Monday, June 17, 2024
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2023-03-09
By Az
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The TOP 10 Arweave misconceptions debunked

Arweave is a blockchain that functions as a permanent data storage network, created in 2017 by Sam Williams after he began exploring the idea of a new type of blockchain that could store data forever. Over the years the network has grown exponentially and is now used as much by individuals as by large tech companies like Meta, that utilises Arweave to permanently store digital collectables from Instagram securely. The network is constantly updated and upgraded by its unique ecosystem of developers and teams, and just a few days ago Arweave 2.6 went live, bringing with it some major updates, and pushing the Arweave ecosystem even closer towards mainstream adoption.

But even though many already know about Arweave and its potential, there are still many misconceptions, many urban myths, and much misinformation that gets spread around the crypto space (we are looking at you crypto Twitter) about the Arweave blockchain and its Permaweb. Today we will look at ten of those misconceptions and debunk them, thanks to little help from Warp Contracts.

A common observation that strikes us is the significant amount of often unintentional misinformation circulating about Arweave. Let’s educate the space about the Arweave! – Warp Contacts

Debunking the 10 Most Common Misconceptions About Arweave

1. Arweave is just a storage layer!

The first misconception comes to the tune that Arweave is just a storage layer, and nothing else. This simply is not true. Arweave is more than just storage as it provides a trust-minimised system for validating the authenticity of information in an era of widespread distrust. The platform revolutionises trust and authenticity by ensuring that the authenticity of data is fully preserved.

Arweave is the Chain-of-Truth, as David Phelps put it in his 2023 crypto predictions. Feel free to read the whole article as it really is insightful, but to summarise, a portion of the article discusses the potential of content blockchains, such as Arweave, to solve the problem of enforcing provenance in content creation. The promise of content blockchains is that a content creator can set a royalty on their work for anyone else to quote, remix, or sell. However, enforcing provenance is a challenge, as plagiarism, derivative works, and distorted content are common problems. The solution could be zero-knowledge proofs (ZKPs), which can ascertain that modified media was edited directly from an original signed by the creator. AI could also be used to identify if the content had appeared elsewhere or been modified, and ZKPs could assign appropriate attribution and royalties. Arweave could potentially become a canonical chain to establish provenance for original work.

Picture a scenario where Arweave hosts a crypto-based TikTok platform that leverages AI to facilitate ad and NFT commissions for both content creators and fans who can remix the content and earn a share of the profits. The platform ensures the full authenticity of the content. This is something that is needed now more than ever.

2. Why would you store data on Arweave if it’s public?

The second misconception is that storing data on Arweave is not secure as it is public. But thanks to protocols building on Arweave, such as Akord and its use of Vaults, and ArDrive and their use of Drives, users are able to benefit from end-to-end encrypted file storage on Arweave with complete privacy.

3. The platform’s low macro fees are a problem!

The third misconception is that Arweave’s low macro fees are a problem. However, Arweave 2.6, which has now officially deployed, aims to democratise mining by reducing enterprise-level hardware advantage, making profitability more accessible for commodity hardware mining and encouraging wider participation for individuals vs businesses and/or the wealthy.

Vance Spencer asks:

Arweave has $170K of annualized fees, but a lot of usages

Stark reminder that all blockchain transactions are not created equal, and that transactions != revenue

Decentralized storage is a nice idea, but what is the use case catalyst for people to pay a large amount for Arweave?

To which Tate Berenbaum, creator of Verto Exchange on Arweave replies:

If cost of storage is low enough to guarantee profitability for miners, the game should be for that number divided by total amount of data stored to be as low as possible. Annualized fees should not be the primary KPI IMO. As long as miners are profitable, the goal should be to drive cost down to users, which miners are currently competing to do. The point is just to maintain economic viability for miners. Revenue should just be low enough for it to make sense for miners to operate over the long term. As storage becomes cheaper over time, spend on hardware is offset by recurring revenue from the endowment.

Sometimes it’s best to let the devs do the explaining. Moving on to our next misconception.

4. Arweave can’t scale…

The fourth misconception is that Arweave can’t scale. While the base layer imposes a limit of 1,000 transactions per block, resulting in an average of only 8 transactions per second at a block time of 2 minutes, the platform’s bundling feature allows multiple requests to be packed into one transaction, offering an arbitrary scaling of data uploads.

One of the protocols building on this idea is Bundlr. 

