SCP Ventures: State of Arweave ecosystem after Version 2.6
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Author: Spike @ Contributor of PermaDAO
Translator: Spike @ Contributor of PermaDAO
Reviewer: Xiaosong HU @ Contributor of PermaDAO
SCP Ventures: State of Arweave ecosystem after Version 2.6
Since its inception, Arweave SCP Ventures has had its own goal of promoting large-scale adoption of Arweave, and since the Arweave 2.6 upgrade, the Arweave ecosystem has entered a mini-boom period. To fully demonstrate this progress, SCP Ventures, in collaboration with Forward Research and everVison, wrote the following report.
Key Insights
The number of Arweave transactions has exploded. Arweave’s Network Size now exceeds 100 PB, with over 1 billion transactions. Similarly, Bundlr has also surpassed 1 billion transactions and everPay has also recently reached 10 million transactions., Over the past 3 years, the number of developers in the Arweave ecosystem has increased by 933%.
The Arweave 2.6 upgrade marks a major milestone of innovation at the protocol level. Mechanical hard drives can now participate in mainnet mining, competing to provide access to as many replications of the Arweave dataset as possible.
Arweave's latest developments are geared towards CreatorFi. The combination of UDL (Universal Data License), UCM (Universal Content Marketplace), and $U allows anyone to trade and license Atomic Assets, which will contribute to the prosperity of Arweave's creator economy.
The Arweave ecosystem is steadily advancing in the bear market. With more than 130 projects in the ecosystem, from development tools to DeFi, Atomic Assets (NFTs), DDB, storage, RWA, content, and DePIN, the Arweave community is well prepared for the next bull market.
The quantity and quality of developer tools in the ecosystem is ever expanding. Arweave currently has 62 developers active in open source projects, with Forward Research, everVision, and Community Labs being the leading forces. EverID and Permaswap have been fully prepared for mass adoption, working towards the goal of 1 billion Arweave users.
With the help of SCP theory, Arweave has moved from cold storage to hot computing, from static to dynamic. The huge performance improvement brought by separating storage and computation will allow developers to fully meet users' arbitrary needs, and will eliminate the performance limitations of public blockchains.
Part I: Introduction to Arweave
Although it is typically compared to so-called “decentralized storage” solutions, Arweave is unique in its ability to provide onchain data with unlimited scalability and the ability to access any public chain or application . Generally, Arweave is a Layer 1 public chain that utilizes a unique and highly efficient mechanism called SPoRA. It’s operated by a decentralized network of miners.
Image caption: Blockweave Structure
Photo: The Block Research
Arweave SCP Ventures will provide a brief review of what makes Arweave special. The following mechanisms build the main components of Arweave's technology:
SPoRA (Succinct Proof of Random Access) is a new type of consensus mechanism for the Arweave network. SPoRA incentivizes miners to replicate data more efficiently and more swiftly, and requires less energy to maintain. Also, whereas classic PoW networks like Bitcoin spend energy for energy’s sake, the energy spent mining on the Arweave SPoRA network goes towards data storage and retrieval. This architecture is a more elegant alignment between resource spending and utility.
SmartWeave, which is Arweave's smart contract architecture. Different from Ethereum's "off-chain storage + on-chain computation" mechanism, Arweave adopts the design concept of Lazy Evaluation, which can be understood as the reverse of Ethereum - "off-chain computation + on-chain storage". As a result, Arweave smart contracts have the strongest data availability assurances while providing unparalleled scalability.
Permanent storage tokenomics. There is no additional issuance mechanism in Arweave beyond its maximum supply of 66 million $AR tokens. When users pay storage fees with $AR, part of the funds enter the sustainable endowment. These funds adopt a linear release mechanism to subsidize miners, so the data on Arweave can be stored for at least 200 years.
