As I tweeted a while back, it is very rare to find technologies that completely alter first principles. These technologies are pure innovation, and while they may be composed of concepts familiar to society, their packaging of these concepts is unique. In my opinion, Arweave is one of these technologies. To sum it up, Arweave is decentralized storage infrastructure that unlocks numerous use cases and desired characteristics in serious need. My goal for this post is to clearly articulate the value behind Arweave as it stands today in addition to some avenues for future value creation.

The ‘base layer’ of the Arweave thesis

At its core, Arweave is valuable because it offers permanent, decentralized storage. Why do we need this?

Blockchain data emissions

Blockchains are at the center of crypto. These public ledgers are maintained and updated by miners / validators to create this trustless and decentralized value system we all talk about; however, they produce immense amounts of data. And, in order for blockchains to truly be trustless, ledgers need to be maintained, meaning miners / validators need to be able to access all the ledger data going way back. If a wallet hasn’t done a transaction for 5 years, but then suddenly becomes active, it cannot just receive a message saying “oh, you have been forgotten as data corresponding to your address was lost, sorry :/”. Oversimplified, but you get the message. Thus, there is a need for permanent and tamperproof storage of data. This is exactly what Arweave offers: a permanent and decentralized library for you to store your data. Solana, Avalanche, Near, Cosmos, and other blockchains are working on Arweave to create their blockchain data lakes. As I have tweeted about before, while Arweave acts as the library, Kyve, a phenomenal project partnering with the aforementioned blockchains, is the librarian — it allows for the retrieval of data via a very efficient ‘snapshot’ mechanism.

tldr: blockchains are data producing machines. Data needs to be maintained in a tamperproof way. Arweave facilitates this.

NFTs

To all the NFT fans out there — do you really own your whole NFT? Could it be at risk of disappearing? Scary questions, right? Well, while NFTs are ‘stored’ on the blockchain, their media data is nearly always hosted on some server linked to via a url (i.e. the ERC asset points to a URL link). So people are spending millions of dollars on these digital assets, yet the most important part of them is exposed to the risk of going missing (even the non-crypto community is catching on to this, i.e. as written on Vice). NFTs can become the cornerstone of culture, art, digital life, and more and thus represent an extremely large TAM. Ensuring they work properly is a very valuable service opportunity. Arweave is emerging as one of the leading places for NFT projects (conscious of this problem) to store their NFT media. Its recent integrations with chains like Solana allow for NFT creation on the native chain (Solana) yet media storage on Arweave. As time passes, Arweave should emerge to be a main venue for blue chip NFT project media storage.

tldr: NFTs will be a massive market. NFTs cannot be valuable if their ingrained media goes missing. Arweave is NFT infrastructure and safely / permanently stores NFT media.

Decentralization in Web 3.0

Recently, I read a pretty comprehensive write up from Signal founder Moxie on Web 3.0. It provided valuable insights, especially coming from a Web 2.0 viewpoint. One of the big overarching themes was questioning the true nature of decentralization in Web 3.0 (Moxie actually mentions the NFT issue above). If we really want to build this decentralized and improved web stack, then Arweave can assist with a valuable layer: storage. Permanent and tamperproof storage is crucial to really building a Web 3.0 stack that doesn’t just shift some things around and become akin to a morphed Web 2.0. It is permissionless and decentralized.

Tying this into UX and real adoption, topics mentioned by Moxie, it is fair to ask whether people will even use Arweave. Isn’t it more expensive than AWS / Azure? For the short-term, yes it is; however, if we are measuring over a duration lasting years, Arweave eventually becomes cheaper! Check out this graphic that used to be displayed on ArDrive’s website:

Arweave’s one-time endowment model is unique — it provides a cheap way to store forever. And, frankly, this is where competitors pale in comparison. Filecoin, Sia, and Storj also offer decentralized storage but compete on a PAYG / contract-based offering with services like AWS and Google. It is much harder to use these given the relative price issues (current prices on the aforementioned names are not bad because they are heavily token subsidized… which is not sustainable). Arweave is in its own offering category, which gives it an edge.

tldr: want to really make a decentralized Web 3.0? Well, you could really use Arweave…

The ‘second layer’ of the Arweave thesis

On top of the three points above are secondary ones that give Arweave value, but are more inclined towards future needs / ecosystems than those of today.

