Arweave's AO: What You Need to Know
$AR Bull Case, Transition from Storage to AI, & More
Last week we briefed you on why Arweave, a protocol that has been building for quite some time and hasn’t typically attracted a whole lot of attention, is now more interesting to some. The main reason is AO (Actor Oriented), a hyper-parallel computer built on top of Arweave. This recent addition has seen the native AR token outperform the relative markets recently, uncharacteristic for the token. Despite this significant undertaking, another catalyst has been teased…
Arweave has mostly been a decentralized storage play, but is now expanding it’s offerings into the realm of AI with its AO computer. AO will likely see it’s own token come to market, but for now AR is the only way to frontrun this possibility. AR is also a mature project, with 100% of FDV unlocked, one of only a few tokens in the industry which can say as much.
Stay alert, stay informed ⬇
Exposure to Relative Strength
In the current market, characterized by high volatility and rapid moves to the downside, reallocating capital towards assets demonstrating relative strength is key to continue being in the market.
In the current market, characterized by high volatility and rapid moves to the downside, reallocating capital towards assets demonstrating relative strength is key to continue being in the market.
$AR has notably outperformed during the most recent market corrections, showing unusual resilience as $BTC dominance increased and alts trended towards lower prices. These quick flushes provide great opportunities to reallocate capital from underperforming assets to higher quality options or “faster horses”.
This tactical rotation capitalizes on the relative strength of assets like $AR during downturns, positioning the portfolio for potential incremental gains when the market rebounds. Conversely, maintaining positions in slower-moving, weaker assets during such times increases the risk of exacerbated losses if market conditions worsen. Overall, this presents a favorable environment for pairs trading, not blindly buying $AR, but also hedging and protecting ourselves from overall market risk.
Zooming out, Arweave is commonly recognized as a solution for decentralized data storage, often categorized with storage platforms like Filecoin, Storj, Siacoin, ShadowDrive, etc. Distinctly, Arweave has evolved beyond mere storage solutions, venturing into the AI narrative, with signs of replicating a rerating similar to $NEAR’s. The latest initiative, the AO Hyper Parallel Computer, attempts to solve the challenge of achieving infinite scalability, and incubate an ecosystem of projects that can support multiple high-growth market sectors, such as AI, DePIN, autonomous agents, etc.
While the release of AO in February is highly likely to be priced in, we might as well expect to see another large catalyst coming in the near term.
Considering that Arweave can now be categorized as an AI project, it would be very opportunistic to release the announcement coinciding with NVIDIA’s earnings on May 22.
Key Takeaways
Arweave aims to maintain data "for the maximum possible term, without change."
Inspired by Bitcoin's proof-of-work mechanism, Arweave modifies this concept to suit large-scale data storage.
Users pay a one-time upfront fee to store data on the network, a portion of which is used to pay for the initial storage costs for 200 years, and the remainder goes into an endowment fund to pay for future storage costs.
With declining storage costs, the tokens in the endowment fund might not enter the circulating supply for a very long time, creating deflationary pressure.
$AR boasts one of the highest mcap/FDV ratios in the industry, contrasting with the current negative sentiment that surrounds the meta of low float with high FDV tokens.
Right now, the only way to frontrun the AO launch is by having exposure to $AR.
Sam Williams, founder of Arweave, has been hinting at the release of another highly ambitious project similar to AO.
As AO continues to expand and attract more users and applications, the demand for Arweave’s storage capabilities is expected to grow correspondingly.
Arweave has been an outperformer for the large majority of the bull market, making it an attractive bet to be used in the long leg of pairs trading strategies.
$AR’s price has soared relative to $BTC in the last weeks and shown resilience during the downside moves of the overall market.
Arweave is more than a storage network, now sitting at the intersection of Crypto, DePIN, and AI, recently entering the top 50 in tokens by market cap.
Background on Arweave
The team of Arweave is led by Sam Williams, who currently operates as the CEO. After graduating in 2014 with a First-Class Bachelor of Science with Honors (BSc Hons.) in Computer Science, Sam pursued a PhD at the University of Kent. During that time, Williams' research focused on distributed systems and their scalability, which laid the foundational knowledge for Arweave's unique approach to data storage.
The team around Williams has worked collectively to evolve Arweave since May 2017, taking the project from a simple conceptual framework into 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 of ~20% of the supply in June 2018 helped Arweave to secure ~$8.7M in funding. One year later in November 2019 Arweave raised $5M from a16z, USV, and Multicoin, to build out the “permaweb”. Those same investors doubled down again in March 2020, providing Arweave with $8.3M in funding alongside Coinbase Ventures.
Overview: Like Bitcoin, but for Data
Arweave operates as a decentralized storage solution, utilizing a blockchain-based protocol to offer permanent data storage. This is achieved with an economic model that involves charging a one-time fee for data storage, with the cost projected to cover data preservation indefinitely. This model leverages the concept of endowment, where upfront payments help fund long-term storage. Central to this vision of offering a global hard drive that ensures permanent storage is the $AR token, which not only allows the network to act as a data repository but will also help to power a vast ecosystem of applications built on top of AO.
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