The Permaweb. The use cases of Arweave include not only static storage, but also the construction of dynamic applications. From top to bottom, the Permaweb has a three-tiered architecture: application layer, service layer, and storage layer. Based on permanent storage and immutability in the back-end, users can update front-ends at any time to support complex business requirements.
Overall, Arweave’s architecture is optimized for permanent onchain data, but is by no means a just simple personal cloud or static database. Arweave can be used to support large network infrastructures and global scale applications. Currently, we are still at the beginning of the adoption curve. Nevertheless, the Arweave ecosystem is constantly growing. Arweave SCP Ventures will now detail its components and ecosystem progress below.
Photo caption: Arweave Structure
Photo credit: Arweave SCP Ventures
Part II: New developments since Arweave 2.6
Launched in March, Arweave 2.6 has changed the way Arweave works in a number of ways, but it's always focused on the original goal of "pay once, store forever." The most important innovations are listed here.
Arweave 2.6 introduces a dynamic pricing mechanism. The protocol now specifies a maximum drive speed, which makes cheaper hard drives viable in mining without affecting network performance. Under this mechanism, miners will not be rewarded for using drives faster than the specified speed.
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Photo caption: Dynamic pricing mechanism
Photo credit: Arweave SCP Ventures
As a result, it will become more profitable for miners to use cheaper mechanical hard drives (HDDS), making it less costly to maintain at least 15 copies of each piece of data. This is the estimated threshold required for permanent storage, given the current Mean time to Failure (MTTF).
Eventually, Arweave hopes to incentivize miners to store more data, especially rare data and space-intensive data types such as audio and video. Specifically, Arweave will add a new data partition size, which will be organized at 3.6 terabytes to improve the scale of data utilization.
In the six months since the upgrade, the network scale of Arweave has successfully exceeded 100 PB, while the total number of transactions has exceeded 1 billion. The current average number of dataset replications is about 1000.
Besides the Arweave 2.6 update, bundled transactions (based on the ANS - 104 standard) also contributed a large amount of data. Bundling services can be thought of as a Layer 2 on top of Arweave that combine multiple data uploads into one transaction. At present, the most popular bundling services are Bundlr and Arseeding(an open source component of Web3Infra).
Image caption: Arweave Eco Stats
Photo credit: Arweave SCP Ventures
DeFi and basic development tools are the primary drivers of Arweave's data growth.
Bundlr has entered into a robust partnership with Lens Protocol to enable Momoka, its onchain data storage solution that allows Bundlr to charge as little as $0.0003 per transaction. Currently, Momoka has processed over 677,000 onchain transactions for $214. And, Bundlr's total transaction count has crossed 1 billion, another milestone for the entire Arweave ecosystem.
Similarly, Arseeding also crossed 10 million transactions at the end of August, largely made up of DeFi volumes driven by everPay, and has expanded to more hosting services such as 4everLand in preparation for mass adoption.
In addition, more innovations in the underlying infrastructure of the Permaweb is unfolding, the most significant being the recent announcements from Forward Research. UDL, UCM and $U together unlock a new frontier for the creator economy on Arweave. UDL (Universal Data License) allows any creator to license the real world rights of their content for various types of reproduction and commercial use. The uploader has the ability to define the payment currency, length of the license, as well the specific permissions granted to those who purchase the rights. UCM (Universal Content Marketplace) is a decentralized atomic asset markplace contract, implemented using Warp. It allows content of any format to have transaction value, including text, pictures, and streaming media. Even fungible tokens and NFTS can be traded with UCM, which will fundamentally revolutionize the existing economy for content creators.
$U is a smartweave token that can only be created by sending an equivalent amount of $AR to the sustainable endowment. It allows for fast and scalable value transfer between smartweave contracts, and is essential as the universal currency used to trade atomic assets. Users can readily swap for $U on Permaswap.
