The Three Pillars of Web3 and Arweave's Innovations

Web3, as the foundation of the next generation of the internet, is built upon the three core elements of consensus, storage, and computation. Blockchain technology has sparked a wave of decentralization, and Web3 extends this concept to the entire internet realm.

In terms of decentralized storage, peer-to-peer networks have become a global, trustless, and immutable data storage solution. Arweave, as a pioneer in this field, provides a cost-effective solution that ensures data permanence, immutability, and censorship resistance, meeting the growing demand for NFTs and decentralized applications.

According to predictions from International Data Corporation, the global data generation volume is expected to reach approximately 221,000 exabytes by 2026, equivalent to 231.7 billion TB. This massive scale of data highlights the enormous market potential of decentralized storage protocols like Arweave.

Arweave is expanding into the field of decentralized computing, with its AO computer designed as a "super-parallel" system aimed at integrating large AI models with smart contracts. AO combines the performance of high-speed blockchain with the verifiability required by decentralized projects.

By 2032, the global AI market size is expected to grow to approximately $257.516 billion, with an annual growth rate of 19%. Decentralized AI addresses the issues of transparency and control in machine learning, promoting a fair and open AI ecosystem while protecting intellectual property and personal data. Arweave's advancements in decentralized storage and computing place it at the forefront of the Web3 revolution, meeting key demands and expanding its market potential.

Overview of the Arweave Protocol

Arweave is a decentralized storage protocol that enables permanent data storage through a one-time payment. It consists of two core components: blockweave and permaweb.

Blockweave, as the storage foundation of Arweave, is responsible for handling storage requests and replicating data. It employs a Simple Proof of Random Access (SPoRA) consensus mechanism, which requires nodes to provide cryptographic proof of access to previously uploaded data before accepting new data.

Permaweb is a human-readable layer built on top of blockweave, mimicking the structure of the World Wide Web. Unlike traditional web pages, the content on the permaweb cannot be changed once uploaded, ensuring the permanence of websites and applications.

Arweave supports smart contract functionality through the SmartWeave platform. Unlike traditional blockchains like Ethereum, SmartWeave calculates the contract state only on the local device that requests the execution of the contract, improving efficiency and scalability.

AR is the native token of the Arweave network, used to pay for storage fees. Most of these fees go into the storage donation fund, aimed at covering storage and network maintenance costs in the long term. Historical data shows that the average annual decline rate of storage costs is approximately 30.57%, supporting the long-term sustainability of the protocol.

Miners in the Arweave network are rewarded through transaction fees, inflationary token issuance, and donations. The rate of token issuance decreases gradually with the weight of the block.

The token economic model of Arweave includes an initial issuance of 55 million AR tokens, as well as 11 million inflationary issuance tokens. The total circulating supply will gradually increase to 66 million AR, and the protocol does not adopt a token burn mechanism, maintaining a fixed supply.

Latest Developments in the Arweave Network

In December 2023, the Arweave community experienced a controversy surrounding the potential fork of Irys. However, through communication and clarification, the misunderstandings were resolved, and the community was reunited.

In March 2024, Arweave underwent a significant network upgrade, introducing a coordinated mining mechanism that allows multiple nodes to work together, improving network efficiency and computing power. The new version also supports pooled mining, enabling miners to share resources. Additionally, the protocol adjusted the block difficulty, optimized the pricing mechanism, and shortened the checkpoint intervals. These changes enhanced network performance and stability, contributing to the rise in Arweave token prices.

AO Computer: Arweave's Innovative Computing Platform

AO Computer is an important innovation in the Arweave ecosystem, combining the security of blockchain with the efficiency of cloud computing platforms. AO addresses the scalability and efficiency issues of zero-knowledge machine learning (zkML), providing a transparent and verifiable computing system while leveraging Arweave's permanent storage capabilities.

AO adopts parallel processing technology, enabling the simultaneous execution of multiple programs and optimizing resource allocation. This approach enhances the system's scalability and performance to meet the growing demand.

AO is based on an open data protocol, featuring a flexible and modular design that facilitates upgrades and component replacements. AOS, as the decentralized operating system of AO, allows developers to run command-line processes similar to smart contracts, combining the convenience of cloud server operations with the advantages of decentralized processing.

In AO, programs frequently interact with Arweave as autonomous agents, which is beneficial for developing efficient data-intensive applications. Unlike traditional smart contract platforms, AO supports the automatic execution of contracts, paving the way for truly autonomous blockchain applications.

Market Competition and Performance Comparison

In the decentralized storage space, Filecoin is the main competitor of Arweave. Arweave focuses on long-term data storage, while Filecoin aims to disrupt the existing market through low-cost temporary storage. Arweave is pioneering the permanent storage market, while Filecoin needs to compete with traditional cloud storage services on price.

In terms of performance, Arweave has recently achieved a processing capacity of over 600 transactions per second, making it one of the highest throughput permissionless blockchains. Considering that AO computers are still in the early stages, this achievement is particularly remarkable, as its TPS has surpassed that of some well-known blockchain networks.

Team Background and Ecosystem Development

Arweave was founded by Sam Williams and William Jones during their PhD studies at the University of Kent in the UK. The project was inspired by deep thinking about permanent data storage and technological innovation.

Arweave has raised significant funds through multiple rounds of financing, supported by well-known investors including Coinbase Ventures and Andreessen Horowitz. The project adopts a DAO governance model, ensuring a community-led decision-making process.

The Arweave ecosystem is thriving, with over 130 Arweave-based projects as of the third quarter of 2023. The network transaction volume has surpassed 1 billion, demonstrating its increasing adoption rate and strong infrastructure.

Development Prospects Analysis

Bullish factors:

• The launch of AO has elevated Arweave's position in the AI field.
• AO expands the possibilities of machine learning and AI integration.
• The ultra-parallel architecture facilitates the efficient training and deployment of AI models.
• AO provides an ideal environment for developing DeFi applications.
• Solved the scalability and efficiency challenges of zkML
• The volume of online transactions has significantly increased and is expected to rise further in 2024.

Bearish factors:

• The AO testing phase may expose technical issues.
• The on-chain scalability of AI models has not been fully validated.
• The integration of old and new tokens may face challenges
• With the increasing demand, scalability issues may arise.
• The integration of AO and Arweave is still in the early stages.
• The value of the token may fluctuate due to various factors.