without evaluating the risk of them being modified or removed after publication.

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This application goes further than just academics, media organizations who broadcast political information will be prevented from removing or modifying any stories.

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Another use case of archiving that is relatable is the storage of 'insurance' files which will act as encrypted data that can be easily made accessible by the release of the decryption key.

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Moreover, bloggers like me will benefit from the weave knowing that their content isn't subject to a particular host! Equally, the readers can have comfort knowing that these blogs will be available for years ahead. It is expected that blogs and journals stored on the weave will be of significant use in the future! Maybe I'll start blogging on the weave…

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Storage Pools

One potential theoretical attack against Arweave is that miners may work cooperatively to maintain a single copy of the weave, which they can all access to retrieve recall blocks; however, if such ‘storage pools’ were employed, the incentive for other miners to store rare blocks would increase. The reason for this is that if these centralized pools become unavailable, miners with a copy of rare blocks will likely receive the reward when the recall block is assigned.

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Thus, Arweave uses this self-interested human nature to its advantage, allowing them to scale the network as the inflow of data increases.

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Conclusion

There is no doubt that there is a current issue regarding how valuable data is archived, and after much consideration, I am confident that Arweave is well on its way to providing an immutable network changing how institutions, companies, and individuals archive their data.

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Ultimately, I believe that Arweave’s technology is truly revolutionary; its implementation is vital for the future of data storage, and users will indeed pay for its permanence.

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