Based on the SCP AR+AO implementation framework, build a value internet that integrates "financial-economic incentives."

1. Building the Value Internet Based on Distributed Ledger

The traditional internet built on the TCP/IP protocol suite is referred to as the Information Internet, as it efficiently and cost-effectively enables the expression, replication, and transmission of information, such as chatting and sending images on WeChat, uploading and publishing videos on YouTube, and remote working on Feishu.

The emergence of blockchain has brought about a transformation to the internet at the underlying protocol architecture level. Here, we illustrate this with the three-layer protocol stack of the Bitcoin blockchain, as shown in Figure 1-1.

Figure 1-1 The Three-Layer Technical Stack of BTC

$BTC can express and transmit, relying on the script software that runs Bitcoin, which is built on top of the underlying Bitcoin blockchain. Generally speaking, a blockchain is a chain formed by different blocks connected end-to-end through hash pointers. Each block records transactions and their related data, including block version, hash value, Merkle root, user address, transaction amount, and transaction time, etc. A single block can be viewed as a page of transaction records, while the connection of all blocks forms a complete ledger.

At the same time, because the blockchain is built on a P2P network and a POW consensus mechanism, it possesses characteristics such as decentralization, openness and transparency, permissionless, verifiability, traceability, loss prevention, and immutability. Therefore, the BTC blockchain is essentially a distributed ledger concerning $BTC, with global consensus consistency.

Importantly, the three-layer protocol stack built on the distributed ledger of $BTC realizes the protocolization of currency, pioneering the first programmable cryptocurrency in human history, allowing currency to be issued, traded, paid, and transmitted on the internet without relying on centralized third parties. This marks the beginning of the Value Internet.

The innovation of Bitcoin has led people to discover blockchain (distributed ledger) and, based on this, reconstruct the internet at various levels through software protocols, promoting the formation and prosperous development of the Value Internet, as shown in Figure 1-2.

Figure 1-2 Distributed Ledger Promotes the Formation and Development of the Value Internet

These software protocols all carry native Tokens and have built a token economy system (Tokenomics) around Tokens, achieving protocol assetization. Thus, the entire blockchain protocol framework has realized the protocolization of currency and assetization of protocols, constructing a Value Internet that integrates currency, assets, and software protocols.

In summary, compared to the traditional Information Internet, the distributed ledger based on blockchain has promoted the formation of the Value Internet concept and has conducted in-depth exploration and innovation around "value" in practice.

2. Token-Oriented Distributed Ledger - Building a Financial Value System

Since the birth of Bitcoin, blockchain has developed for 15 years, experiencing several cycles. Why do its main applications still focus on issuing cryptocurrency assets and decentralized finance (such as DeFi, NFTFi, GameFi, SocialFi, etc.) surrounding cryptocurrency assets? We explore the underlying logic from the two largest public chains by market capitalization: Bitcoin and Ethereum.

Public chains are the core infrastructure for ecological development, and other protocols, smart contracts, or DApps are built on public chains. Different public chains are essentially different distributed ledgers, and it can be said that, to a large extent, the underlying architecture of distributed ledgers determines and limits the construction above them.

Bitcoin was initially created by Satoshi Nakamoto, with the original design intended as a peer-to-peer electronic cash system, focusing on achieving the transmission, payment, and simple transaction functions of $BTC. Bitcoin's design is very conservative, deliberately limiting its scalability. Therefore, before the emergence of inscriptions, Bitcoin had almost no ecosystem, just a distributed ledger oriented towards $BTC.

Ethereum, compared to Bitcoin, indeed has more powerful scalability, mainly reflected in its ability to support the construction of various smart contracts and decentralized applications (DApps). This has led to a series of trends in the blockchain field, such as ICOs, DeFi (decentralized finance), NFTs (non-fungible tokens), etc. These technologies and applications have not only led to the prosperous development of the Ethereum ecosystem but also attracted widespread attention and participation globally.

However, it is very evident that, despite high expectations and calls for "going beyond the circle" at that time, the entire ecosystem still revolved around the issuance of cryptocurrency assets and decentralized finance closely related to assets, leading to a general belief that the Ethereum public chain had developed into the settlement layer for financial applications.

Returning to the nature of the Ethereum public chain as a distributed ledger, it may help to understand its current development status better. If we view this distributed ledger as a production system, the core element of its processing is the Token. However, compared to Bitcoin's distributed ledger, Ethereum supports tens of thousands of Token types, including FT, SFT, and NFT. These Tokens exist on Ethereum in the form of smart contracts, allowing them to participate in various complex processing, trading, and circulation processes. This establishes a closely related, combinable, and prospering financial system.