The ownership economy

One of the most thrilling visions crafted by the Web 3.0 community is that of the ownership economy (shared some preliminary thoughts on it here in 2020). We aim to create a digital world where creators reap the largest portion of the value generated from their work. Quite inspirational, right? Well, we do have a long way to go before getting there and will need a lot of creativity and innovation. A technology like Arweave could play a valuable part in this. If we want creators to really partake in this ownership economy, then they must own their work entirely through the Web 3.0 stack. Mirror, on which this is being written on (unless you are reading the version on Medium), has led the way by posting written content to Arweave. Thus, when an author proceeds to sell their piece via an NFT, they own the IP all the way to where it is stored and can thus guarantee full value of the work being transferred to the buyer.

What if owners are censored or face threats composed of their works being removed by to evil parties? No fear — Arweave is permanent and you own it. Content cannot be purged and blocked, truly unlocking a creator economy (there are, of course, some drawbacks to this in terms of prohibiting dangerous content, which lead one down some very philosophical rabbit holes).

Have you heard of Glass protocol? They are attempting to take creator ownership of video media to a whole new level. Stored on Arweave, the videos created and published using Glass are creator owned. There is also Pianity for music and other projects working on other media sub-verticals.

tldr: Arweave facilitates the ownership economy, it helps creators benefit the most from what they create.

PSTs

This opens a whole other can of worms, but is an absolutely fascinating one. PSTs stand for profit-sharing tokens. On Arweave, one can create these PSTs and essentially link them as a mechanism to a permaweb website (one stored on Arweave), whereby the PST can serve as a right to value generated from the website. This is basically a micro-asset that developers can use to monetize their websites in a synergistic way with users. Instead of selling user data or attention, developers can generate income from PSTs in the form of digital tips. On top of that, instead of waiting for the software j-curve to play out, they can sell some of the PSTs to obtain cashflow immediately. Those who buy the PSTs can capture part of the future value generated by the site (yes, there are regulatory qualms with this one for now).

PSTs revolutionize the paradigm behind Web 2.0. Users don’t have to be seen as these herd animals which developers must squeeze value out of to make money… rather, users and developers can be aligned. Developers create websites that add value to user lives. This drives profit flow for them in the form of usage-based tips (ingrained in the PST mechanism and described here). Could PST-based internet interactions not work out? Yes, this risk exists. However, the potential to create an entirely new website business model is fascinating and will most likely drive value for Arweave in a multitude of ways as the concept evolves with user / market feedback. The best avenue to engage with PSTs is through Verto, one of the leading and most innovative apps in the ecosystem.

tldr: Arweave brings something to the Web 3.0 game that is crazily out-of-the-box.

The ‘beyond’ of the Arweave thesis

And then, there is just so much more…

• Storing log data on behalf of SaaS providers (suggested to me by a good friend in Web 2.0 who now loves Arweave)
• Storing family images / digital items permanently for purposes of legacy and to be accessed by generations way into the future
• Storing Supreme Court links, historical items, national documents, etc.
• The ever-growing data dump the world is creating
• And more!

Conclusion

The above formulates an attempt to grasp the value and immense potential behind Arweave. While, frankly, so much is still left out and remains to be discussed, my desire is that the simplicity and big-picture framing of the ideas in this post makes certain value propositions behind Arweave more digestible and better understood. I look forward to writing more on this project / ecosystem.

Disclosure: This blog series is strictly personal/ educational and is not investment advice nor a solicitation to buy or sell any assets. Please always do your own research.