1. Introduction

1.1 Background and Purpose

In the process of continuous evolution of blockchain technology, Arweave, as a new type of blockchain storage network, is committed to solving the difficulties of data permanent storage and access, attracting much attention. Its innovative ‘permanent storage’ method, by storing data on the blockchain, provides a reliable guarantee for the long-term preservation of information, allowing users to securely store various important data such as documents, images, videos, and access them at any time without worrying about the risk of data loss.

As a distributed, decentralized, Actor-oriented computing system built on Arweave, AO further expands the application boundaries of Arweave. AO aims to achieve computing services that are trustless, collaborative, and without practical scale limitations, providing a new paradigm for the integration of blockchain and applications. It allows the introduction of AI large models into smart contracts on the blockchain, a breakthrough innovation that not only fully leverages the decentralization and security features of the blockchain, but also brings more efficient and intelligent solutions to various application scenarios through the powerful data analysis and processing capabilities of AI.

2. Overview of AO

Definition and Basic Concepts of 2.1 AO

ao.arweave.net(AO) is a distributed, decentralized, Actor-Oriented computing system built on Arweave. Its core goal is to provide a computing service without the need for trust and collaboration, with no practical scale limits, offering a new paradigm for applications combined with blockchain. AO allows an arbitrary number of parallel processes to run simultaneously within computing units, coordinated through open message passing without relying on centralized memory space.

AO adopts the Actor-Oriented Paradigm, which is inspired by the original actor model and Erlang, supporting the parallel execution of any number of processes (contracts). In the AO architecture, there are three important components: Messenger Unit (MU), Scheduler Unit (SU), and Compute Unit (CU). The Messenger Unit is responsible for message delivery between nodes, ensuring accurate and timely information transmission in the network; the Scheduler Unit plays a vital role in task scheduling, allocating computing resources reasonably based on certain algorithms and strategies, and assigning tasks to the most suitable compute units; the Compute Unit is where actual computation tasks are executed, capable of handling various complex computation operations, providing powerful computing capabilities for the entire system.

These units collaborate with each other, enabling AO to support high-concurrency computing tasks, making it particularly suitable for big data and AI applications. For example, during AI model training, AO can decompose the training tasks into multiple sub-tasks, assign them to different computing units for parallel processing, greatly improving training efficiency. At the same time, AO’s architecture is highly modular, easy to integrate with existing smart contract platforms, allowing customization in areas such as computing resources, virtual machines, security mechanisms, and payment mechanisms to meet the needs of different application scenarios.

2.2 The relationship between AO and Arweave

AO is closely connected with Arweave, which provides a solid foundation support for AO, and AO further expands the functionality of Arweave, promoting each other, and jointly driving the development of blockchain technology.

Arweave, as a decentralized storage protocol, is committed to solving the challenges of data permanent storage and access. It adopts a unique ‘permanent storage’ method by storing data on the blockchain, ensuring the long-term availability and tamper resistance of data. Arweave’s blockweave storage layer uses the Succinct Random Proofs of Access (SPoRA) consensus mechanism to process storage orders and replicate data, ensuring nodes provide encrypted access proofs to previously uploaded data before accepting new data. The permaweb on top of blockweave is a human-readable layer that mimics the World Wide Web, with immutable content; once uploaded, websites and dApps remain unchanged.

AO is built on Arweave, making full use of Arweave’s permanent storage feature. Through Arweave, the AO process can seamlessly load and execute data of any size and write it back to the network, achieving the organic combination of persistent storage and computation of data. For example, in the training and inference process of AI models, a large amount of training data and model parameters can be stored on Arweave, which AO can read and use at any time without worrying about data loss or corruption. Additionally, Arweave’s SmartWeave platform supports smart contracts, providing a foundation for AO’s smart contract execution, enabling AO to implement various complex business logics.

On the other hand, the emergence of AO also brings new development opportunities to Arweave. The distributed computing capabilities of AO make Arweave not just a storage platform, but also a computing platform, further expanding the application scenarios of Arweave. For example, AO can use the data stored on Arweave for complex data analysis and processing, providing users with more value-added services, thereby attracting more users and developers to use the Arweave platform.

2.3 The development history and important events of AO

AO has gone through several important stages of development, each of which has witnessed the continuous improvement of its technology and the gradual growth of its ecosystem.

