by: Jordi Guillamon
Today we bring you an exclusive report that we have made on an asset that we have been investigating, which we see has many qualities that make it one of the assets to observe in the long term within the Ethereum network ecosystem. We are talking about Arweave, a decentralized storage network designed with the aim of providing a platform that provides indefinite data storage. Let's dive deep into Arweave; join us!
What is Arweave?
As we have mentioned before, Arweave is a decentralized data storage protocol that raises the idea of indefinite data storage. They define themselves as "a perpetual, collectively owned, sustainable hard drive with a one-time, up-front payment fee. The protocol works by connecting people who have spare space on their hard drives with individuals and organizations that require permanent data storage or content hosting. As a practical example we can see how Glovo connects customer orders with restaurants. In the case of Arweave, a decentralized network is used, such as Ethereum, where the stored data is backed up by a sustainable endowment ensuring that they are available in perpetuity with resistance to censorship In addition to the Arweave protocol, the concept of the permaweb is raised: a global web that gives ownership to the community in which anyone can contribute or get paid for staying in. The permaweb looks like the traditional web, but all the content, from images, videos, documents, has This complete web application is permanent, recovers quickly and remains decentralized indefinitely. Just as the first web connected people over great distances, the permaweb connects people over extremely long periods of time. Thanks to this advance, we will no longer see those typical input failure messages on web pages (those annoying “404 Not Found error” messages), which introduces the protection of property on the elements and quality maintenance. of web pages in general.
Arweave home page. Source: Arweave
The team behind Arweave
Founders and Core Team
The founding team is made up of Sam Williams and William Jones, two Ph.D. candidates at the University of Kent in the UK. The project was first announced as Archain in August 2017, then changed its name to Arweave in February 2018 and officially launched in June 2018. Williams landed at the company bringing his expertise in decentralized and distributed systems. As part of his studies he developed an operating system called HydrOS, but ultimately decided to drop out of graduate school to focus all his time and energy on the project. Jones focused on spending time on the studies he was doing on graph theory and neural networks, to such an extent that Jones left the project in mid-2018 around the official launch dates of the project. Eventually, Jones achieved his Doctor of Philosophy degree.
According to Williams himself, the concept behind the project came to him while he was walking one day in the mountains of Scotland and he immediately contacted Jones, with whom he developed the technical details. After launching Arweave, Williams was appointed as an advisor to Minespider, a company that provides blockchain-based supply chain tracking for the commodities industry, and served as a mentor for the Techstars accelerator program. Although Arweave was founded by Williams and Jones, in January 2020 the DAO (Decentralized Autonomus Organization or Decentralized Autonomous Organization translated into Spanish) was founded, made up of core members of the community to foster the development and growth of the network and its ecosystem. The protocol had a total annualized revenue of $1.06 million.
Arweave team with their respects to the project.
Project advisor
Within the list of Advisors that we can find within the project we have the names of personalities who have traveled within the cryptocurrency ecosystem, with extensive experience in the creation and management of companies, and especially in matters of communication between companies, clients and governments in parallel with each other. All of them bring different nuances that can help the company to constantly expand and further develop the future of decentralized data storage. Next, we leave you the information about the Advisors that we have mentioned previously:
Arweave Project Advisors
Project partners
One of the usual data that is analyzed to determine where promising projects can be found are the partners that have contributed in some phase of the project for joint growth and development, either by providing capital in seed phases or by directly contributing to the development of the project. . It should be noted that Arweave, due to the characteristics that make it up, is considered as the final step of the integration that we are currently witnessing in the Ethereum platform towards the proof of validation of blocks by participation (Proof of Stake in English or Proof of Participation translated into Spanish). Spanish), leaving behind the previous validation process of the proof of work (Proof of Work in English or Proof of Work translated into Spanish). By the time the Ethereum network upgrade is fully integrated, it is very likely that it will end up integrating Arweave's decentralized data storage infrastructure into the Ethereum network transaction ledger. As we see below, it has high-level partners, such as Coinbase Ventures, Multicoin Capital or Andreessen Horowitz, which gives us indications that this project is promising knowing that these Partners have a long history of investments in the seed phase of projects that they have been successfully developed and have demonstrable experience with the vision of seeing the value of the projects in which they invest. Later we will see how the listing of the Arweave token, the AR, on high-level Exchanges such as Binance promotes investment in the projects they list and positively influences the price of the asset that we will present below.