Looking at other public chain ledgers beyond Bitcoin and Ethereum, they basically do not escape this framework paradigm: Tokens are the core elements of the ledger, but they each emphasize different aspects such as computational performance, privacy, cross-chain assets, and protocol interoperability to meet different application scenarios and user needs.

Thus far, the crypto industry has developed decentralized finance (various blockchain-based intelligent digital contracts) starting from cryptocurrencies (assets), but has not developed a scaled cryptocurrency economy, let alone the practical significance for the real economy and the sustainable development of society. The author has previously organized the interrelationship between currency, assets, finance, economy, and social development (see Appendix 1), which will not be elaborated here, but their interrelationships can be abstractly represented in Figure 2-1.

Figure 2-1 The Interrelationship Between Financial Assets, Contracts, and Economic Activities

In the above figure, if the core element at the center is still merely the Token, then its capability, as developed in reality, mainly lies in constructing today's financial Value Internet. However, the author believes that the Value Internet should not only encompass financial value but also economic value. The capability circle of the Token-based distributed ledger is difficult to extend to the crypto economy. But what if the core element is no longer just the Token, but rather Data as the core element?

I believe this is precisely what Arweave is doing, and it is worth further exploration.

3. The Data Trilogy - Building a Data-Oriented Distributed Ledger

Although Arweave has always been categorized under decentralized storage, it does not compete at this level with storage projects like Filecoin, Sia, or Storj, because Arweave possesses the capability of "decentralized permanent storage," which can build applications based on the "Storage Consensus Paradigm (SCP)," promoting data storage on-chain and supporting the transformation of "data resources" into "consensus data," further becoming "data elements." Thus, through the "Data Trilogy," Arweave becomes a data-oriented distributed ledger, providing innovative resources and expansion capabilities different from other decentralized storage projects, bringing feasibility for the innovation and development of the crypto digital economy, as shown in Figure 3-1.

Figure 3-1 The Data Trilogy Constructs a Data-Oriented Distributed Ledger, Bringing Innovative Development

3.1 Data Resources: Decentralized Permanent Storage

In Arweave, any type and size of data can be permanently stored, including not only cryptocurrency or asset (Token, FT/SFT/NFT) but also documents, images, audio and video, web pages, games, legal contracts, program code, and holographic states.

Is it feasible to have these data stored on-chain with a one-time payment for permanent storage and open reading? The Arweave white paper analyzes this from two aspects: economic feasibility and the feasibility of the permanence mechanism.

Regarding economic feasibility, the white paper mentions that storage costs have decreased at a rate of about 30% per year over the past few decades, and the cost after infinite years will be a constant, providing a limited cost opportunity for permanent storage, thus opening up the permanent storage market. In terms of storage pricing, the protocol adopts a storage fund mechanism to incentivize miners to permanently store any amount of data. From a practical cost perspective, permanently storing 1GB of data costs about $2, which offers good cost-effectiveness.

In terms of the implementation of the permanence mechanism, Arweave employs a mining mechanism of PoW + PoA (Proof of Access) to incentivize miners to conduct effective data mining. The more data stored, the higher the earnings, and storing rare data yields even higher returns. These measures ensure that the data replication rate exceeds 90%, and data will not be lost due to the failure of a single node or server, thus ensuring durability and reliability.

In summary, with any data plus permanent on-chain storage, Arweave will accumulate massive on-chain data resources, constructing a public knowledge base in the process of human development, laying the foundation for forming a common understanding, and also providing the possibility for introducing the SCP paradigm to build applications.

3.2 Consensus Data: Storage Consensus Paradigm SCP

Arweave introduces the Storage Consensus Paradigm (SCP), which is an abstraction and paradigm refinement of the SmartWeave concept. SmartWeave is the smart contract on Arweave, characterized by the separation of storage and computation, with storage on-chain and computation off-chain.

In terms of computation, SCP uses off-chain smart contracts that can run on any device with computational capability, allowing computational performance to be unconstrained by on-chain consensus rules, enabling infinite scalability of computational performance, and achieving excellent performance similar to traditional applications. This opens up possibilities for blockchain applications requiring large-scale data processing, intensive computation, and real-time interaction, such as machine learning, graphic rendering, online gaming, and social interaction. The ultra-parallel computing AO is generated on this basis and will be discussed further.

