CoinEx Institution: Can the Storage Star Arweave Replace Filecoin?
Arweave is a blockchain storage platform with a new data structure. Based on Proof of Access (POA), a novel consensus mechanism which incentivizes miners to store history infinitely and share it as required, miners will benefit from random old blocks in the storage chain in addition to new block rewards. Arweave applies the RadomX algorithm for mining, and at the same time introduces the block integrity rate parameter.
Arweave aims to overcome the scalability and cost issues in blockchain data storage in a sustainable way, and provide permanent on-chain data storage services; at the same time, by innovative means nodes can realize their main functions without processing the entire chain of information.
Sam Williams, co-founder and CEO of Arweave, is a decentralization enthusiast with extensive experience in decentralized system design and implementation, and has delivered various projects, including distributed operating systems. He started building software a long time ago and is good at Erlang and operating system development. He used to work for Minespider and Loki Foundation.
Filecoin is second to none when it comes to the most popular project in the niche market of storage. Established in 2017, Filecoin built a decentralized storage market on IPFS through the token incentive model. Having been sought after by large investment institutions, this project raised funds of 257 million US dollars, making itself one of the largest ICOs in the history of blockchain.
As an underlying protocol of the Internet, IPFS aims to create a more open, fast, and secure Internet by solving data transmission and positioning problems with distributed hash tables and enabling point-to-point transmission. Data is stored in the structure of a hash chain. Filecoin, serving as a resource trading market, aims to provide a cheaper storage network where miners contribute to the overall network by providing storage space and network bandwidth for which users need to pay.
In October 2020, after the Filecoin mainnet was launched, market excitement pushed speculation to an all-time high, leaving good and bad projects mixed up in the market. As early as late April 2020, on the contrary, Arweave2.0 entered the market before Filecoin, and has maintained continuous growth. In addition, Arweave also raised funds from well-known investors, including Andreessen Horowitz, Union Square Ventures and Coinbase Ventures.
Unlike the decentralized storage that IPFS focuses on, Arweave commits itself to permanent storage. It is designed to solve problems prevailing in today’s Internet, i.e. limited freedom of speech, excessive censorship, and easy tampering, thus creating a protocol that allows permanent file storage with one payment. The storage solution called Permaweb it provides is a permanent network that directly writes the content into the block for storage relying on the non-tamperable nature of the blockchain.
The Arweave protocol provides permanent storage as a service, not by establishing a contract between the user and the storage provider, but by creating an encrypted incentive mechanism for miners to copy as much data as possible. Permanent data storage is a brand new service, one that Amazon, Google and other companies cannot provide.
In November 2019, the Arweave network listed the native token AR which can be the encrypted information to be fed into the system and also incentives for miners. Its genesis block produced 55,000,000 AR and began to release on June 8, 2018, and another 11,000,000 AR (an additional 20% of the genesis block output) gradually flowed into the market as a block reward. The circulating AR is being stored in the wallet or endowment pool. To incentivize mining, miners will be rewarded with some AR for each block mined, and the block interval is set at 5 minutes to prevent inflation; in addition, the token reward for each block generated is reduced, that is, 10% of the tokens in the genesis block are released in the first year, and the rewards are halved every year thereafter.
AR is mainly used to store payment data permanently, but it also has transaction value. Users need to pay AR as a transaction fee to record the transaction in the block. In other words, to store a file on Arweave, the user needs to create a transaction and pay a certain amount of AR tokens as a network fee to store the data infinitely.
The transaction fee paid by the user will not go directly to the miner who has mined the block. Most of the transaction fee goes to storage endowment, which will then be gradually distributed to the miner’s wallet.
As we all know, Filecoin has a thriving community and many early investors. Arweave serves a brand new market, a market uniquely realized by blockchain technology, a market that can cater to the existing storage market and release new ones. The network has already been launched and kept expanding. Decentralized application interfaces from projects such as SushiSwap, Uniswap V2 and yearn.finance have recently adopted Arweave, paving the way for its application by thousands of applications. That will all ultimately catalyze the development of Arweave.
Filecoin is not acting well as expected, and there is even such voice in the industry that it will be replaced by Arweave someday. Indeed, being an excellent storage project, Arweave has outperformed many of its counterparts and thus drawn much market attention. Currently, both CoinEx and Huobi have listed AR. Stay tuned for its future.
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