Partners that we can see on the main page of Arweave
Project investors
The project has formed different rounds of financing throughout its existence, where a total of 22 million dollars have been received in 7 rounds of financing. These rounds have been made up of different investors at different stages of the project, such as FJ Syndicates, a16z Crypto, Coinbase Ventures, Union Square Ventures, Andreessen Horowitz or Multicoin Capital are the most renowned investors in a list of 15 investors. We see how names that we had previously seen mentioned in the list of partners also appear again in the list of investors, so it gives us a positive signal that they are involved with the company from an economic point of view, providing support by investing capital in the project. and at the same time they are part of the team of partners with whom, collaborating side by side, they can help the Arweave project to scale and expand over the following years. Within our thesis we have already mentioned how blockchain infrastructure projects can bring about very positive revolutions for society and the way in which our data is processed and stored.
Tokenomics Arweave (AR)
The utility token; AR
The native token of the Arweave protocol is recognized by the AR ticker. It is a utility token used to make the payments required to add data to the Arweave network, where it can be accessed through the use of web browsers on the Arweave permaweb. Users pay the cost that Arweave has predicted will be enough to store the data forever. It currently has a maximum supply of 66 million AR tokens, but instead has a total supply of 63,190,435, which tells us that there may be a portion of the supply that should have been set aside for grant programs. Currently as of writing 2/9/2022 it has a circulating supply of 51% of the total, which is also a good sign if we look further and try to find out how many tokens will be released in the following months. It has a market cap of $1,357 million and a fully diluted market cap of $2,683 million.
These last two data are interesting to observe, since they can give us information on the long-term valuation that we could give to Arweave to try to close a price as close as possible with the analyzed data and we see that it is interesting to have half of the outstanding supply for future offer terms. We also see how it has a trading volume of 57 million dollars in the last 24 hours, so we see that it is a highly demanded protocol due to the volume of capital that this protocol moves daily. It is currently priced at $40.66, which places it with an impressive ROI (Return on Investment) currently since its launch of 43,000% and 55% below its ATH (Asset Historical Maximum). in English), in turn seeing the growth potential it has in the long term makes it a candidate to be one of the most revolutionary protocols in the DeFi and crypto space.
Characteristics of the Arweave Protocol Ecosystem
Financing rounds with the participation of investors/partners
As we have mentioned before, the protocol benefits from different investors who in turn act as partners of the project, and we could differentiate 3 rounds of financing that we could call the most important of the project:
1- Private sale held between June 3 and 6, 2018. Arweave carried out an ICO (Initial Coin Offering) where it managed to raise a total of 8.7 million in ETH, covering 100% of the round offer. The Arweave teams reported that more than 30,000 people applied to participate in the company's ICO through the Whitelist that was provided. Of the people who were whitelisted, 1,800 were selected to be participants. That funding round offered the tokens at a price of $0.73/token, making up 20% of the tokens available for sale.
2- The first seed phase as Venture Funding (those mentioned above). It was held on November 6, 2019 where the company raised $5 million in exchange for AR tokens from Venture Capital firms including A16z crypto, Multicoin Capital, and Union Square Ventures.
3- The second was formalized four months later, on March 5, 2020 where a total of 8.3 million dollars were raised in exchange for AR tokens from Ventures Capital, including Andreessen Horowitz and Coinbase Ventures and repeating funding a16z crypto and Union Square Ventures. Arweave publicly stated that this round of funding would be used to incentivize community development.
Returns on investment of the AR token since the launch of the ICO. Source: Icodrops
Technology behind Arweave; Blockweave and proof of access
The Arweave protocol combines a new data structure called "blockweave" and a new consensus mechanism called Proof of Access. As the name suggests, the blockweave protocol uses a block-based structure where each block is linked to two blocks:
- The oldest block in the Arweave blockchain.
- The recovery block, a randomly selected block within the protocol history. The recovery block is determined by taking the hash of the current block and calculating its modulus with respect to the height of the current block.
Miners must provide hashes of the previous two blocks to create a new block and get the block reward in the form of Arweave's native (AR) token.
