The current Arweave ecosystem applications are no longer just about storage

Author: Rhythm Research Institute

In the impression of many, Arweave has always been known for providing low-cost permanent storage services. However, as the Arweave ecosystem gradually matures, more new application forms based on Arweave technology have begun to emerge.

Can you imagine minting and trading NFTs directly on Arweave? Or paying for ERC20 tokens at zero cost on Arweave and directly exchanging these assets for stablecoins on Arweave's native trading platform?

This article will introduce readers to more new application scenarios in the Arweave ecosystem through several typical applications.

1. Minting and Trading NFTs

Previously, the only connection between Arweave and NFTs was helping other ecosystems' NFT projects store metadata. However, it is entirely possible to build a complete NFT trading platform using Arweave's technology. Below, we will take the recently popular music NFT platform Pianity as an example to analyze the underlying construction logic.

Pianity is a music NFT minting and trading platform that helps creators tokenize their music works as NFTs and sell them to generate ongoing revenue. So, do the NFTs traded on Pianity use the familiar ERC721 standard?

We first visit Pianity's homepage and randomly click on a music NFT. On the details page that opens, we can listen to the song and browse the basic information about it.

At the same time, we can see a storage transaction link for Arweave in the lower left corner of the details page. Clicking on it will take us to the browser interface for that transaction.

In this transaction, the audio file of the music is permanently stored on the Arweave chain. We can also see that the Input field of the transaction calls the mint function in the Pianity smart contract to mint a new NFT. The number of NFTs generated is 100, and the copyright owner's address is: wigfR4Dm76tDOTz8wjhJNauHUQc493Mdy8YFsFhwVRw.

The NFT contract address that was called: SJ3l7474UHh3Dw6dWVT1bzsJ-8JvOewtGoDdOecWIZo, appears to be the minting address for all NFTs in Pianity.

Next, we click on the link to this NFT contract address (https://viewblock.io/arweave/address/SJ3l7474UHh3Dw6dWVT1bzsJ-8JvOewtGoDdOecWIZo) to enter the corresponding browser interface.

In this interface, we can see all transactions related to this NFT contract, as well as review the complete code of the entire contract and its latest status (such as the latest owner information of a specific NFT).

By clicking the STATE button on the right side of the smart contract interface, we can query the owner's information.

It can be seen that the entire process of minting or trading NFTs on Pianity does not involve other public chains, nor does it include the metadata fields commonly used for storing multimedia files. The entire process of minting NFTs is simply sending a transaction to the NFT contract on Arweave, while simultaneously saving the song's audio file on the chain.

According to Pianity's official documentation, the NFT standard used in Pianity is a new NFT standard built on Arweave. This standard fundamentally addresses the issue of off-chain storage of NFT metadata compared to the previously familiar ERC721 protocol.

The reason NFTs on Ethereum needed to point to off-chain storage addresses through metadata fields is due to the high on-chain storage costs of general public chains. The NFT standard based on Arweave naturally enjoys the advantage of low-cost on-chain storage. Therefore, in the NFT standard on Arweave, it can truly achieve a complete and inseparable unity of content and NFT. This standard is also referred to as Atomic NFT.

Atomic NFTs solve the biggest trust issue in traditional NFT standards. Under the Atomic NFT standard, users no longer need to worry about the content storage of NFTs. As long as the NFTs held in a user's address still exist, the stored music and other content must also exist simultaneously. This, to some extent, further reduces the trust cost for users in the process of trading NFTs. Users no longer need to understand complex concepts such as metadata and various storage methods, making the trading process straightforward and truly achieving trustlessness in transactions.

For the future creator economy, where text, audio, and even video files are the main products, the Atomic NFT standard based on Arweave technology undoubtedly creates a favorable condition for the future development of the industry.

2. Creating Profit Sharing Tokens for Smart Contracts

Just as there is a new NFT standard in the Arweave ecosystem, Arweave also has its own ERC20 token format. This new token standard is called Profit Sharing Token (PST).

