In the last few years, a number of decentralized data storage services based on blockchain technology have emerged in the market. One of these projects is Arweave, a data storage protocol based on the Proof of Access (PoA) block verification method and a derivative of a blockchain called blockweave.
Arweave’s native cryptocurrency, AR, trades at $80. It has a circulating supply of around 33 million tokens and a market cap of $2.66 billion.
What Is Arweave (AR)?
Arweave lets you use decentralized data storage for a fee, and gives opportunities to individuals and businesses who have available disk space to offer it for storage. Arweave is based on a technology called blockweave, which is a modification of the standard blockchain.
The overall structure of the blockweave and blockchain technologies is similar in many ways, with verified blocks permanently linked to each other on a chain-like ledger. What makes blockweave different is its distinct block verification procedure called Proof of Access (PoA).
What is Proof of Access?
Under the PoA verification method, providers of the disk space act as miners. In order to verify a new block, a miner node must replicate an additional older block that has been previously verified on the network. This additional block is called the recall block and is chosen randomly.
This system incentivizes miners to provide more storage and for longer periods of time. That is because miners with access to more of the previously verified blocks get a higher chance of successfully verifying the next block.
As blocks are added to the ledger, each new block is linked to the previous block as well as to the recall block used to verify it. This linkage is what makes the blockweave structure somewhat different from the standard blockchain, where each block is linked to its preceding block only.
How Does Arweave Work?
Arweave users can store data using the platform in a decentralized way. Currently, storing 1GB of data costs around 0.45 AR ($36). A great feature of Arweave is that you pay the storage fee only once and can store the data indefinitely.
Your data is stored on the so-called permaweb, a web of data and apps that could be likened to another digital web we are all familiar with – the world-wide-web (WWW). However, a big difference between permaweb and the Web is that any data on the former is stored permanently.
By providing blockweave-based permanent storage capacity, Arweave offers a high level of protection against data loss.
In addition to storing files, permaweb can store decentralized apps (DApps) with full functionality, essentially acting as an application server. Users can access the apps via Arweave Gateways, a part of the platform’s functionality that renders the outputs of the apps in users’ web browsers.
Arweave uses content moderation to disallow inappropriate content on the permaweb in order to avoid the inappropriate and offensive content mess that the Web descended into quickly after its launch. Storage providers can filter content they are not comfortable hosting and refuse to host it.
Similar to Ethereum (ETH), Arweave supports smart contract functionality. Arweave smart contracts are compiled into JavaScript programming language code. Source code of many different programming languages can be compiled into JavaScript code, and thus, Arweave supports smart contract development in a variety of languages.
Arweave-based DeFi
The team behind Arweave is working on a couple of decentralized finance (DeFi) apps under the umbrella of the everFinance platform. One of these is everPay, a protocol for real-time blockweave-based digital payments.
A big drawback of many blockchain-based payment systems is long waiting times to execute transactions. That is because most blockchains package transactions into blocks that need to be verified by miners who choose which block to solve first.
In everPay, there are special nodes called everPay servers that are specifically tasked with transaction verification. The system does not wait for transactions to be batched in blocks. Each payment transaction is immediately sent to everPay servers to be processed and quickly added to the ledger.
everPay is capable of supporting payment transactions on different blockchain platforms. Ethereum and Arweave are currently supported, and new platforms are in the development team’s plans.
Another DeFi functionality, a decentralized exchange (DeX), is offered as part of everPay. The DeX offers swaps between ETH, USDT, and AR.
Wallets supported by everPay currently include MetaMask and WalletConnect, in addition to Arweave’s native ArConnect wallet.
Who Is Behind Arweave?
Arweave was founded in July 2017 by British technology entrepreneurs Sam Williams and William Jones. The company is registered in Germany. Arweave’s mainnet was launched in June 2018, and its permaweb platform went live in early 2019.