Chronology of movements of the last year and current situation
In order to see how the price of the Arweave token has been moving in the last year, we are going to carry out a chronological technical analysis, explaining the important points that have been developing during the year 2021 and the beginning of this 2022. We are going to support each other Through the Tradingview tool together with a Binance Exchange price chart with the AR/USDT ticker on a daily basis from its IEO (Initial Exchange Offer):
Initially, we can see how the token was launched on May 14, 2021, which was listed at a price of $27.18, leaving an upward wick placing a maximum at $77.80 with an amplitude of one 186%. At that time it was the highest point that this asset had ever reached to date, which is why we previously commented that the fact that a token is listed on a notorious Exchange positively influences the price.
But misfortune made the launch on the Binance platform coincide with the bearish period that the cryptocurrency market experienced during the preparation of the start of summer. It was progressively descending to the point that we could finally see signs of recovery on July 22, when the change in trend was defined and the beginning of the first upward movement that the token would experience.
If we place ourselves at point no. 1 on the graph, we can see how on August 16 the volume of purchases began to increase sharply, managing to rise by 360% in just 15 days (no. 2). Thanks to the climatic volume candle that marked the first upward movement, the first great support of the movement (lower channel) could be delimited.
At the beginning of September it fell back (No. 3) as it lost buying interest in higher areas, where the area with the most trading on the chart (second channel located in the middle) was just located, to resume contact with the second resistance for two more days. late (#4), which turned out to be a failed attempt as it fell back to lower channel support during the last week of September (#5).
Starting the month of October, we saw how it became supported again in the aforementioned area and started an upward movement to try to break the second resistance of the middle channel, but approaching the area it fails again (#6) and returns to reject the area, taking the price to the levels of the stop it had previously made, ending the month of October (#7) at the levels of the beginning of September.
When fear made its presence known again, the month of November arrived to erase all those thoughts and with a climactic buying volume candle, it catapulted the Arweave token to appreciate 100% (#8). But again, we saw how all that bullish movement faded twice: the first we can see with the first correction (nº9) that an upward movement was confirmed by pulling back the previous zone (nº10) and finally falling strongly supporting (nº11) coincidentally in the guideline proposed at the beginning of August.
When it seemed that he was breaking the guideline, he began the month of December relying again on the life support of the movement (nº12) and tried to retake the middle channel to return to higher levels (nº13), he corrected again slightly (nº14) and formed a triple top (#15) late in the year that definitively rejected the mid-channel zone, taking it back to the bullish trendline we outlined earlier (#16). In the middle of the month of January 2022 we saw how it got stuck in the guideline, to finally descend below it (nº17) setting off the alarms having broken the life support of the movement (nº18). We arrive at the current approach, where we see that these last few weeks, including the beginning of February (No. 19), have returned to the path recovering life support above it and we see how it is at 50% of its historical maximum.
Pros and Cons of Arweave
In favor of Arweave we can argue that data, a critical component of advanced technologies such as Machine Learning and AI, is the king of the 21st century. The Arweave protocol is a robust blockchain network project that could potentially revolutionize the way online storage and data management works. It is capable of handling more than 5,000 transactions per second. Considering the complex consensus that is involved, this is quite a feat, so it could subsequently host the Ethereum platform.
In turn, the AR token has immense utility within the Arweave ecosystem, as well as fairly stable historical price action. AR holders will greatly benefit from adopting the decentralized storage services offered by Arweave. Partnerships with Solana, in addition to the rich experience background of Arweave's founders, add to the credibility of the Arweave project.
On the other hand, we are skeptical about the protocol that addresses the problem of scalability when addressing the global market. If Arweave fails to fix scalability-related issues, the project could suffer a downturn, causing the price of the AR token to drop drastically. Without a doubt, Arweave's innovative technologies are great and are required now more than ever. However, this could become a potential drawback due to the competition that the project could attract; for example, competitors could come up with better and more feasible solutions based on the Arweave Network.
Last conclusions; Is Arweave (AR) a good investment?
After analyzing the historical and recent price action of the AR token, the crypto is poised for exponential growth in the coming years. According to WalletInvestor, the AR token is currently undervalued and could surge more than 108% in a year. The most interesting thing is that their algorithms predict that AR could recover its ATH ($90.94) by the end of 2022 and reach a price of $252 in less than five years. These growth forecasts are supported by the increased interest in the adoption of decentralized storage systems in the industry.
Price prediction of the course of the year 2022. Source: WalletInvestor
We hope that the report you have just read has helped you to better understand the potential of this project, we remind you that this is not investment advice, it is a compilation of relevant information.
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