On top of that, there's also progress on important underlying protocols, such as UCP (Universal Commenting Protocol), which enables users to interact with content on Arweave and sign with their wallets to verify their authorship. UCP allows comments to be stored permanently and prevents arbitrary censorship or deletion, giving users the freedom to express their ideas, communicate, and foster a strong community.
To illustrate how these innovations can be used, Forward Research has created a super product, the BazAR Atomic Asset Marketplace. It supports UDL and UCM, and allows anyone to circulate and trade NFTS/atomic assets using $U.
Image caption BazAR NFT Marketplace Tech Structure
Photo credit: Arweave SCP Ventures
Arweave’s underlying infrastructure is reaching a robust level where development will soon be straightforward and streamlined. In the near future, ecosystem focus may shift towards application development and data use.
Part III: Data Interpretation
In regards to basic storage cost, Arweave's storage price changes dynamically, but that is not the whole story. Based on AR's price fluctuations, Arweave's storage price for 1 TB is currently around $3,500 (September 2023), but we need to note that this is for perpetual storage.
In fact, according to CoinGecko's calculations in May, Arweave costs about $2.13 for 1 terabyte of storage per month, or 10% of the price of Amazon S3, and will last for more than 200 years.
In terms of storage scale, Arweave's data lake has entered a stage of steady growth. Arweave SCP Ventures compiled a breakdown of data from March to August to explain Arweave's data explosion.
Arweave mainnet has maintained a high-frequency data upload rate of about 100 million transactions a month since March, including more than 100 million transactions in July and August. Driven by this data, the number of transactions in Q2 2023 (4/5/6) has exceeded 260 million. A Q3 breakthrough of 300 million transactions following the current growth trend is expected.
Although the current price of $AR is down from the bull market highs, the trading and use of $AR is still growing at a high speed. For example, spurred by the upgrade in March, the trading volume of AR reached 17 million tokens in a single month, and the monthly average trading volume was about 10 million (9,158,368). $AR saw a volume of more than 10 million in August.
With the continuous growth of the data lake, Arweave's network size has been stable at more than 125 TB since March, and has been steadily increasing for 6 months at a trend of 2 TB per month. In a bear market environment, this data growth is undoubtedly more real and valuable, and by the end of the year, Arweave's weave size is likely to approach 150 TB in size.
Image caption Arweave tx/trade volume/Weave Size Stats
Photo credit: Arweave SCP Ventures
After reviewing how the data is growing, Arweave's onchain address count is also of interest. Since the 2.6 upgrade in March, smart contract address growth on Arweave's chain has started to erupt, especially in April of Q2, where contract address growth was close to 2 million (1,919,789) in a single month, while the consolidated data growth for the quarter was more than 4 million.
The number of active user addresses on Arweave has also begun to grow rapidly, from 479 in March to 1,042 in June, surpassing 1000 for the first time.
Image caption Arweave Address Stats
Photo credit: Arweave SCP Ventures
Overall, Arweave's network growth has continued in the bear market, which is related to Arweave's recent protocol upgrade and the robustness of its ecosystem projects. From a macro perspective, Arweave's data growth is mainly dependent on storage dApp applications, but there are also new trends worth paying attention to. DDB (decentralized database) and web hosting services will likely form the main engine of Arweave's data growth in the future.
Arweave hasn't stopped exploring the broader crypto-native fields of DeFi and NFTs, most notably the creator economy and account abstraction, as well as SCP theory guided DeFi practices.
Part IV: Ecosystem progress and DDBs
According to Community Labs, at the end of 2022, most Arweave ecosystem projects were focused on development tools. But in 2023, more projects are transitioning into application development.
Arweave ecosystem infrastructure developmenthas been mostlycompleted, gradually opening the doorto other aspects of market development.