Developers can set the corresponding PST tokens when deploying smart contracts and agree that PST holders will share the gas fees generated by the contract proportionally in the future. Therefore, the more a smart contract deployed on Arweave is used, the higher the intrinsic value of its PST tokens.

Currently, many native Arweave ecosystem projects have issued their own PST tokens. For example, the VRT token issued by the PST trading platform Verto and the ARDRIVE token issued by the ArDrive cloud storage application based on Arweave both belong to the PST model.

This type of token construction model provides developers with richer channels to capture value. As long as the application you develop is widely used, even if the developer does not carefully design the token economic model, the revenue captured through PST tokens can still provide stable income.

Of course, the development of PST tokens is still in its early stages. In the image above, we can see that the total number of PST tokens currently supported by trading platforms is only 29, and most of the trading volumes are low, with almost no presence in the market. Therefore, PST seems more like a technical reserve prepared for the future prosperity of the Arweave ecosystem, which may play its due role in the near future.

3. Establishing Asset Trading Platforms

Yes, on a storage-oriented public chain like Arweave, developers can also establish independent decentralized asset trading platforms.

Verto is currently the only trading platform built on Arweave for trading PST tokens. When we open Verto's homepage, we can see that its overall style is also based on the black-and-white minimalist aesthetic of the Arweave system. The homepage displays basic information about the logged-in address, several common token price trends, and a display interface for the NFTs stored in the address.

If you need to trade assets, you can click the Swap button at the top of the page.

It can be seen that the trading interface in Verto is basically consistent with the familiar Uniswap frontend. The assets it supports, in addition to Arweave's native token AR, are all various PST tokens issued by ecosystem applications.

Currently, Verto is undergoing an overall upgrade process, so actual trading demonstrations cannot be conducted. However, based on the official demonstration video, it can be seen that Verto's trading experience is not fundamentally different from trading platforms in Ethereum. At the same time, Verto also adopts the AMM trading mechanism we are familiar with. In other words, if no one tells you that this is developed on Arweave, a public chain focused on storage, ordinary users may not feel any significant difference.

From Verto's trading records before the upgrade, it can be seen that Verto's trading volume is not active. However, this does not mean that Verto's product is not excellent; after all, the entire Arweave ecosystem is still in its early stages, and the PST assets available for trading on Verto are not yet rich. On the contrary, if it is believed that the Arweave ecosystem will thrive in the future, then infrastructure like Verto is undoubtedly an existence that cannot be ignored.

4. Free On-Chain Payments

Free on-chain payments may initially sound more like a marketing gimmick, as theoretically, it is impossible to achieve true free transactions whenever an application involves interaction with a public chain, at least not for the long term. However, the on-chain payment protocol everPay developed based on Arweave has almost achieved this seemingly impossible goal.

We will not introduce the specific principles of how everPay achieves free payments just yet, but instead, let’s experience the specific usage process of its product.

First, we go to the wallet interface of the application, where we can see the list of assets that everPay currently supports for recharge. In addition to Arweave's native token AR, all are mainstream assets that have been cross-chain from Ethereum (currently, it does not cover the native PST tokens in Arweave).

Clicking the recharge button will pop up the wallet login button. We find that although it is a native Arweave ecosystem application, everPay supports login with both ArConnect and Ethereum wallets.

For users needing to recharge Ethereum assets, they can first log in to their Ethereum wallet. The subsequent cross-chain recharge process is similar to a regular transfer payment process: first select the asset and amount, then click confirm and pay the gas fee (cross-chain is the only part of the everPay process that requires paying Ethereum gas fees), and after a moment, the transferred asset balance can be seen in the everPay account.

After a successful recharge, we can enter the operation interface for free transfers. Note the information displayed in the red box in the receiving account at the bottom of the interface. In the everPay application, the assets recharged into everPay will first be stored in the recharged Ethereum address by default, but in the transfer interface, users can directly transfer the balance from the Ethereum address to any other Ethereum address, or even to an Arweave address (note that this is not cross-chain).

In all payments completed through everPay, the entire operation only requires the original asset owner to sign through their wallet, without needing to pay any gas fees. More importantly, everPay supports seamless direct transfers between Ethereum addresses and Arweave addresses, eliminating cross-chain costs.

