AO is an upcoming AI agent coordination platform less than a month away from mainnet launch, which is an important milestone for Arweave and the AI ​​x Crypto community. This article provides an in-depth analysis of Arweave’s persistent data storage design, explains AO’s hyper-parallel computing architecture, and illustrates how both networks are driving the next wave of on-chain autonomous agents.

We outline the challenges that AR and AO will face, as well as the current AR token market dynamics - reveal that starting in September, a whale is liquidating its positions AR supply and they are almost done selling. Finally, we’ll cover how to get involved in the AR ecosystem and gain participation in upcoming AOs.

Introduction

On February 8, 2025, the AO mainnet will be officially launched—— This is a major event for the AI ​​x Crypto community and will change the way everyone interacts with on-chain agents. AO brings to the market a hyper-parallel computing layer designed specifically for agent applications. This is also an important milestone for Arweave. As the permanent data storage network behind AO, Arweave makes the implementation of AO possible.

This article will analyze the technology behind Arweave and AO in detail, delve into their token economics, and explore the emerging AO ecosystem.

Important statement: We were venture investors in Arweave, and as holders of AR tokens, we also accumulated some AO tokens.

What is Arweave?

Arweave is a decentralized permanent data storage network. Users pay a one-time upfront fee based on the amount of storage required and are guaranteed that the data will always be available. Arweave does not have a centralized permission management mechanism, and fees will be dynamically adjusted according to miners’ storage needs to ensure that miners can continue to receive compensation for data storage. Arweave is a “pay once, store forever” solution. This is different from other popular data storage networks such as Filecoin, which require users to pay ongoing fees for storage, andStorage time is limited.

Arweave's architecture is based on a unique design called "blockweave". While many blockchains follow a linear chain-like structure of blocks, Arweave connects each new block to the previous block and to a randomly selected earlier block in the historical chain. This design forces miners to retain more historical data than standard blockchains, because they must prove that they hold the correct piece of data from recent blocks and randomly selected historical blocks in order to create each new block. This requirement ensures long-term permanence of the data – nodes must maintain the entire historical data set in order to mine new blocks and continue to receive rewards.

Arweave’s token AR is used to pay fees and reward miners. When new data is published to the Arweave network and fees are paid, approximately 85% of the tokens will go into the Endowment for future miner reward payments. Miner rewards are calculated independently of network fees, ensuring that miners are continuously incentivized to participate in the network regardless of user activity. This smooth mechanism for fee collection and distribution increases confidence in Arweave’s storage guarantees.

Development momentum

Arweave has been running since its launch in June 2018. But its real user growth begins in 2021. The chart below shows the weekly data upload volume since the launch of the network:

Source ：

https://viewblock.io/arweave/stat/dataUploaded?time=week

In September 2021, the amount of data storage increased sharply, and in 2023 It reached its lowest point in June and has grown steadily since then. The chart below shows the amount of different types of data uploaded each month.

Arweave usage over time (classified by data size)

Source: https://stats.dataos.so/arweave

In 2021, the NFT craze swept the world, driving the first substantial growth of Arweave data storage. Creators began storing their JPEGs and other images in Arweave rather than linking to a centralized hosting provider, which was a major reason for the surge in Arweave usage during this period. Arweave is ideal for storing NFT artwork data because it is permanent and decentralized.

Starting in 2023, some new usage scenarios have emerged. Across all use cases, the category that uses the most storage space is applications, primarily “bundler” applications, which bundle multiple transactions and data together and publish them to the Arweave network. These applications include Bundlr (the team has renamed it Irys.xyz and launched its own data link in addition to the bundler application). Applications that package this data, including content that would otherwise be classified as images, videos, or other blockchain data, are being stored permanently through Arweave. In addition to these bundler applications, several other projects are taking advantage of Arweave’s persistent storage capabilities. These projects include Lens’ social applications, content publishing platform, and some AI use cases.

The chart below shows activity by transaction volume. While the fees charged by Arweave are based on the size of the data stored, usage scenarios with an increasing number of transactions may indicate the future direction of Arweave.

Arweave usage over time by number of transactions

The two fastest growing by number of transactions The two usage scenarios are Redstone and AO respectively. Redstone is one of the fastest growing oracle networks in the crypto industry, providing price data for all major assets on major EVM chains. We have a private equity investment in Redstone and are optimistic about their growth prospects as they continue to expand new partners and add product features.

AO is a parallel computing and agent messaging layer built on top of Arweave. We'll discuss AO in more detail later, but it's worth noting that AO is still in its infancy. AO is still running on the testnet, and the mainnet is expected to be launched in February 2025. Arweave's current growth trajectory is encouraging, and we'll be watching closely to see if this growth trend continues.

