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Here Comes Arweave

Arweave is not yet a household name. Even those who have heard of it usually only associate Arweave with the concept of ‘permanent data storage’. This is true - but there is a lot more under the hood.

What is Arweave? At its core, Arweave is a global hard drive that never forgets. Supported by a decentralized network and incentivized by a token (AR), it provides storage for any type of file permanently and sustainably with a single upfront payment.

Arweave was created to solve the problem of long-term data storage. But it’s not merely a passive ‘data lake’ with millions of permanent files. A large ecosystem of infrastructure and software projects use Arweave’s protocol to create applications that were not possible with impermanent data.

In this article, we’ll unpack the Arweave protocol to demonstrate what it can do. It’s a long read, but we’ve broken it down into the following sections:

Arweave 101 - Permanent Storage and the Permaweb
Technical: Blockweave and Proof of Access (Spora)
Economic: Endowment and the Incentive that funds permanent storage
Layer 1 and the Ecosystem built on top of permanent data

Arweave 101: Permanent Storage and the Permaweb

Peter Thiel coined the term “zero to one” for an invention that is unlike anything that has come before. And that is what permanent data storage is – something that is unlike anything that has gone before it.

Arweave offers two things that are unlike anything else on the internet today:

Permanent File Storage – The ability to save any type file onto the Arweave network (documents, mp3s, pdfs, movies, digital art, and more). With Arweave’s innovative economic system (more on that later) an endowment is created that will fund the storage of data on the decentralized network for a minimum of 200 years, but, most likely, much longer.
The permaweb – The ability to save webpages and applications permanently, so they will continue to function as originally designed and remain indexed and searchable in perpetuity.

As Arweave puts it: “The permaweb looks just like the normal web, but all of its content – from images to full web apps – is permanent, retrieved quickly, and decentralized – forever. Just as the first web connected people over vast distances, the permaweb connects people over extremely long periods of time.”

So how did Arweave create permanent storage and the permaweb?

Arweave managed to create storage based on two components:

a technical component that turned a blockchain into a blockweave
an economic component that created an endowment that would cover the costs of future storage

Before focusing on the economic component, let’s first look at the technical side.

Technical: Arweave’s Blockweave and Proof of Access (Spora 2.6)

Arweave’s first major breakthrough was the blockweave, an iteration on blockchain technology. Blockchain’s traditional method of confirming data is sequential: every piece of data in the database is added in a long, single chain and verified in order. This is how Bitcoin works - with around 150 ‘blocks’ of new data added every day.

With Arweave’s blockweave, only a random piece of data needs to be verified before a new piece can be added. So instead of a long chain of data, the result is more like a weave or 3D spider web of data.

Because the verification process is shortened, it dramatically reduces the amount of energy needed to run the blockweave. Instead of wasting energy verifying the data again and again, the blockweave is able to efficiently store data – a lot of data! The blockweave will be able to store Petabytes of data in cost-efficient ways while a blockchain like Bitcoin can't manage 400 MB.

Finally, the blockweave kept the immutable (unchanging) nature of blockchain technology. All data put into the blockweave stays in the blockweave. Once it is there it cannot be deleted. This does not mean that all the information on the blockweave is necessarily public and visible to all, but that the information simply cannot be removed.

As with other blockchain technology, there is a continual verification of data when new data is uploaded in the network to confirm that all the data is present and accurate.

There will be more than 5,670 validations of your data transaction every day going forward. That means the integrity of your data will be checked once every 14.4 seconds. This is the highest level of data validation currently available. —Sam Williams, Founder of Arweave

The Arweave protocol is still being tweaked to optimize performance. The latest updates of the protocol for enhanced improvements include:

Scalability with Bundled Transactions: Arweave allows up to 1000 transactions per block. But these transactions do not need to represent solitary files - they can be ‘bundles’ of numerous transactions or large data sets. Bundles can even have additional bundles nested within them, essentially allowing Arweave to take on an unlimited amount of data.
Incentivized data replication with minimal energy use for miners: Miners can now compete to earn rewards with standard desktop computer hardware. Arweave has increased its rewards to miners based on the amount of replicated data, not hashpower and energy consumption.

To learn more about the history of the Arweave protocol and the changes which have increased adoption watch Forward Reseach’s presentation:

Now let's have a look at the economic innovation of Arweave.

Arweave Incentives: Economics and the AR token

The foundation of Arweave is the decentralized network that actually stores the files added to it.

What incentivizes the network to store your data for long periods of time?

People all over the globe store data on Arweave because they get paid. Just like how you wouldn’t go to work unless you got paid, they wouldn’t store your data unless they get paid.

Storing files for centuries requires an economic incentive to do so – and one that must have longevity.

How did Arweave overcome this problem?

Enter the Arweave Token (AR). Arweave created a cryptographic token called AR that is used as payment to put data onto the blockweave network. People who store permanent data on their computers are compensated in AR (which they can exchange for normal currency at digital exchanges).

But, the economic system is a little more complicated than this.

When you put a file onto the Arweave network you have to pay a one-time fee in AR. That's simple enough.