In terms of storage, storage equals consensus, forming consensus data. We can understand it this way:

Firstly, the input for computation comes from the stored data in the Arweave blockchain, and the state generated during computation will also be stored on-chain in the blockchain, making the blockchain akin to a computer's hard drive. However, its role is not only to store various types of data but also to ensure that the stored data is loss-proof, tamper-proof, and traceable, making the stored data a trusted source of information.

Secondly, the source code of the smart contract and all its input parameters are sequentially stored on the blockchain, ensuring that computation will only produce deterministic states, making it feasible for clients to generate and verify states locally, becoming trusted terminals, and the data submitted on-chain is also trusted data.

Together, these form the consensus data on-chain, indicating that the data on the Arweave network is not merely the content stored but carries a kind of consensus value, and is not just a static information preservation, but possesses a higher level of functionality and significance, becoming an object for verification and participation in consensus, supporting various applications and smart contracts on the blockchain.

Thus, Arweave is not just a storage platform, but a distributed ledger with Data consistency consensus, providing a new paradigm and solution for the storage, sharing, and utilization of data on the blockchain. Based on this, SCP brings two very important contributions: first, it promotes data resources to become consensus data, laying the foundation for data to transform into production materials; second, it allows computational performance to be infinitely scalable, accelerating the release of productivity.

3.3 Data Elements: Circulation and Production Collaboration of Data

As mentioned above, decentralized permanent storage constructs data resources, becoming the source of data; based on the storage consensus paradigm, it forms consensus data, which is trusted data; so how will these data exert their effects? This is about the circulation and production collaboration based on data.

But before that, there are some fundamental questions to consider: How is data identified? Whose data is it? How is data priced? How are benefits distributed? This brings us to the form of data existence on Arweave.

In summary, regardless of the type or size of data uploaded to Arweave, it is regarded as an Atomic Asset, which is the NFT paradigm of data on the Arweave chain. Viewing data as atomic assets on Arweave indeed brings multiple advantages and solutions, especially in terms of data circulation, production collaboration, and asset management:

• Data Identification and Ownership Confirmation

  Each piece of data uploaded to Arweave is treated as an atomic asset with a unique transaction ID. This design makes data easy to identify and trace, as all asset data, metadata, and contracts are bound to the same transaction ID. Moreover, each data item can be clearly attributed to its creator or uploader, facilitating ownership confirmation.

• Data Monetization and Pricing

  Data, as atomic assets, can be monetized as a new form of digital asset and achieve price discovery through circulation and trading in the market.

• Benefit Distribution and Collaborative Innovation

  The characteristics of atomic assets being easy to identify, having ownership attribution, being monetizable, and being priceable can bring about a clearer benefit distribution model, which can be automated and transparently executed by smart contracts. Thus, data can be more easily utilized by other applications or services, promoting collaboration and innovation.

It is evident that Arweave, as a platform providing decentralized permanent storage, endows data with new forms and functions through the concept of atomic assets. This approach not only addresses fundamental issues such as data identification, ownership, pricing, and benefit distribution but also releases the liquidity and application potential of data, promoting the process of data assetization in the digital economy.

These examples illustrate how to utilize Arweave's atomic asset concept to promote the innovative use of various data assets:

• Purchasing big data for certain scenarios can serve machine learning and artificial intelligence;
• Audio and video data can be constructed as atomic assets to build copyright consumption markets and permissionless secondary development;
• Gamer identity and experience data can be used to establish a trusted, decentralized player reputation system.

Even Web2 applications, combined with Arweave's consensus data, can promote the transformation of Web2 into Web3, facilitating integrated development.

At the same time, we also see that public chains or applications such as Lens, Opensea, Mirror, Solana, Cosmos, and Avalanche have already stored data on Arweave, demonstrating their trust and recognition of Arweave's decentralized storage and consensus data model. This practice not only provides their users with data permanence and verifiability but also promotes the possibility of cross-chain interoperability and collaboration based on consensus data among various public chains and applications.

In summary, Arweave has moved beyond the development framework based solely on Tokens, achieving the evolution from data resources to consensus data, and then to data elements. With the support of SCP, Arweave breaks through traditional constraints, creating new data production materials, bringing large-scale high-performance computing productivity, and reconstructing the production relationships among subjects in the processes of data circulation, exchange, production, consumption, and value distribution. Arweave is expected to bring new momentum for innovative development in the crypto industry, constructing a true cryptocurrency digital economic system.