• Concept proposal and early research stage: The concept of AO initially originated from the exploration of the integration of blockchain and computing technologies, aiming to address the limitations of traditional blockchain computing capabilities. Early on, the research team conducted in-depth studies in the fields of distributed computing, blockchain technology, and smart contracts, laying the theoretical foundation for the technical architecture and implementation of AO.

• Technical research and development stage: After completing the theoretical research, the development team began the technical research and development work of AO. They are committed to building the core components of AO, including communication unit, scheduling unit, and computing unit, and repeatedly testing and optimizing each component to ensure its performance and stability. During this period, the team actively communicated and cooperated with the Arweave community, drawing on Arweave’s technical advantages to continuously improve the design of AO.

• Test network release and community participation phase: On February 27, 2024, AO announced the launch of the test network, marking the entry of AO into a new development phase. The release of the test network has attracted the active participation of thousands of developers and a large number of users. They have provided valuable feedback for the improvement and perfection of AO through participation in testing and submitting feedback. At the same time, AO also released the technical document Cookbook and the test network token $CRED, and held online hackathon events such as Hack The Weave Hackathon, further promoting the development and improvement of the AO ecosystem.

• Continuous development and ecological construction phase: As of now, AO is still in a phase of continuous development, continuously optimizing technical performance, and expanding application scenarios. The ecosystem has initially established basic infrastructure including cross-chain bridges, oracles, wallets, AMM, stablecoin protocols, etc. Applications such as games, social, Memecoin, AI, etc. are also under construction. For example, the first cross-chain bridge AOX in the AO ecosystem provides asset cross-chain services, 0rbit as the oracle of the AO network supports the transmission of arbitrary data, Arconnect, aoWebWallet, etc. have become the wallet infrastructure of the AO network. In the future, AO is expected to achieve more breakthroughs in the integration of blockchain and AI, bringing users more abundant and efficient services.

3. Technical Principles and Innovations

3.1 Storage-Based Consensus Paradigm (SCP)

The storage-based consensus paradigm (SCP) adopted by AO is the key to its technological innovation, providing a solid foundation for AO to achieve efficient and reliable computing services. The core idea of SCP is to use the immutability of storage to ensure the traceability of transactions, thereby ensuring that the same results can be obtained no matter where the computing application is performed. In AO’s architecture, Arweave plays a crucial role as a persistent and immutable logbook used to store all message logs. Through the holistic storage of message logs, AO computers can reach consensus, ensuring that interaction logs are permanently available, allowing any network participant to calculate the system’s state based on these logs.

3.2 Parallel Computing Architecture for Message Passing

The message passing parallel computing architecture of AO is an important guarantee for achieving high-performance computing. This architecture fully utilizes the advantages of message passing, achieves efficient utilization of computing resources, and horizontal scalability of the system. In the AO system, applications are built by any number of communicating processes, which are inspired by the original Actor model and Erlang, and do not share memory with each other, but coordinate through native message passing standards. This design allows each process to run at full speed with available computing resources without interfering with each other, greatly enhancing the system’s parallel processing capabilities.

Taking a large-scale data processing task as an example, traditional computing systems may need to centralize all data into a shared memory space for processing, which not only easily leads to memory bottlenecks but also limits the parallelism of computation. In the AO message-passing parallel computing architecture, data can be divided into multiple parts, each processed by different processes. Each process coordinates and exchanges data with other processes through message passing. In this way, multiple processes can run simultaneously, greatly accelerating the speed of data processing and avoiding the problem of ‘lock contention.’ When processing massive image data, each process can be responsible for processing one or a group of images, and through message passing, send the processing results to other processes or aggregation nodes, thus achieving efficient parallel computing.

3.3 Modular Architecture Design

The modular architecture design of AO is a key factor in achieving flexibility and scalability. The design divides the system into three main parts: Scheduling Unit (SU), Messenger Unit (MU), and Computing Unit (CU), each with its own independent functions that collaborate to provide AO’s computing services.