The latest indicators about Arweave can be viewed through this link:

https://viewblock .io/arweave/stats

Criticisms

Perhaps the most common criticism of Arweave This is due to its lower fees compared to other Layer 1 blockchains of similar size.

Source: DeFiLlama, December 2024

From the "price/annualized cost" indicator, Arweave is only better than Avalanche among all L1s. A lower ratio means that users pay a higher fee relative to the fully diluted market capitalization (FDV) of the network. These figures reflect the total fees generated by transactions on the blockchain – the fees users pay to transact on the blockchain. However, this does not take into account miner rewards, or in Arweave’s case, pool contributions. Since Arweave distributes most of its fees to miners, its short-term profits may appear smaller than some other blockchains.

AR Token Performance

In 2024, AR ushered in a landmark year . Especially after the AO announcement, the price of the Arweave token surged from less than $10 per token to over $40. The market is very excited about the potential that AO brings and the increase in activity expected for Arweave. Since February 2024, AR holders have been minting AO tokens simply by holding AR in their wallets. Currently, 33% of newly mintedAO tokens are being distributed to AO holders, and these tokens will become transferable after the AO mainnet goes live in February 2025. After the mainnet launch, AR holders will continue to earn one-third of AO tokens until 21 million AO tokens are created. Rewards are distributed every 5 minutes, and the monthly reward ratio is 1.425% of the remaining supply. This means that the issuance of tokens will gradually decrease over time.

AR Token USD Price Trend:

Source:

https://coinmarketcap.com/currencies/arweave/

AR prices declined over the summer as the overall market declined. However, AR lags behind other tokens with AI value propositions such as RENDER, TAO, NEAR, etc. We believe on-chain financial flows play a role in this story.

Since September, a whale has been selling AR tokens in considerable quantities. We think we know who's selling, but this hasn't been confirmed yet. Wallet address dRFuVE-s6-TgmykU4Zqn246AR2PIsf3HhBhZ0t5-WXE received over 10 million AR tokens in November 2021 (the total supply of AR is currently less than 66 million). There had been transfers before 2023, and by 2024 the wallet had 5 million tokens left (worth $80 million at today’s price of $16).

On September 6, 2024, the wallet transferred the remaining 5 million tokens to two addresses:

i3gk39KyYCEjiylhBO9lM8DQVRtwaIG59llf2QL14Fg and

jcRNRYfbIfaj_YrjN8he864KBT_4D13DL7fmj6txZgA. These two addresses then sent the tokens to the exchange, implying that these belonged to the market makeraddress. Of those 5 million tokens, approximately 1.35 million are still in the hands of these (presumably) market makers, ready to be transferred to exchanges.

These two addresses moved tokens to the same two addresses on the exchange, indicating that this is likely the same market maker. This selling pressure accounts for a very large proportion of the number of AR tokens in circulation, exceeding 7%. Once all remaining tokens are sold, the AR market may see a reduction in downward price pressure.

AO Overview

AO is a decentralized, "hyper-parallel" ( Hyper-parallel computing) network that breaks the scale and type limitations of on-chain computation while maintaining the verifiability of everything. At its core, AO is a messaging layer for independent and simultaneous processes. AO leverages Arweave for permanent data logging, so any updates or interactions with the process are saved permanently. The name AO stands for "actor oriented", meaning you can build and run modular programs (actors), each of which can choose its own virtual machine (VM), consensus method and payment model, while still being able to Communicate with other agents using standardized message formats. In practical terms, this means that cloud applications like Amazon EC2 can plug into AO’s decentralized network and collaborate with decentralized smart contracts, all working together toward a common goal.

There are already some AO agents actually running. One agent continuously searches for the best returns on crypto assets across multiple lending protocols, while the other automatically places bets on decentralized exchanges (DEXs) based on user-defined parameters. These agents utilize Trusted Execution Environments (TEEs) to protect user privacy and allow users to hand over their private keys, which enables the agents to act completely autonomously without the need for further instructions or commands.

An important difference between AO and other Layer 1 blockchains is that AO's program can automatically "wake up" at a set time without waiting for external functions. call. This enables truly autonomous services that do not rely on centralized triggers. They can run entirely on their own schedule, and applications that rely on them do not need to rely on centralized actors for survivability. In the example of the yield-optimizing agent we mentioned earlier, this means that the agent can automatically wake up while you sleep and reallocate your investments to higher-yield strategies without any prompting.

