Advisor & Editor: JX (Partner of OFR)
At the start of the year, Ryan Selkis wrote in his Messari 2022 Crypto Theses, “Of the various components in the Web3 hardware stack, decentralised storage is arguably the most robust.” Compared to the short-term services offered by IPFS and Sia, the report acknowledges Arweave as a key player in the long-term blockchain storage sector. So how exactly does Arweave come to carry the weight on the decentralised storage space?
Arweave is a block network whose goal is to achieve decentralised permanent storage for data. Arweave promises to provide users with at least 200 years of storage, and this goal is becoming clearer as the annual cost of storage decreases.
Why we need Permanent Storage?
Long before Web 3.0, it was explored that permanent storage of data was an important thing. Nowadays, a question remains of how users can still access a URL address from 10 years ago besides ‘https://archive.org/web’ or browse and download data stored on a centralised server? In the crypto world, NFT works that can cost tens of millions of dollars are inevitably stored in traditional centralised servers, all of which create great pitfalls.
An Internet that relies on centralised storage is fragile and fragmented, with exponential data growth on one side and frequent incidents of old data loss or theft on the other. Over the past 20 years, 98.4% of web links have suffered from corruption, resulting in the familiar "404 Not Found". Stretching the timeline, data integrity on the blockchain will be a new value proposition, and achieving permanent data storage will be an exciting area of innovation for the future of the Internet and Web 3.0 era.
How Arweave store data permanently?
Arweave provides a new solution to the problem of permanent storage by leveraging data structure - Blockwave and SPoRA's consensus mechanism. Blockweave's spun architecture comes with sharding properties and high scalability, while SPoRA's consensus mechanism ensures that miners receive enough incentive to store rare data for permanent data storage.
So how miners achieve permanent storage? The SPoRA mechanism at the consensus level can be explained as a set of three concepts: 1. PoW 2. PoA 3. speed of data access. Arweave requires a previous random block (recall block) to produce the new block, and this consensus mechanism is Proof of Access (PoA). In addition, on top of PoA, PoW mechanism is introduced to ensure that the miner who calculates the random number fastest has the right to bookkeeping in order to prevent all miners from storing all data and not being able to decide the right to bookkeeping. However, if a large number of miners will coincidentally choose low-cost regions to run nodes in order to reduce costs, this geographically centralized storage pattern will increase the data access speed for certain users. Therefore, data access speed is also a factor in determining miners' rewards.
The PoA mechanism also conceals another feature that motivates miners' willingness to store - the probability of recall blocks is consistent. So miners who store rare blocks have a higher probability of competing for the reward. This results in the entire data being stored evenly on Arweave.
While the subjective willingness of miners to store can be satisfied with permanent storage, will objective data loss affect the performance of permanent storage? In other words, a block happens not to be stored by a miner resulting in permanent loss.
Taking the above replication rate of 50% and the number of nodes of 100 as an example, we can see that the probability of losing blocks is already very small when miners store only half of the total data. But in reality, the number of nodes in the Arweave network is above 1000, and the replication rate can reach 90%. It can be said that the probability of permanent loss is negligible.
In addition to this, storage cost is also an important factor in maintaining permanent storage in Arweave. Everyone has become accustomed to price increases in almost all areas of life, but data storage is one of the few areas that runs counter to this trend. In the last 50 years. The cost of data storage has fallen by an average of more than 30.5% per year. And Arweave's working assumptions for the economic viability of permanent storage are very conservative: Arweave assumes that the cost of data storage decreases by only 0.5% per year. The initial cost to the user of uploading data to the Arweave network covers the first 200 years of storage. If the amount of data storage decreases by more than 0.5% per year, this will increase the number of years of data storage. In other words, further adding to the deflationary trend mentioned above.
At the same time, Arweave has set up its own endowment - whenever a user pays for storage, 86% of the cost goes to the endowment. Over time, the fees in this endowment will gain in value, much like the interest that accumulates on cash in a bank account. The aim is to provide expenses as needed to keep the rewards of storing data higher than the cost of storage.
In the most recent update of the hard fork, the version2.5 hard fork has had an immediate positive impact on users of the Arweave network, where the AR cost of storing data on the permanent storage network has been reduced by nearly half. This fork will gradually implement HDD storage to replace SSD storage, thus reducing the initial storage costs.
Looking at the numbers alone, Arweave only had a maximum of 600M transactions three years after launch, in contrast to Solana and Avalanche which had the same amount of transactions only a year after launch.
Back in the history of public chain development, we can easily find that: the development of public chains tends to be top-down. Uniswap and Opensea, as the two heavyweight applications that burn the most Ether, have added a large number of transactions and active addresses to Ether, supporting the bull market of Ether one after another; DEX, led by Serum and Raydium, has promoted the early development of Solana, and Game has been the first chain in the world. The early development of Solana led by Serum and Raydium, the rise of GameFi drove the activity of BSC, and the highly distinctive Defi asset protocols such as Anchor, Mirror, etc. brought funding and growth momentum to Terra.
On the contrary, Arweave has yet to explode into a moat-level presence similar to the one mentioned above, in addition to the fact that a number of excellent applications have sprouted so far. Some of the current ecological projects on Arweave are listed below according to infrastructure and applications.
It is easy to see that Arweave, as an infrastructure-level protocol, is very different from other public chains in terms of its narrative, logic and value support. The Web3.0 narrative is so that a large number of native blockchain dApps tend to use on-chain storage. After the underlying facilities gradually mature, more application layer projects will surely emerge as well, bringing incremental users and funds into the Arweave ecosystem.
Arweave has become the leader in this field through its unique permanent storage in the storage segment. Users achieve permanent data storage, once paid, forever use; at the same time, based on their own storage services, gradually realise the SmartWeave contract and PermaWeb mutual synergy of the ecological environment. But in the future exploration of Web3, the important feature of data ownership is not only reflected by perpetual storage, but also requires more empowerment to help Arweave tell the story. The reliance on Solana is bound to be a factor affecting its development in the future, and Bundlr is actively seeking bridges to other public chains in this regard.
The following throws a few interesting use cases and directions for your reference.