The Scheduler Unit (SU) is responsible for assigning atomic increment time slot numbers to the messages sent to the process, similar to the nonce in Ethereum, in order to sort the process messages. After sorting is completed, the scheduler unit needs to ensure that the data is uploaded to Arweave to ensure the permanence and accessibility of the data. In a complex smart contract execution scenario, the scheduler unit can reasonably arrange the sending and processing of messages according to the execution order and priority of the contract, ensuring that the contract executes accurately and correctly.

The Messenger Unit (MU) is mainly responsible for receiving incoming messages from the client and routing these messages to the designated scheduler unit. After the computing unit completes the computing task, the Messenger Unit is also responsible for retrieving the results from the computing unit and returning them to the client. The Messenger Unit acts as an efficient information hub, ensuring the fast and accurate delivery of messages in the system, guaranteeing the smoothness of the computing process.

The Compute Unit (CU) is responsible for the actual calculation of the process status in AO, and multiple compute units form a computing market similar to decentralized computing protocols (such as Akash). In this market, compute units compete with each other to complete the computation process status services. After completing the service, the compute unit needs to return the computation results and a signed proof of status to ensure the reliability of the computation results. If a user does not trust the results of a particular compute unit, they can request information from other compute units. When providing computation services, compute units need to make a certain amount of stake. If incorrect status is provided, their stake will be forfeited, effectively incentivizing compute units to provide accurate computation services.

This modular architecture design makes AO highly flexible and scalable. Different units can be optimized and upgraded independently without affecting the normal operation of other units. Users can choose different virtual machines, message passing security guarantees, and payment options according to their needs to meet specific application requirements. At the same time, modular architecture also facilitates integration with existing smart contract platforms, providing developers with more choices and convenience.

3.4 Comparison Advantages with Other Blockchain Computing Systems

In comparison with traditional blockchain computing systems like Ethereum, AO demonstrates significant advantages in multiple aspects. In terms of storage capacity, Arweave provides strong permanent storage support for AO, enabling AO to store a large amount of data, including large data files such as AI models. In contrast, Ethereum, due to its original design not focusing on storage, has relatively limited storage capacity and may not meet the demands for large-scale data storage. When handling AI model training data, AO can easily store massive training data on Arweave and access and call it at any time, while Ethereum may be unable to handle such a large scale of data due to storage capacity limitations.

In terms of parallel computing capabilities, the message passing parallel computing architecture of AO allows any number of parallel processes to run simultaneously, avoiding the problem of ‘lock contention’ and greatly improving computing efficiency. Ethereum adopts a single shared memory space, and all nodes need to execute calculations in this shared space, which can easily lead to memory bottlenecks and competition for computing resources, limiting the ability of parallel computing. When handling complex smart contract computing tasks, AO can decompose tasks into multiple sub-tasks, which are processed in parallel by different processes to quickly obtain results, while Ethereum may experience slower processing speeds due to limitations in computing resources.

In terms of consensus mechanism, AO’s storage-based consensus paradigm (SCP) is fundamentally different from Ethereum’s traditional consensus mechanism. AO does not need to reach consensus on the state, but only needs to reach consensus on the order and storage of interaction logs in Arweave, which greatly reduces the waste of computing resources and improves the scalability of the network. Ethereum’s consensus mechanism requires all nodes to verify and agree on the state of the ledger, which not only consumes a large amount of computing resources, but also limits the speed of transaction processing and the scalability of the network. In the face of high-concurrency transaction scenarios, AO can process transactions more quickly to ensure efficient system operation, while Ethereum may experience transaction congestion, processing delays, and other issues.

4. Application Scenarios and Case Analysis

4.1 Application in the field of AI

AO has shown great potential in the field of AI, its unique technical architecture provides new solutions for the operation and development of AI models, effectively promoting the integration of AI and blockchain.

Taking AgentFi as an example, it is the first focus point of the AO ecosystem in the field of AI, dedicated to utilizing AI’s reasoning capabilities to create and adjust complex financial strategies. In traditional finance, the development and adjustment of financial strategies often rely on human experience and limited data processing capabilities, which are inefficient and difficult to cope with the complex and ever-changing market environment. With the powerful computing capabilities of AO and the permanent data storage of Arweave, AgentFi can analyze a large amount of financial data in real-time, including market trends, trading data, macroeconomic indicators, etc., and quickly generate and optimize financial strategies through AI models.