So, what is the principle behind everPay's ability to achieve free on-chain payments?

According to its official introduction, everPay utilizes Arweave to store transaction records, allowing it to support transaction scales in the millions with a storage cost of just $1. In other words, the only cost of payments made through everPay is the storage cost of storing this payment transaction record on the Arweave chain. Of course, for the Arweave public chain, which is optimized for storage, the storage cost of a single payment record is negligible. Therefore, the everPay team simply waived this already minimal storage fee, allowing users to use a truly free on-chain payment service.

Free payments for stablecoins have always been a rigid demand in the crypto industry. After Tron began charging transaction fees for transfers, there has yet to be a good alternative in the industry. The free payment application created by everPay using Arweave's storage technology may be a direction worth paying attention to.

5. Becoming Storage Middleware for Other Blockchains

Strictly speaking, these applications still primarily utilize Arweave's storage capabilities, making their inclusion in this article somewhat off-topic. However, since these applications consume a significant amount of Arweave's storage space and are major contributors to the growth of Arweave's business data, they will be briefly introduced in the final chapter of this article.

(1) Bundlr

The biggest obstacle a new Web3 application encounters when using Arweave for storage is the payment of storage costs. It is hard to imagine an Ethereum application prompting users to install the Arconnect wallet and then purchase AR tokens to pay for storage costs when storage is needed.

In NFT platforms like Mintbase on Near and writing platforms like Mirror, this part of the storage cost is silently borne by the project parties, but this business model clearly cannot sustain larger-scale usage demands in the future.

Therefore, the entire crypto industry urgently needs a storage middleware that allows users of other smart contract public chains to more conveniently purchase Arweave storage services. This is the first storage middleware product we will introduce, Bundlr.

Bundlr is a product that just launched last month, and its official website is extremely simple.

The main business logic of Bundlr is also quite simple. First, users from other public chains can directly delegate storage tasks to Bundlr and pay for storage costs using the native tokens of their respective public chains, with Bundlr converting other public chain tokens into AR to pay for the storage gas fees.

Secondly, Bundlr can package multiple storage transactions into one (this packaged transaction is called a bundle) and submit it to the mainnet. This greatly reduces the number of transactions on the Arweave mainnet, thereby indirectly increasing the transaction throughput of the Arweave mainnet and can also lower the gas costs of each storage transaction to some extent.

Currently, users on Polygon can already pay Matic directly to Bundlr to cover their storage costs on Arweave, and Bundlr plans to gradually support more public chains in the future.

In the Arweave browser, we can also see that the number of transactions using Bundlr for storage is gradually increasing. In the transaction browsing interface below, the transactions marked with purple symbols are storage transactions packaged using Bundlr services.

Additionally, Bundlr uses an economic mechanism to prevent storage nodes from acting maliciously. In the Bundlr system, centralized storage nodes are called Bundlers, and each node needs to stake the project token $BNDL. If they fail to successfully complete a user's storage instruction, their staked tokens will be forfeited.

(2) KYVE

KYVE is a storage middleware that utilizes Arweave's storage capabilities to establish a connection between Arweave and other public chains. Unlike some projects that only use Arweave to back up user data in applications, KYVE chooses to back up the entire historical data of a public chain.

We know that the storage of historical states of public chains mainly relies on full nodes in the public chain network. However, operating a full node is costly, and new full nodes need to repeat all previous computational processes to synchronize historical data, which is time-consuming and labor-intensive. Additionally, retrieving historical data from the blockchain via full nodes is relatively slow.

Therefore, if the historical records of these public chains can be directly stored on Arweave, which excels in storage, both new nodes synchronizing information and retrieving historical data will see significant efficiency improvements. The only issue is how to ensure that the historical data stored on Arweave is not tampered with.