AO architecture

Processes

Processes are similar A single "agent" on AO. Each process starts with an initial state and logs every message it receives. All this data is stored on Arweave so it cannot be lost or censored. Separated from actual calculations, AO Can be expanded to handle larger-scale tasks than traditional blockchains

Messages

Messages are how processes interact with users. Messages are sent over the network and have a unique ID for easy tracking. If a message is not forwarded correctly, it will not be delivered - this provides flexibility in how traffic flows, while Still ensures that all successfully delivered messages are permanently logged

Scheduler Units

Scheduler Units (SUs) append incremental slot numbers to messages to ensure they are uploaded to Arweave, thereby Maintain the consistency of message order. Depending on the needs of the actual application, the scheduling unit can be centralized or decentralized

Compute Units

Compute Units

Computing units (CUs) are responsible for performing actual computing tasks. They are free to choose which processes to execute, thus forming a competitive computing service market. After completing the work, the computing units return a signed proof of process state change - and any new messages or processes triggered by this status update

Messenger Units

Message passing units (MUs) are responsible for delivering messages across the network. They first send each message to the dispatch unit, ensure that the message is recorded on Arweave, and then forward the message to the computing unit. If a process spawns In response, the messaging unit will continue to forward these messages until all operations are completed.

Challenges faced by AO

AO is not without its challenges. Each network ultimately defines itself by excellence in certain areas. For example, Arbitrum is emerging in the DeFi space, Solana focuses on memecoins and DePin, and IMX focuses on gaming. But Arweave’s main focus has always been on content storage, blockchain archiving and oracle data persistence. AO aims to redefine decentralized content storage and DeFi, but it still faces many challenges, especially in promoting the application of AI agents in DeFi.

The use of AI agents in DeFi has been slower to develop elsewhere. We have yet to see a breakthrough application that effectively integrates AI into the DeFi space. The closest example so far is the introduction of machine learning models on-chain for optimizing returns from capital pools. However, these machine learning models tend to be very simple algorithms that are mainly used to predict returns and compare them with the transaction costs of switching strategies. These models are simple and linear, a property that helps reduce overfitting and “hallucinations.” In contrast, models like large language models (LLMs) are highly nonlinear, non-deterministic, and often have difficulty performing basic calculations such as number crunching. It may be a while before we see real AI agents managing our money, rather than just user-defined intentions wrapped in agent form.

Arweave is not a DeFi chain historically. While there have been a few attempts to build decentralized exchanges (DEX) on Arweave, none have succeeded in achieving breakthrough growth. This is not surprising considering that Arweave’s original purpose was to store content such as images. Future developments will be interesting to watch as AO attempts to engage Arweave’s existing community and users, as well as new users on other chains. The team has clearly taken this challenge into consideration, which is reflected in AO’s tokenomics. Those participants who transfer DAI and stETH to the AO network will be rewarded with AO tokens, and in addition, they can earn income using these bridged tokens in the AO mainnet. To date, AO has attracted approximately $578 million in TVL (Total Value Locked). It is crucial to keep this pool of funds and interact with emerging DeFi applications.

Airdrop mechanism

Token supply: total21 million AO tokens will be issued in half at scheduled intervals.

Qualification for minting AO tokens:

AR token holders will be eligible to mint AO tokens based on their AR The balance will receive AO tokens.

Users bridging DAI and stETH will also receive token allocations.

Distribution method:

1.03 million AO tokens will be distributed retroactively to Holders and bridgers since February 27, 2024. All AO tokens minted during this period have been distributed to AR token holders based on the corresponding balance held every 5 minutes.

How to participate

If you have read this far, Indicate that you may be interested in participating in the AO ecosystem. Here are some of the best ways to get started:

Hold AR Tokens: Since one-third of new AO tokens will be distributed to AR holders, Simply holding AR tokens is a great way to gain exposure to AO tokens.

Bridge to DAI or stETH: Currently, two-thirds of AO tokens will be distributed to those users who bridge DAI or stETH to AO. This is also a great way to earn AO tokens without risking AR price fluctuations.

Use the AO mainnet application: The AO mainnet will be launched in February, when multiple trading and lending platforms will be available. You can check out AO’s ecosystem to learn more.

Provide computing resources: Anyone can provide computing resources to various processes in the AO network without permission. For people with a strong technical background, this may be one of the best ways to learn about the AO ecosystem and participate directly in it.

Future Outlook/Summary

AO mainnet will be launched in 2025When it goes live in February 2020, anyone can provide computing resources or set up their own processes and agents. The token bridging function will also be opened, allowing any token to enter the AO network. As more people join and build advanced AI or automation services, AO's decentralized and massively parallel architecture will unlock a range of new possibilities - especially in areas that require trustless and efficient computing.

The launch of the AO mainnet will be an important milestone for Arweave and the AI ​​x Crypto community. We will keep a close eye on this ecosystem.