4. Building an Economic Value System Based on the AR+AO Framework of SCP

Typically, the challenge faced by blockchain is the imbalance between strong verification and weak computation, known as the impossible triangle problem of blockchain. However, SCP successfully eliminates this constraint by achieving the separation of consensus (storage) and computation based on Arweave, allowing computational performance to be infinitely scalable. AO, based on the core theory of SCP, aims to achieve the interconnection and collaboration of large-scale parallel computers on the Arweave network, providing feasibility for the realization of large-scale computational applications, which will help in constructing a data-oriented economic value system.

4.1 The Modular Architecture and Advantages of AO

AO is a "verifiable distributed computing system" built on Arweave, representing an implementation of the Storage Consensus Paradigm (SCP). It consists of three basic units: MU, SU, and CU, as illustrated in the architecture diagram.

Figure 4-1 Modular AO Computing Architecture (Image from AO White Paper)

This is a modular architecture where not only computation and storage are separated, but MU, SU, CU, and Arweave are also independent modules that are interconnected and interact with each other.

• MU (Messenger Unit): This is the messenger unit responsible for sending information to the appropriate SU for processing, then delivering it to the CU for computation, and returning the computation results to the SU, with the messenger unit continuously repeating this process;
• SU (Scheduler Unit): This is the scheduling unit responsible for scheduling and message ordering, and uploading messages to Arweave;
• CU (Compute Unit): This is the computing unit that receives messages, performs computations, achieves state transitions, and uploads results to Arweave.

This architecture exhibits advantages in computational performance, consensus data, and application innovation:

• In terms of computational performance, starting an application on AO is equivalent to starting a process, with the system allocating and scheduling resources such as MU, SU, CU, etc. These units can horizontally scale to obtain unlimited computational and storage resources, thus achieving high-performance, large-capacity parallel computing.
• In terms of consensus data, a process can be viewed as a series of ordered logs that record the state of the process at any given time, forming what is called holographic data. This holographic data will be uploaded to Arweave, which will handle settlement processing and data storage for each independent process. As a result, the data not only possesses loss-proof, tamper-proof, and verifiable characteristics but also makes AO a verifiable distributed computing system.
• In terms of application innovation, the true value of data is reflected in the analytical significance and value created after computation. Arweave, as a platform that carries a large amount of trusted data, provides an ideal foundation for this. The ultra-parallel computing capability of AO promotes collaboration and application innovation based on Data, such as running AI large language models, executing machine learning tasks, and implementing autonomous agent intelligent applications that require high computational loads.

4.2 Incentive Integration in the Value Internet

As mentioned above, this architecture decouples computation and storage (consensus), highlighting their respective advantageous features, and brings modular flexibility and scalability; at the same time, in the overall architecture, AO and Arweave can rely on each other and promote each other. This relationship is not only a technical complement but also holds significant meaning in constructing the Value Internet system:

• Building an Economic Value System

  Transitioning from a Token-oriented financial value system to a Data-oriented economic value system. Tokens possess typical financial attributes, with liquidity at their core, constructing a decentralized finance (DeFi) value internet system, such as asset issuance, trading, liquidity provision, collateral lending, etc.;

  Meanwhile, Data, as an asset, possesses financial attributes, but as a production material, it has economic attributes, allowing for circulation and production collaboration based on Data, such as artificial intelligence (AI), intelligent agents, computing power markets, copyright management, game development, and social networks, capable of constructing a more diverse and innovative economic value internet system that is not limited to the financial field but encompasses a wide range of economic activities and value creation possibilities.

• Financial - Economic Incentive Integration

  In the crypto field, the financial value system is relatively mature, while the economic value system is yet to be built. When the Value Internet possesses both financial and economic values, currency, assets, finance, and economy will form a complete closed loop. Finance will provide momentum for the economy, while the economy will, in turn, promote the development of finance, thus achieving the "financial - economic incentive integration" of the Value Internet.

Conclusion

Finally, a slight modification of Figure 3-1 gives us an overall view of the entire text (Figure 4-2), along with a summarizing organization.

Figure 4-2 The AR+AO Implementation Framework Based on SCP, Constructing a Value Internet of "Financial-Economic Incentive Integration"

First, we provide a perspective that the essence of blockchain is a distributed ledger, which opens up the construction of the Value Internet system. However, the distributed ledgers based on Tokens and Data are two different foundational attributes. The former begins with BTC, represented typically by Ethereum, constructing a financial value system centered on decentralized finance. The latter, represented by Arweave, realizes the "Data Trilogy," and subsequently, under the AR+AO framework based on SCP, separates storage (consensus) from computation, thereby promoting innovation in production materials, production relationships, and productivity, with the potential to achieve a Value Internet of "financial - economic incentive integration," driving the innovative development of the cryptocurrency digital economy.