*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)
Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.
It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.
Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.
💪 Strengths (Internal) (Helpful)
1. Single One-Time Fee
One of the killer distinguishers between AR and all other decentralized storage solutions is the “Single One-Time Fee” for permanent storage. Somewhat reminiscent of Amazon’s “one-click buy,”; the single one-time fee for permanent storage is a game-changing restructuring of the cost burden for end users. By abstracting away the complexity of the process, a wider audience becomes interested in participating in the solution, and more data is brought on-chain. Ultimately, users don’t care about tech; they care about experience, Single One-Time Fees could be the simplification that onboards users without having to sell them technology.
2. Blockweave Technology
Data structures exist at the core of Web3, where intricacies on how information is stored, its ability to resist manipulation, and the ability to formally verify the quality of the information have given rise to the radical new digital economy we are currently building. Blockweave is a novel adaptation of blockchain, where the data structure is based on intertwining randomness in the form of prior access points while maintaining maximal simplicity in synchronizing new nodes to the chain. Blockweave allows new nodes to join the network without having to download the entire history/chain; instead, reference lists (of prior blocks and active wallet addresses) allow nodes to join on the fly. Full synch is an option but not a requirement, which presents itself as an appealing solution to the new generation of market participants.
Novelty in consensus mechanisms marks true understanding of the technology of the digital economy. Arweave has developed its own consensus mechanism, POA (Proof-of-Acces), that is rooted in lightweight randomness with a hint of resemblance to POW. In its simplest form, it is this innovation that provides the security and performance guarantees that AR provides (blockweave). The logic of POA is found in the concept of miners having prove that they have access to historic state before given the right to mine.
4. Well Developed, Accessible Environment
Arweave has done a fantastic job building out a suite of ancillary applications and organizing information about itself in a very user-friendly way. Immediately upon arrival on their website, there are options to “save a file forever”, “host your webpage on the permaweb”, interact with calendar/events, plug into their wiki, and so much more. This ease in presentation is very effective as dirting users, by default, to almost fall into a rabbit hole of interacting with the protocol through simple interfaces.
5. Supportive of Ecosystem Development
Arweave is very community-friendly and champions decentralization. Looking to support others that are building on top of them, Arweave has a multitude of dedicated investment affiliates (DAOs, VCs, and other entities) that are open to actively contributing to the growth of AR by helping projects (in any stage of maturity) integrate Arweave into their tech stacks with some complimentary capital injections.
6. World-Class Investors
Backing the vision of Arweave is what can be referred to as the “perfect” group of venture capital firms, One Block Capital, 1kx, Coinbase Ventures, Multicoin Capital, Andreessen Horowitz, Coefficient Ventures, Arrington XRP Capital, Greenfield One, Techstars, LedgerPrime, Union Square Ventures, and a16z Crypto among others. Being supported by such a sophisticated network of entities provides an extremely high degree of access to the brightest minds and the best technology in the industry, which in turn provide greater robustness against failure.
7. Powerful Professional Relationships
Over 115 projects are currently leveraging Arweave as their decentralized data storage backbone. Meta, Mirror, Instagram, Paragraph, Hackernoon, and Metaplex (just to name a few) have all integrated AR into different vertices of their systems, in turn showing that real-world adoption is happening. With such a powerful community lineup, odds are that new businesses will opt for using Arweave; after all, as network effects of cryptosystems have shown us, just as liquidity begets liquidity, adoption begets adoption.
8. Hard Coded AR Max Supply
Set to 66,000,000, the $AR token carries the highly desirable economic element of having an inflation-resistant supply. Coupled with the utility of providing permanent storage, there is an obvious inflection point where demand would outstrip downward pressure and create immense upside potential. Theory here being that the higher the price goes and the longer the project lives, the more likely that its total economic value would be more than if there were an inflationary force.
😞 Weaknesses (Internal) (Harmful)
1. Censorship via “Democratic Content Policy”
Part of the appeal of a truly decentralized system is that there must be no hurdles or firewalls that discriminate against the data types. Content, whether positive or negative, must be viewed objectively as simply content. Creating a point of potential conflict with its “Democratic Content Policy” that allows network nodes to issue blacklists around certain content, Arweave is hindering the development of an open economy. If these blacklists are adopted by a majority of the nodes, then the entire network will deny blacklisted content from even appearing on-chain.
2. Dense Information Not Easily Available
While the developer docs are stacked with a depth of well-documented information and the website provides an extremely friendly experience to such as otherwise dense subject matter, whenever looking to dive into some of the specific nuances of the project (such as tokenomics), there is no easily accessible single data source. In order to build up a serious understanding of the how/why AR is different from other projects, people have to jump through hoops (scavaging Reddit, joining Discord, reading white/lite/yellow papers, and looking for independent external research).
🧐 Opportunities (External) (Helpful)
1. Growth of Decentralized Storage
A common thread for all of the projects operating in the decentralized storage sector, this thread of the economy is one of the most profitable and has among the highest anticipated CAGR. Currently sitting at an expected ~27% with a $390 Billion USD market size by 2028, presents itself as an incredible market opportunity for Arweave that is currently floating around the sub $300 million USD market cap.
2. Creator Economy Growth
The Creator Economy refers to a community/user-driven environment where education, entertainment, and other segments of information are created by individuals through a breadth of form factors (infographics, memes, gifs, videos, blogs, podcasts, and everything in between). The Creator Economy is set to experience an explosion alongside the further digitization of society and an improvement of tools and incentives. Arweave has uniquely positioned itself to appeal to both enterprise-grade clientele as well as individual creatives. They provide simplified tools that allow somebody without technical experience the ability to appreciate on-chain immutability, provenance, and the such.
😳 Threats (External) (Harmful)
1. Market Competition
With a multitude of giga-brain innovators flooding the space, Arweave is subject to the externalities of market forces where the users ultimately dictate what technology becomes permanent and what fads drift away. Sometimes, it is not a matter of technology itself but the market interpretations of it, the marketing of it, and the adoption of it. Arweave may provide a slew of superior advancements that will be disregarded by the masses and become nothing more than a hobbists preferred tool.
Painfully underappreciated, Arweave is arguably the most innovative project in the decentralized storage sector that is used for more than just being speculated on.
Subject to the same forces of positive and negative externalities associated with the opportunities and threats in decentralized storage, Arweave has been able to present an angle that has not been explored by anybody else yet. The “One Time Fee” for permanent storage could prove to be a driving differentiator between any competition.
The raw amount of strengths and opportunities outweigh any of the weaknesses by a mile!
It is hard (if not impossible) to picture a future for decentralized storage without Arweave in the lineup.
Arweave certainly takes the crown when it comes to technological innovations, from Wildfire and blockshadows to SPoRA (Succinct Proof of Random Access) and blockweave; the elegance in the design of AR is inspirational.
Would I invest in AR?
IMO, it is a top-tier play on the future of decentralized storage.
Personally, everything that Arweave has done so far, ranging from how they position their brand, to how they designed the tokenomics, to the technological approach, all leave a very positive imprint on me.
If you know something that I don’t or feel as though I might have missed anything worth noting, please do share, I would tremendously appreciate some feedback.
Thank you so much for reading,
I hope this serves you well on your journey.
Live long and prosper 🥂
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