AO allows AI models to run on the chain, achieving verifiability and reproducibility of the computation results. This feature is particularly important in the financial field because financial transactions involve a large amount of fund flow, requiring high security and reliability of the transactions. In traditional AI financial applications, as the computation process often takes place on centralized servers, users find it difficult to effectively verify the computation results, leading to certain trust risks. However, on the AO platform, both the process and results of AgentFi’s AI models are stored on Arweave, allowing any third party to verify the accuracy of the computation results by downloading data and running the execution environment, thus ensuring the reliability and fairness of financial strategies.

AO’s message-passing parallel computing architecture enables AgentFi to support high-concurrency financial transaction processing. In the financial markets, timeliness of transactions is crucial, as even a one-second delay can lead to huge losses. AO’s architecture allows any number of parallel processes to run simultaneously, avoiding ‘lock contention’ issues, greatly improving the speed and efficiency of transaction processing. When the market experiences severe fluctuations, AgentFi can respond quickly, conducting a large number of trading operations based on AI-generated strategies to achieve rapid arbitrage and risk hedging.

4.2 Decentralized Finance (DeFi) Applications

In the field of decentralized finance (DeFi), AO also has a wide range of applications, bringing new opportunities and changes to the development of DeFi.

Projects such as Permaswap, ArSwap, Bark, etc. in the AO ecosystem, as decentralized exchanges (DEX), fully leverage the technical advantages of AO. In traditional centralized exchanges, there are issues such as low transparency of transactions, ineffective protection of user assets, and susceptibility to regulatory policy influences. Decentralized exchanges based on AO have significant advantages. Firstly, their transaction data is stored on Arweave, ensuring the data’s immutability and permanent preservation, with the transaction process being fully transparent, allowing users to view their transaction records and market depth at any time. Secondly, AO’s decentralized nature eliminates the need for centralized institutions for matching and clearing transactions, reducing transaction costs and trust risks, giving users complete control over their assets.

5. Ecosystem Development

5.1 Components of the AO ecosystem

The AO ecosystem covers multiple key components that work together to drive the development of the AO ecosystem. Cross-chain bridges play an important role in the AO ecosystem, enabling asset transfer and interaction between different blockchains. The first cross-chain bridge in the AO ecosystem, AOX, uses innovative technical architecture to provide efficient and secure cross-chain asset services. It allows users to freely transfer assets between different blockchain networks, breaking down barriers between blockchains and promoting the circulation of assets and the expansion of application scenarios. This enables the AO ecosystem to deeply integrate with other blockchain ecosystems, providing users with richer services.

As a bridge connecting the off-chain world with on-chain smart contracts, the oracle plays an indispensable role in the AO ecosystem. As the oracle of the AO network, 0rbit can support the transmission of any data. By interacting with real-world data sources, it accurately delivers external data to the chain, providing necessary information support for the execution of smart contracts. In decentralized finance (DeFi) applications, oracles can provide real-time market price data, helping smart contracts achieve automated trading and risk management.

The wallet is an important entry point for users to interact with the AO ecosystem, with Arconnect, aoWebWallet, and other becoming the wallet infrastructure of the AO network. These wallets have the characteristics of security and convenience, allowing users to store, manage, and trade digital assets in the AO ecosystem. The wallet also provides the functionality to interact with smart contracts, allowing users to perform various operations such as participating in DeFi projects, voting, etc.

In addition to the above-mentioned infrastructure, the AO ecosystem also includes many application projects, such as decentralized exchanges (DEX) Permaswap, ArSwap, Bark, stablecoin protocol Astro, Twitter-like social application typr, game and metaverse distribution platform Permaverse, AO Games, prediction market outcome_gg, etc. These application projects enrich the application scenarios of the AO ecosystem, meet the needs of users in different fields, and further promote the development of the AO ecosystem.

5.2 Analysis of Ecological Project Cases

Represented by projects like ArSwap and Astro, they have shown unique innovation and development potential in the AO ecosystem. As a decentralized exchange in the AO ecosystem, ArSwap is committed to innovating on the classic DEX design and creating a perpetual contract DEX to drive DeFi development on AO. It fully leverages AO’s technological advantages to achieve efficient trade matching and asset exchange. ArSwap adopts advanced order matching algorithms to quickly process a large number of trade orders and improve trading efficiency. At the same time, it also supports trading pairs of multiple assets, providing users with more choices.