Photo caption: Arweave Eco
Photo credit: Community Labs
DDB (decentralized database)services are growing and have much untapped potential. At present, a variety of database services are enabled by Arweave, including SQL and NoSQL. Several notable projects are being built in this category with different approaches. Mind Network aims to build a data encryption layer consisting of ZK + FHE, while Kwil and WeaveDB are typical representatives of SQL and NoSQL databases respectively. Kwil provides high-performance services similar to MySQL,while WeaveDB aims to provide a mongoDB-like multi-file database to support the use of non-numerical data such as files, audio and video.
Part V: Dev Tools & Developer Stats
According to developerreport.com, Arweave currently has 17 full-time developers. Plus part-time developers, the number of monthly active developers is about 62. \ The data activity on open source code repositories has increased year by year, especially in 2023, establishing a positive trend.
Photo caption: Arweave developer data
Image source: https://www.developerreport.com/ecosystems/arweave
From a developer's perspective, Arweave can be thought of as a backend framework or a public database. There are two services in particular that enable this functionality: the gateway and the index builder.
As mentioned above, Arseeding and Bundlr can be understood as light nodes which also provide gateway communication functionality. At the same time, Arweave still retains the use of direct interaction gateways, such as Arweave.net and AR.IO.
Image caption Arweave Gateway types
Image credit: Arweave SCP Ventures
After the bundle standard became dominant in Arweave, most Arweave uploads were uploaded through various light nodes. At present, Bundlr, 4EVERLAND and ArDrive (AR.IO) contribute the most data. Among them, Bundlr dominates both the number of transactions and the amount of data.
4EVERLAND is also a key development facility, providing a one-stop web hosting service for Arweave apps and websites, and is used by multiple ecosystem companies , including Arweave SCPVentures.
After building the node service, efficient index construction tools are also needed, as developers need to retrieve data in real time. Here we mainly introduce two projects, namely KNN3 and Adot.
KNN3 integrates Arseeding, which can support real-time indexing services and can be interacted with through GraphQL.
Adot built on Arweave provides a full range of search tools, allowing developers to retrieve all uploaded Arweave data arbitrarily.
With a full suite of storage, gateway, and indexing services, Arweave has become a never-ending, decentralized cloud provider for all builders and developers.
The last piece of the puzzle is how to onboard Web2 users. At present, the industry’s consensus is to abstract accounts, rely on traditional login means such as email and mobile phone numbers, and then build encrypted wallets and chain accounts, hoping to solve the problem of complex barriers to entry for Web2 users.
Three products are relevant here, namely EverID by everVision, othent , and Arweave Wallet Kit, both created by Community Labs.
EverID uses WebAuthn to build its own Web2 to Web3 bridge . EverID uses hardware devices (Windows, iOS, macOS and android) to generate a local identity secret key, It supports private key sharding between multiple physical devices to improve security. After the local key is generated, the user can login to everPay (or other systems) without any entity needing to record the private key or account address.
Othent uses Google JWT(JSON Web Token) to register a Google email to Arweave, and calls Warp's smart contract service to build an on-chain identity system. This system makes logging in to Web3 applications seamless and familiar for Web2 users who are already used to Google authentication.
Unlike Wallet applications, account abstraction aims to lower the barrier for Web2 users to use the blockchain. The large-scale use of Arweave also requires high-performance products, ranging from the most basic DeFi infrastructure and tools to more complex use cases such as cross-chain bridges.
The opportunity for further simplification via account abstraction is huge. There is still much work to be done in order to present a perfectly accessible and intuitive experience for Arweave users.
Part VI: SCP paradigm and Arweave investment matrix
For a while, the Arweave ecosystem lacked its own native DEX, and most projects opted to issue ERC-20 tokens to complete their own token issuance work.
Arweave itself proposes the PST (Profit Sharing Tokens) standard, but it can only run on top of Arweave, and lacks the ability for cross-chain interoperability with larger markets, so it cannot make full use of crypto’s market liquidity.
The everVision team proposed SCP (Storage Consensus Paradigm), which separates computation and storage. Computation is done off-chain, and storage is done on-chain.