KYVE's approach is to establish an economic incentive system to solve this key issue. Currently, there are two types of nodes in the KYVE ecosystem: storage nodes and validation nodes. Storage nodes need to stake project tokens and submit the information that needs to be stored to Arweave. Validation nodes are responsible for verifying the accuracy of the information, and if they find that a storage node is acting maliciously, the system will forfeit their staked funds. Through this economic game mechanism, KYVE ensures the authenticity and validity of the blockchain information uploaded and backed up through its system.

Although KYVE is still in the testnet phase, it has already supported data storage for several mainstream public chains, including Solana, Cosmos, and Near. Following this trend, KYVE may quickly evolve into a historical archive for the blockchain industry, utilizing Arweave's storage capabilities to preserve all historical data generated by other public chains. This addresses the issue of too few full nodes in some public chains and the inefficiency of data retrieval.

Key Pillars Behind the Development of the Arweave Ecosystem

Most of the application forms introduced above require Arweave to provide support for smart contract functionality at the underlying level. How a storage-focused public chain can support smart contracts has always been a key point that many find difficult to understand about the Arweave ecosystem. In the final part of the article, we will briefly introduce this issue.

First, the biggest difference between Arweave, based on storage consensus, and other public chains is that it does not support on-chain computation, and therefore cannot reach consensus on the computational results of smart contracts on-chain. But if on-chain computation is not supported, how can the computational results of smart contracts be obtained?

To explain in relatively simple terms, since Arweave can permanently store any data, it can naturally store the code of smart contracts. Therefore, as long as the same code can be downloaded and executed locally by users when the smart contract is executed, even without reaching consensus on the computational results of the smart contract on-chain, every user who downloads the same code can theoretically compute the exact same result.

However, this model has a significant flaw: if a smart contract is frequently used over a long period after deployment, it will generate a large number of new transaction states. New users wanting to compute the latest state of that contract from scratch will need to repeat the computation of all its historical transaction records. In this logic, hackers could even launch DDoS attacks on smart contracts by storing a large number of invalid transactions at low cost, preventing certain contracts from functioning normally.

The second problem that KYVE mentioned earlier attempts to solve is the state explosion problem of smart contracts. KYVE calculates the latest state of smart contracts on Arweave through its validation nodes and saves it on the Arweave public chain. This way, new users can start executing smart contracts directly from the latest state, significantly reducing the difficulty of using Arweave smart contracts.

It can be said that smart contracts based on storage consensus, while initially appearing to have some flaws compared to Ethereum, can still support the vast majority of application scenarios through appropriate ecological applications. At the same time, since the cost of smart contracts on Arweave is simply the storage cost of the code, the gas costs of applications built on Arweave smart contracts can be kept extremely low, providing a significant competitive advantage for future Arweave ecosystem applications.

Conclusion

1. In the early days, many viewed Arweave as a competitor to Filecoin, but from its current development potential, it is clear that Arweave and Filecoin have never belonged to the same track. The future Arweave has the potential to compete with mainstream computational public chains.

2. Applications in the Web3 era, whether centered around creator economies or in fields like gaming and social networking, have seen a significant increase in their data storage needs compared to financial applications, and current mainstream public chains clearly cannot support this level of on-chain storage.

We used to assume that NFTs could confer rights, but if the text, music, or video represented by NFTs cannot be reliably stored, then the NFTs purchased by users may not be fundamentally different from traditional commercial bills issued based on commercial credit. The Atomic NFT model created based on Arweave seems to be one of the alternative solutions to this problem.

3. Since the beginning of this year, we have witnessed countless public chain ecosystems and token price explosions. However, looking back, most public chains have ultimately fallen into the quagmire of homogeneous competition. In this environment, storage-oriented public chains represented by Arweave have opened up a new battlefield in less conspicuous areas. Both Arweave and the new social-focused public chain Deso have relied on low on-chain storage costs to achieve differentiated competition against other public chains.

Innovation and trial-and-error have always been the most primitive driving forces behind the development of the blockchain industry, and such projects frequently emerge in the unconventional Arweave ecosystem. If you are tired of the various DeFi clone projects in the industry, you might want to take a look at the Arweave ecosystem, where projects are continuously exploring more possibilities for blockchain applications.