Arweave News
Arweave is Introducing an Experimental New SmartWeave Token Model
Securities.io is committed to rigorous editorial standards. We may receive compensation when you click on links to products we review. Please view our affiliate disclosure. Trading involves risk which may result in the loss of capital.
Arweave, a decentralized storage network that aims to offer a platform for the indefinite storage of data, is seemingly about to get a new product, according to one of its developers. The developer who goes by @TateBeranbaum on Twitter, recently announced that the project is introducing an experimental new SmartWeave token model.
According to the announcement, the purpose of the token is to help with data tokenization at scale, Demand Modulated Markets (DMMs).
The idea behind SmartWeave
While trying to explain the purpose and the idea behind SmartWeave, Barenbaum explained that he came to the theory that society has learned and evolved to understand the world through quantification. In other words, people need to put a numerical value on things in order to understand their importance in the world. With that being the case, it is possible to allocate and incentivize efforts to efficiently utilize or improve upon those things.
Today, the confirmation of that theory is easy to spot on the examples such as goods and services, as Barenbaum continued to say. However, more importantly for the age of information, the developers and data experts are at the tip of the iceberg when it comes to quantifying the value of data, and there is a lot more to uncover there.
That implies that it is extremely important to create an ideal structure for that value to live in, from both technical and economic perspectives. So far, the efforts to do this have led to the creation of NFTs, which have tokenized the world to some extent. However, the problem lies in the fact that it is currently not feasible to create liquid markets for every NFT that exists out there, as Barenbaum concluded. This can lead to two things — either there will be extra money left on the table from supply constrains that can’t meet excess demand, or people will be at a constant risk of suffering a rug pull with fractionalization.
However, there might be a third option, which lies in the creation of a token that could algorithmically scale its supply to match the demand. That’s where DMMs come in, and why SmartWeave is so important.
DMMs and SmartWeave
When it comes to DMMs, these are simply tokens that have markets built into them. This allows them to scale and contract their supplies as people continuously buy and sell. Barenbaum noted that, wile building this and discussing the situation with another developer, they came to a conclusion that Ethereum has recently got PRISM — liquid NFT market that acts as Uniswap for NFTs.
The two concluded that this was the right idea, and that tokenizing permanent data on Arweave would come at zero additional cost, while a DMM of its own would be extremely valuable for the project, its ecosystem, and its economy.
Once it arrives, SmartWeave will be optimal for fungible and non-fungible tokens alike, focusing on the ones that are considered illiquid, and difficult to trade in an open market. It will allow token liquidity to scale in response to the market demand, prevent the need for liquidity providers, eliminate the risk of rug pulls, and more.
To learn more visit our Investing in Arweave guide.
