Arweave AO -- Rerating or Remilio?

Earlier this week, Arweave launched AO, a “hyper parallel computer.” Many are now calling Arweave a “new Layer 1.” It’s a long-standing narrative, but this latest announcement is worth paying attention to. At the very least, because of the price action.

In the 24 hours following the AO announcement, the price of $AR put in a 2x. It’s since pulled back a bit, but CT has stayed buzzing about its potential.

Outside the intro video above, the docs are relatively light and information is hard to come by on AO. But from what the Arweave team has said, AO’s core innovation is the ability to scale blockchain state horizontally. Instead of scaling vertically via L2s and L3s, AO aims to scale horizontally by parallelizing operations across an “arbitrary number of processes.”

This is a pretty big claim, and it remains to be seen whether all this modular, parallel processing has any big UX/composability tradeoffs. But if what the Arweave team says is true, then AO could be a fundamentally new design space for computation that was previously impossible on more constrained state machines like Ethereum and Solana. There’s even a nascent “onchain LLMs are now possible” narrative brewing…

I’d say I am cautiously optimistic for now, mostly because AO seems to enable new applications like AMMs and DAI-like stablecoin minting that previously were impossible on yesterday’s Arweave network. Whether this new design space will make Arweave competitive with the likes of Ethereum and Solana remains to be seen, but it makes sense that it is driving AR’s current price action.

Outside of AO, Arweave – the storage network – is seeing remarkable growth.

Transactions per day are going vertical and approaching 50M/daily.

Rising transactions are driving data fees, which on several occasions has pushed Arweave “deflationary.” Although AR supply isn’t technically burned — it instead goes to an endowment fund used to reward miners —  AR is removed from circulation for 100s of years (literally, lol). So, it is functionally the same dynamic as a plain vanilla burn mechanism.

As more info comes out and builders start building, I will share what I learn here. In the meantime, let me know what you think about Arweave and AO in the comments below — especially if you’ve found any good resources on AO’s tech.

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