Sam Williams acts as the CEO, while the other co-founder, William Jones, was involved in the project as the CTO until August 2018, but has left since then.
Arweave has raised a total of $22 million in Venture Capital (VC) funding. The first major funding round was the Initial Coin Offering (ICO) in June 2018, when the project raised a total of $8.7 million. The key contributing investors included Arrington XRP Capital, 1kx, and Coefficient Ventures.
In subsequent major funding rounds, in November 2019 and March 2020, Arweave raised $5 million and $8.3 million respectively. In both of these rounds, Andersen Horowitz acted as the lead investor. In total, Arweave has been VC-funded by 15, mostly institutional, investors.
In addition to raising VC funds, Arweave has been active as an investor in a number of blockchain startups. The company invested in four different blockchain-based projects over five funding rounds. The funded projects include Mintbase, Meson Network, Redstone, and Kyve.
Arweave (AR) Price History
Before 2021, the AR coin mostly traded at levels under $5, with a peak price of $7 briefly in late August 2020. AR started the year 2021 at $2.6. This year proved to be a real breakthrough for the coin.
It broke through its previous peak of $7 by mid-February, kept rising rapidly, and touched the $32 level by the end of March. However, the cryptocurrency market crash of 2021 did not leave the AR coin untouched. AR plunged from the $32 local peak in late March/early April down to around $7 by the late July.
Unlike some other cryptocurrencies, AR managed to quickly and very confidently recover from the market crash-driven plunge. Since late July, the coin has been largely on a strong uptrend, and now trades at around $80.
What Is the Future for Arweave?
The overall outlook for the Arweave project looks quite promising. The platform offers a much-needed service, secure blockchain-based storage, that should underpin its future growth.
Recently, there has been a growth in similar storage solutions as the market recognizes the utility of the service. Projects like BTT are driving the growth in this area. However, Arweave, with its permaweb platform, offers a wider functionality beyond simple data storage.
Permaweb is capable of storing not only files but also distributed apps with full functionality enabled. In that regard, permaweb is both a storage medium and a vast application server.
The permanent nature of storage on permaweb also makes Arweave a formidable competitor to non-blockchain cloud storage services such as Dropbox, Microsoft’s OneDrive, and Google Drive. Arweave lets you pay the storage fee once and store your data permanently, while the competing cloud storage platforms charge on an ongoing monthly or yearly basis.
You do get some free storage allowance from some of these platforms, e.g. Google Drive is free for up to 15GB of data. However, the free allowances are often very modest for users interested in external storage services.
While the upfront costs of storing on Arweave may be higher than on the competing platforms, the fact that you pay only once to store your data forever makes long-term storage on the platform more cost-effective than what competitors have to offer with their regular charges.
The market is also responding positively to Arweave’s business concept with the confident growth in AR this year. Arweave itself is actively investing in other blockchain startups, a sign of the project’s healthy financial position.
The demand for storage services keeps growing strongly, and Arweave stands to only benefit from this growth.
Conclusion
Arweave is an innovative data storage platform based on a derivative of blockchain technology called blockweave. It has a unique PoA block verification method that helps Arweave achieve operational efficiencies and enables its permaweb platform.
Permaweb is a blockweave-based web of files and applications stored in a completely decentralized way, independent from a central controlling entity. Permaweb is capable of storing both files and decentralized apps, supporting their full functionality.
While permaweb is a decentralized platform, Arweave miners, who also act as the storage providers, can remove some content they deem inappropriate for storage on their devices. This measure, while implying a degree of censorship, is a useful feature to help Arweave avoid becoming an offensive content mess that characterizes some sections of the world-wide-web.
Arweave is also making its initial steps in offering DeFi functionality via its digital payment and DeX solutions. These are being developed under the everFinance branding umbrella.
As the demand for data storage services grows rapidly, we expect Arweave to grow confidently and possibly even challenge the storage heavyweights such as Dropbox, Microsoft, and Google.
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