Written by: ReveloIntel
Compiled by: TechFlow
Introduction
Arweave, a long-standing relatively unknown protocol, has recently attracted market attention for its newly added AO (Actor Oriented Hyperparallel Computer) system. The performance of the $AR token has also outperformed the market. Arweave has not only expanded its application in decentralized storage, but also moved into the field of artificial intelligence. This article will detail this transformation of Arweave and analyze what it means for investors.
text
Last week we briefly covered why Arweave, a long-in-the-making and usually low-profile protocol, is starting to become more interesting. The main reason is AO (Actor Oriented), a super-parallel computer built on top of Arweave. This recently added functionality has led to the native AR token outperforming the relevant market recently, which is unusual for the token. While this is a significant effort, there is another catalyst that has been hinted at...
Arweave is primarily a decentralized storage solution, but it is now expanding its offerings into the AI space with its AO computer. AO may soon launch its own token, but for now AR is the only way to pre-emptively participate in this possibility. AR is also a mature project and one of the few tokens in the industry with 100% FDV unlocked.
Relative intensity exposure
In the current market, characterized by high volatility and rapid declines, reallocating assets into assets that are showing relative strength is key to remaining in the market.
$AR has outperformed during the recent market correction, showing unusual resilience as BTC’s dominance increased and other tokens trended lower. These rapid capital flows provide us with an excellent opportunity to move capital from underperforming assets to higher quality projects or “fast horses”.
This tactical rotation capitalizes on the relative strength of assets like $AR during market downturns, positioning the portfolio for potential incremental gains when markets rebound.
Conversely, in this case, continuing to hold less liquid, weaker assets increases the risk of exacerbated losses when market conditions deteriorate.
Overall, this creates a favorable environment for hedging transactions, without blindly buying $AR, while being able to hedge and protect oneself from overall market risks.
Looking at the big picture, Arweave is often considered a decentralized data storage solution, often grouped with storage platforms such as Filecoin, Storj, Siacoin, ShadowDrive, etc. However, Arweave has moved beyond a simple storage solution, dabbling in the AI narrative and showing signs of potentially replicating $NEAR-like re-ratings. The latest initiative, the AO Hyperparallel Computer, seeks to address the challenges of achieving infinite scalability and incubate an ecosystem of projects capable of supporting multiple high-growth market sectors such as AI, DePIN, Autonomous Agents, and more.
Although the February AO release is already priced in by the market, we can expect to see another large catalyst coming in the near term.
Considering that Arweave can now be classified as an AI project, the announcement would be very well timed on May 22, right around the time of Nvidia’s earnings release.
Key information points
Arweave aims to keep data “immutable for as long a period as possible.”
Inspired by Bitcoin’s proof-of-work mechanism, Arweave modifies the concept to accommodate large-scale data storage.
Users pay a one-time upfront fee to store data on the network, with a portion of that going toward the initial storage costs for 200 years and the rest going into an endowment to cover future storage costs.
As storage costs fall, tokens in an endowment may not enter the circulating supply for a long time, creating deflationary pressure.
$AR has the highest mcap/FDV ratio in the industry, contrasting with the current negative sentiment surrounding low circulation and high FDV tokens.
Currently, the only way to get a head start on AO is to hold $AR.
Arweave founder Sam Williams has been hinting at the release of another ambitious project similar to AO.
As AO continues to scale and attract more users and applications, demand for Arweave’s storage capacity is expected to grow accordingly.
Arweave has performed well throughout much of the bull market, making it an attractive investment for long-term use in hedge trading strategies.
Over the past few weeks, the price of $AR has surged relative to $BTC and has shown resilience amidst the overall market downside dynamics.
Arweave is not only a storage network, but now sits at the intersection of cryptocurrency, DePIN, and AI, and recently entered the top 50 token market cap rankings.
Background on Arweave
Arweave’s team is led by Sam Williams, who currently serves as CEO. Williams graduated with a BSc Hons. in Computer Science in 2014 and did his PhD at the University of Kent. During this time, Williams’ research focused on distributed systems and their scalability, which provided the foundational knowledge for Arweave’s unique approach to data storage.
Williams’ team has been working together to advance Arweave since May 2017, growing the project from a simple conceptual framework to a functional decentralized storage network. Notable members and contributors to the ecosystem include William Jones (co-founder and former CTO) and Tate Berenbaum (current CEO of Community Labs, a venture studio focused on building and accelerating the adoption and growth of the AO ecosystem).
A token sale in June 2018 netted Arweave around $8.7 million in funding. A year later, in November 2019, Arweave raised $5 million from a16z, USV, and Multicoin to build the “permaweb.” These same investors doubled down again in March 2020, providing Arweave with $8.3 million in funding along with Coinbase Ventures.
Overview: Like Bitcoin, but for data
Arweave operates as a decentralized storage solution that provides permanent data storage using a blockchain-based protocol. This is achieved through an economic model that involves charging a one-time data storage fee, which is expected to cover the indefinite preservation of the data. This model leverages the concept of donations, where upfront payments help fund long-term storage.
Central to this vision is the provision of a global hard drive to ensure permanent storage through the $AR token, which not only allows the network to act as a data repository, but also helps power the vast ecosystem of applications built on top of AO.