Based on SCP theory, the Arweave native DEX Permaswap was developed, which currently supports three native formats: PST, ERC-20, and everPay tokens. Permaswap is built on top of the general payment protocol, everPay. At present, it supports dozens of tokens on six public chains including Arweave,Ethereum,Polkadot and more.
EverVision, in cooperation with various Asian digital banks, has also issued the offshore RMB stablecoin ACNH. ACNH is entirely based on everPay’s implementation for minting and redemption, and is everVsion’s first attempt in the field of RWA.
Image caption: everVision product matrix
Photo credit: Arweave SCP Ventures
In addition to regular product development, everVision led the formation of the Arweave Ecosystem incubation and investment fund, Arweave SCP Ventures, to facilitate the data growth of the Arweave network and the incubation of related projects.
To date, Arweave SCP Ventures has invested in outstanding projects in a variety of fields, as listed below:
ReadOn: A reading community built on the Read 2 Earn model to build a value-transferable content community for users around the world;
Mind Network: A privacy service network based on ZK and FHE (Fully Homomorphic Encryption) to protect users' data security.
4EVERLAND: A one-stop web hosting service that enables developers to distribute their content in a decentralized manner, store it permanently, and resist censorship.
Starpower: A smart socket startup project in the direction of DePIN, which hopes to bring environmental protection and Arweave into the daily life of ordinary people and help improve the global environment;
LegalNow: an AI lawyer and legal contract generation SaaS platform initiated by the founders of LegalDAO, which hopes to democratize legal services;
S31 Labs: Content creators platform based on AI and symbiotic relationships, facilitate people to brainstorm, edit content, and create any form of material.
The above projects cover the creator economy, DDB, website hosting/development tools, DePIN, AI and other fields. Arweave’s influence will be felt throughout Web3 within each area, especially in DePIN. Growth in all directions will add to Arweave’s data lake.
Outside of SCP, the Arweave ecosystem remains active with a number of investment organizations that have made outstanding contributions to the continued prosperity of the ecosystem. Let's take SevenX Ventures as an example to provide a brief overview of Arweave's unique appeal.
SevenX Ventures launched its second crypto fund in 2021 with assets totalling $30 million, investing in infrastructure projects, with Arweave and its ecosystem as a key thesis,. They cover almost every aspect of Arweave's business expansion, and are active on the front lines of expanding Arweave's ecosystem footprint.
In the direction of DDB, it has participated in Mind Network, a privacy project, and Kwil, a SQL solution. In the storage track, it has invested inArDrive and Akord, of which Akord mainly provides secure storage services for valuable data, while ArDrive is closer to traditional personal disk services.
Through additional investments in everVision, SevenX is excited to help build all aspects of the ecosystem from underlying protocols to the key components in the application layer.
Overall, SCP theory has guided the everVision team's practice and Arweave SCP Ventures' establishment and growth, and in the future, this growth will reshape the current overall landscape.
Part VII: Conclusion
In 2023, Arweave celebrated its fifth anniversary, starting from its original concept of permanent storage and gradually building a technical architecture that can effectively store data for more than 200 years, distinguishing itself among storage projects.
Arweave has grown into the most decentralized storage infrastructure in the Web3 field, with the goal of building an unfailing library for the entire world, storing all the achievements of human civilization so far.
Under the guidance of this concept, Arweave has expanded from the initial concept of personal storage to enterprise level storage, from static data to DDBs, from a single storage service to a global data availability service, from Meta NFT proof of concept testing to supercharging the growth of decentralized social media with Lens protocol, all of which prove the reliability and longevity of Arweave.
References:
https://g8way.io/cFPxLK9V0vWjNaIfAuDKx88QoTJeJ-SitJ30TUHJLpQ
Crypto Fundamental Analysis — ‘The Arweave’ : Good Concept, Solid Tech 💾
https://twitter.com/MessariCrypto/status/1514694855070556170?s=20
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