Interpretation of Arweave White Paper Version 17 (7): How the Protocol Should Keep Up with the Times

This article will be the final part of the white paper interpretation. This section is not an argument for the core mechanisms of Arweave, but rather presents a model that allows the protocol to evolve healthily, serving as a good complement to the core mechanisms.

We all know that no protocol or mechanism can operate perfectly forever. A good evolutionary model can ensure that the protocol evolves better with technological advancements. This article presents the evolutionary mechanism of Arweave.

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Over time, the network environment in which the Arweave protocol operates will inevitably change. True permanent storage requires a system that can adapt to these changes. We find that existing blockchain governance methods fail to achieve both the adaptability of the protocol and the long-term maintenance of user protection. To address these issues, the governance mechanism deployed in the Arweave network has been improved based on traditional blockchain fork models, providing a framework that incentivizes protocol evolution. The governance procedures of the Arweave network are entirely constitutional in nature; they are social agreements reached among community participants, allowing technology to change as needed. The complete framework and the principles it references can be found within the Arweave network itself.

Mechanism Overview

At the core of this framework is a system that activates and rewards permissionless innovation through forking on the Arweave protocol. This mechanism facilitates a form of evolution: it provides a mechanism to generate, test, and select better versions of protocol improvements.

It allows anyone with an idea to propose a version of protocol improvements with rewards, thus creating a market for mechanism evolution. Broadly, this mechanism functions as follows:

1. Innovators choose a protocol based on previous versions to carry out their new work. They select their innovative parent version based on their understanding of its adoption rate and applicability.
2. Then, innovators create a new version of the protocol and submit it to the community, minting a new number of tokens that they believe represent a reasonable reward for their contribution.
3. Finally, community members evaluate this new improved version, and if it provides sufficient improvement within a reasonable range, they choose to use it over other options.

This process creates a protocol that evolves with environmental changes, maximizing its practicality and adaptability while minimizing dilution. Thus, to have their proposed new version recognized and accepted, innovators need to meet the needs of both protocol users and other innovators, the two main market participant groups. Once this goal is achieved, they will receive the rewards recognized by the market.

Cooperative Motivation

This permissionless mechanism encourages all market participants to collaborate rather than compete with earlier versions of the protocol. Specifically, there are three main reasons that motivate anyone attempting to build a permanent data storage system to participate in this mechanism:

• Faithfully participating in this mechanism allows them to easily promote the adoption of improved versions through an activated and highly engaged user base. This maximizes their innovation rewards while minimizing cost expenditures.
• By faithfully participating in the mechanism, innovators can expect their improved versions to become part of the lineage of permanent data storage systems. Therefore, others will advance their protocols (their data and tokens) forward.
• Anyone attempting to create a permanent information storage system needs a flexible and adaptable mechanism to cope with an environment that will undoubtedly change over time. Arweave's evolutionary framework provides a solution to this problem that everyone can participate in without cost or restrictions.

Therefore, the real costs incurred by innovators are very low, making participation in this mechanism more ideal than creating a competitive service independently.

Incentives for Unified Datasets

There is another strong incentive for innovators: maximizing the value of their newly evolved versions by merging data from forked lineages. A unified protocol is generally more valuable than merely an evolved version of a specific fork lineage. The basic strategy to achieve this unity includes two elements: addressing technical issues of different communities and incorporating data from branches into the new evolution. If executed correctly, this strategy of unifying data will diminish the motivation for community members to continue participating in forks, as unified datasets tend to maximize value.

Figure 1: Data from forks can be integrated into the evolution version accepted by the protocol.

If the result of the following expression is positive, innovators will be motivated to merge data from different forks on the evolutionary tree:

Where:

• V = Net value gain or loss resulting from merging data from forks.
• F_M = Market capitalization of the fork.
• C_D = How much market capitalization proportion will transfer from the old fork to the new fork if old data is merged.
• C_N = Regardless of whether new data is merged, the proportion of market capitalization that will transfer from the old fork to the new fork.
• D_C = The cost required to replicate old data into the new evolutionary version.
• D_V = The intrinsic social value of including data from forks in the new evolution.

In this equation, the value of DC is typically smaller than FM, incentivizing innovators to unify the most prominent forked data. Therefore, even if users' data is uploaded to a fork, there is a high probability that it will be unified into subsequent authoritative evolutionary versions in the future.

The overall effect of these incentives is that token holders will accumulate a range of assets across different evolutionary versions, while Arweave users can expect their data to be maintained by a continuously improving set of protocols, evolving alongside the network.

For a deeper analysis of the various components of the framework, you can read the article "Evolving Arweave Framework."

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