5.3 Challenges and Opportunities for Ecological Development

In the process of the development of the AO ecosystem, there are various challenges such as technology, market, and regulation. At the technical level, although AO is innovative in computing power and storage, it still needs continuous optimization and improvement. Performance optimization is a key issue. With the increasing number of applications and the expansion of user scale within the ecosystem, ensuring efficient operation of the system under high concurrency is an important challenge that AO needs to address. When dealing with a large number of AI computing tasks or high-frequency DeFi transactions, the system may encounter performance bottlenecks, leading to slower response times and affecting user experience. Security is also an issue that cannot be ignored. Blockchain systems face various security threats, such as smart contract vulnerabilities and network attacks. AO needs to strengthen security measures to ensure the safety of user assets and data privacy.

6. Token Economics and Market Analysis

6.1 The issuance and distribution mechanism of $AO tokens

$AO has a total of 21 million tokens, following a 100% fair distribution principle, with no presale or pre-allocation. This fair distribution ensures that all participants have an equal opportunity to obtain tokens in the initial stage, avoiding the concentration of tokens in the hands of a few people, and is conducive to building a fair and open ecosystem. Its halving cycle is 4 years, distributed every 5 minutes, with a monthly distribution amount of 1.425% of the remaining supply. This distribution method ensures that the number of new tokens will decrease slightly every month, forming a steady issuance schedule, avoiding the sudden impact on the market caused by events like Bitcoin’s “halving event”.

In terms of token distribution, approximately 36% (the initial 100% over the first 4 months plus an additional 33.3% thereafter) of AO tokens are minted over time by Arweave token holders, incentivizing the security of the AO base layer - Arweave. As Arweave serves as the underlying storage platform for AO, its security is crucial for the stable operation of AO. By allocating AO tokens to $AR holders, more people are encouraged to participate in the maintenance and security of the Arweave network, enhancing the stability of the entire ecosystem.

About 64% of the AO tokens are used to provide external revenue and bring assets into AO, incentivizing its economic growth. This creates a strong impetus to increase the liquidity of the ecosystem, forming an economic flywheel effect. When users bring assets into AO, they not only receive AO token rewards but also promote the development of various applications within the AO ecosystem, attracting more users and developers to join, further driving the flow of assets and the prosperity of the ecosystem.

6.2 The relationship and mutual influence between AO and AR

AO and AR have a close relationship in terms of functionality and value. In terms of functionality, AR, as the native token of the Arweave network, is mainly used for paying data storage fees, participating in the consensus mechanism, and as rewards for miners. On the other hand, AO tokens are mainly used for payment for message delivery and computing services in the AO network, and also serve as an important incentive for users and developers to participate in the construction of the AO ecosystem.

In terms of value, AO and AR interact with each other. The development of the Arweave network and the expansion of its use cases will increase the demand for AR, thereby driving up the value of AR. The growth of AR value will attract more users to hold AR, thereby receiving more AO token rewards, which will promote the circulation and application of AO, enhancing the value of AO.

6.3 Market Performance and Outlook Forecast

From the market performance, since the release of AO-related news, it has received widespread attention from the market. After the release of the AO testnet in February 2024, the price of Arweave’s AR token quickly rose, quadrupling in just one month. After the release of the AO token news, the maximum short-term increase of $AR exceeded 18%, demonstrating the market’s expectations and confidence in the AO project.

In terms of ecological development, the AO ecosystem is in a rapid development stage, having initially established infrastructure including cross-chain bridges, oracles, wallets, AMM, stablecoin protocols, etc. Applications such as games, social, Memecoin, AI, etc., are also continuously being developed. With the continuous improvement of the ecosystem, more users and developers will be attracted to join, increasing the demand for the $AO token.

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Conclusion

Looking ahead, AO is expected to make further progress in many aspects. In terms of technological innovation, AO may continuously optimize its computing performance, enhance system stability and security to cope with the growing computational demands and complex application scenarios. With the rapid development of AI technology, the integration of AO and AI will deepen, possibly driving the emergence of more innovative applications, such as the deep integration of smart contracts and AI, realizing more intelligent business logic and application scenarios.