That single payment to the network gets divided two ways:

As an upfront payment to pay the initial storage costs for 200 years
The reminder goes into an endowment for future storage years

The first question we need to ask is: 200 years is a long time, isn’t it expensive to pay for that much data storage all up front?

It sounds expensive because we are used to prices going up in almost all areas of our life. But data storage is one of the few areas that goes against that trend. Over the past 50 years, data storage has seen its costs decrease by an average of 30.5% per year.

There are small fluctuations in prices but, in practical terms, for $1 you can permanently upload 400 photos or 3500 office documents to Arweave. Check out the latest prices on our ArDrive price calculator.

Decreasing costs of storage

Arweave’s working assumption is that the price of storage will continue to decline over time. Given the technological improvements still to be made, along with society’s increasing appetite for data storage, this seems to be a highly plausible assumption to make.

So, for the economics of permanent storage to work, is Arweave betting that data storage costs will keep going down 30.5% per year?

No, definitely not! The working assumption to make the economics viable for permanent storage is extremely conservative: Arweave assumes that data storage costs will decline by just 0.5% per year.

Again, part of the initial cost to upload data to the Arweave network covers the first 200 years of storage. If data storage declines are anything greater than 0.5% per year, this simply adds to the number of years that the data will be stored.

Arweave Endowment

If part of the one-time fee goes to the initial storage price, where does the rest go?

Arweave’s payment system is designed so a portion of costs paid to host data go into an endowment. This endowment will be able to pay for the cost of storage based on the interest generated from it.

Think of an endowment for a university. Universities use interest from their endowments to pay school costs, such as funding a faculty position, without ever touching the principal. Unlike universities, which generally have ever-rising costs, Arweave is using interest towards storage costs that are declining rapidly. Even in the unlikely case that data storage costs do not decline, the one-time storage fee and the built up endowment still cover the cost of storage for 200 years.

The Arweave endowment has already been built up to a sizable amount (over 44,000 AR in January 2023) to ensure that the storage of data is compensated well into the future. This endowment is the economic incentive that will engage the decentralized network to store data for lifetimes to come.

For further reading, see 'Can data really be stored permanently?'

Watch the Coin Bureau's 20-minute video on Arweave:

Arweave Ecosystem: Layer 1 and the Multi-stack Environment

We have discussed how Arweave provides permanent data storage. But the story doesn’t end there. The advent of permanent data paves the way for new kinds of software applications.

Arweave is a “Layer 1” blockchain - a first and foundational layer upon which other technologies can be built. In other words, Arweave provides a base layer of permanent data which can validate and finalize transactions without needing another network, and has a robust multi-layer stack of infrastructure and applications on top of it.

What’s so exciting about data storage?

Data storage is inherently boring. So why are Arweave users excited about it?

Storage itself isn’t that interesting, but the issues it uncovers - a reliance on big tech, privacy concerns, hacking and unexpected data loss - are relevant in the modern world. Furthermore, the advent of permanent storage has created a community of ‘permaweb pioneers’ creating software that was not possible before.

A helpful diagram from SevenX ventures breaks Arweave into three components: Useful, Scalable, and Organic.

Useful

People have used Arweave to archive family photos and NFT collectables. But its usefulness continues to expand. In the future Arweave will be used for:

Atomic NFTs that unite proof of ownership with the asset itself
SmartContracts: automatic execution of computer code
Robust infrastructure: data availability, decentralized gateways
User apps: Social Media, File Sharing Apps, Archiving
Public Data records
Business solutions
Provenance issues
Indelible ownership records
Developer tooling

Scalable

Arweave is a modular blockchain where the execution layer is independent of the consensus and data availability layers. In other words, Arweave is less of a blockchain and more like pieces of Lego that snap together to build what developers dream up. This gives developers the ability to to build applications that are:

Scalable: fast speed and large size
Efficient: lower cost
Decentralized: established by consensus

Organic

The Arweave community is often referred to as one of the most helpful and encouraging across the blockchain space.

Teams from various projects are working together to help build a full-stack of infrastructure and applications for the world to be able to leverage permanent data.

Arweave has also been called the sleeping giant of crypto, because when people wake up to what it can do - and what it is already doing - they will shift towards replacing temporary data storage with permanence. Already, tech giants like Meta have begun to upload their data onto the permaweb. If this trend continues, Arweave shows promise of becoming a backbone of Web3, the future of the internet.

Arweave - Backbone of Web3

The useful, scalable, and organic nature of Arweave points in the direction of it becoming the backbone of Web3.

When you take an overview of the ecosystem you realize that Arweave is more than storage, it is a full stack of infrastructure and applications.

People, applications, organizations, and businesses will be able to get secure permanent storage of data, and they will be able to get this data to use in multiple different ways.

A number of different layers are within the Arweave ecosystem:

Apps layer
Tooling
Decentralized CDN layer
Off-chain computation and scaling layer
Decentralized gateway layer
Database layer
Smart contract layer
Arweave protocol

So, yes, Arweave is permanent storage. However, the permanent storage foundation has grown to become a multi-layer stack environment.

As the world wakes up to all of the functionality that Arweave has to offer it will be exciting to see what new and exciting creations the ecosystem will help deliver.

What is Arweave?