An explanation of the economics of Arweave

Unlike centralized products like Dropbox or Google Drive which are based on a SaaS model where you have to pay on a recurring basis (monthly or annually), you only have to pay once to access Iron Drive, via the purchase of one of our JellyBots.

After that, you just have to pay per use, each time you want to upload a file.

But how can we afford to adopt this business model, when most applications have no choice but to run on the SaaS model because of recurring costs for servers and third-party tools?

First of all, as we’re using Arweave as our backend, we only provide a client. It’s hosted on Cloudflare Pages, and it looks like we might be able to stay on a free plan for a long while, maybe forever (we're fine with 1 custom domain and 1 concurrent build).

Being built on top of Arweave, we therefore adopt Arweave’s business model which is to make a single payment to upload a file. Once the payment is made, Arweave guarantees that the file will be kept for a period of at least 200 years.

As of this writing, it would cost a little more than $3 to upload 1 GB of data for a minimum of 200 years, so it’s pretty cheap.

But how can that be sustainable?

First, Arweave is a blockchain. That means it’s not only hosted on one computer but on a network of thousands of computers spread across the globe. People who own these computers agree to do it because they are rewarded with the $AR token for doing so.

So when you pay to upload a file to Arweave, you pay for the actual storage of the file, but also to reward the people who run the network on their computers.

Adopting the blockchain model guarantees that a single entity cannot pull the plug. As soon as there are enough computers on the network, your files will be safe.

But still, 200 years is a long period of time, isn’t it super expensive to host a file for so long? Well, if things didn't change, it certainly wouldn't be sustainable, but the cost of storage happens to drop year after year.

Over the past 50 years, data storage has seen its costs decrease by an average of about 30% per year. Hosting a 1 GB file will cost almost nothing in 10 years, let alone in 200 years.

Arweave’s working assumption is that the price of storage will continue to decline over time. But they are not basing their assumption on a decline of 30% per year but of 0.5% per year. This estimate of 200 years is based on 0.5%, which is really a pessimistic outlook.

It may well be that the files you upload to Arweave are actually hosted for 10 times longer than that (if we assume that humanity will still exist in 2000 years, which is far from certain given the current state of things).

We are personally convinced that Arweave will become a major player in the future of the web, and it is for this reason that all the decentralized applications that we build and will build will be on top of Arweave and its ecosystem of tools and protocols.

And everyone will come out a winner, both the application developers who see their work made easier and cheaper because the infrastructure is solid and managed in a decentralized way, and the user who will pay increasingly derisory sums to access state-of-the-art software.