5. Contrary to DeFi and Gaming, DePIN is just boring and trivial

The fifth misconception is that DePIN is boring and trivial. Decentralised Physical Infrastructure Networks (DePINs) is the new name for blockchain networks that use tokens to incentivise communities to build physical infrastructure networks/dApps. 

But DePIN is in stealth mode as creating an economically sustainable infrastructure ecosystem proves far more challenging than the software itself. If you are wondering what the use of DePIN networks is, take it from Messari:

Simply put, using token rewards, a protocol can motivate individuals to bootstrap the supply side of the network to the point where end users find its services attractive to use.

The potential for growth is enormous.

6. Arweave’s design is similar to Filecoin, BNB Greenfield, etc

Many believe that Arweave’s design is similar to Filecoin and BNB Greenfield, but the platform’s core design sets it apart from all other platforms in a fundamental way.

Sam Williams, creator of Arweave, explains:

7. There’s nothing exciting in the Arweave ecosystem

Another common belief is that there’s nothing exciting in the Arweave ecosystem. But the platform contains various projects that address fundamental issues with the existing internet and methods of true digital ownership, that other technologies have been unable to solve.

The growth and adoption of Arweave are nothing short of impressive. With over 100 projects currently being developed and nurtured using the platform, it’s clear that Arweave is making waves in the industry. Despite this, many people are still unaware of just how quickly the Arweave ecosystem is expanding. 

From the get-go, Arweave was seen as the solution to various societal problems by many teams. Adoption-wise, Arweave and its use cases became evident in 2022, as the importance of data censorship resistance and permanence became more apparent than ever in that year. However, when zooming out and looking at the picture on a larger scale, one could argue that that is just the beginning.

8. There is no real value proposition to $AR

The eighth misconception is that there is no real value proposition to Arweave’s native token AR, but this is not true. Let’s take it from 

As DesignBlock puts it:

Did you know 85% of Arweave data storage fees go to endowment? These $AR fees are virtually removed from the circulating supply and will go into incentivizing miners for the next 200+ years.

You can also watch Sam William’s explaining the whole method here.

9. Arweave’s model is broken, with no direct value accrual despite the high amount of usage and the high transaction count

The ninth urban myth involves the idea that Arweave’s model is broken due to the lack of direct value accrual despite the network’s high usage and transaction count. Arweave offers a cheaper alternative for non-financial applications without compromising security. Unlike Ethereum’s fee market for block inclusion, Arweave does not charge for transactions, which makes it an ideal platform for applications that require millions of small transactions without incurring high costs. 

This feature makes Arweave an attractive option for decentralised social applications that require a large number of transactions. I divert you back to point number 1.

And finally…

10. Arweave is expensive in comparison to Filecoin and others

Lastly, many users are under the impression that Arweave is expensive in comparison to Filecoin. The issue is that simply comparing the current storage costs of both of them over a 200-year period is flawed, as it doesn’t take into consideration the sustainable Year-on-Year (YoY) decline in storage costs inherent in Arweave’s model. On top of this, Arweave 2.6 lowers the storage acquisition cost for the network by encouraging miners to use cheaper drives to store data, rather than optimising for drive speed. And the cost will likely drop as predicted. 

According to Backblaze’s Hard Drive Cost Per Gigabyte:

The cost per gigabyte has continued to fall over the past 13 years we’ve been tracking our drive purchases. This was in spite of the Thailand drive crisis which started in 2011, as well as the Coronavirus and the continuing supply chain problems it caused.

Bonus points round

Two additional points to be made are, firstly, that Arweave uses Proof-of-Work (PoW), not Proof-of-Stake (PoS), so staking $AR for a yield to secure the protocol is not possible. And secondly, Arweave uses SPoRa (Succinct Proofs of Random Access) as the consensus mechanism, replacing the previous PoA (Proof of Access).

If you learned something you didn’t know from this article, please share it with someone else who might also find it helpful.

Arweave 2.6

It is worth mentioning that just a few days ago Arweave 2.6 went live, bringing with it some major updates, including:

  • Lowering the storage acquisition cost for the network by encouraging miners to use cheaper drives to store data, rather than optimising for drive speed.
  • Lessening energy wastage in the network by directing a greater proportion of mining expenditure to the useful storage of data.
  • Incentivising miners to self-organise into full replicas of the Arweave dataset, allowing for faster routing to data and an even more ‘flat’ distribution of data replication.
  • Allowing for better dynamic price Per GB/Hour storage cost estimation in the network.

Read the full Arweave 2.6 spec here.

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Az

Author and blockchain enthusiast.

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