Author: worthsoft ｜Published on xLog
Tags: Web3｜Token Economics｜Arweave｜Decentralized Storage
🧠 Introduction: Is Appreciation a Blessing or a Curse?#
In the blockchain world, almost every project's token whitepaper states "fixed total supply" to imply scarcity and appreciation potential. $AR is no exception.
The native token of Arweave, $AR, has a fixed total supply of 66,000,000 tokens, with no additional issuance, seemingly possessing a "deflationary expectation" similar to Bitcoin.
However, when we delve into its use cases, we discover a startling paradox:
The higher the price of $AR, the fewer tokens users need to upload content; yet the income of nodes and miners relies on these tokens.
It's like a system where the token price rises, users cheer; but miners can't get fuel, and the engine stalls.
Is this really "token appreciation," or is it "economic mismatch"? Let's start with Arweave and explore the structural contradictions of functional tokens.
🧱 1. The Essential Conflict Between Storage Networks and "Fuel Tokens"#
Arweave is a permanent storage network where users only need to pay $AR once to upload an article or an image, with no renewal fees for decades. The system uses this payment to incentivize storage nodes to keep this data for decades to come.
At first glance, it seems elegant, but from an economic perspective, it's like using one-time income to maintain a warehouse that will operate for decades.
This model poses little problem when the user base is small; however, once user growth explodes, it presents two extreme challenges to the system:
- As more miners join, the rewards for each miner decrease (dilution effect)
- The cost for users to upload files cannot rise too quickly, or users will stop using it
Thus, to "maintain the usage threshold," the system introduces an automatic adjustment mechanism:
When the price of $AR rises, the number of tokens required to upload the same content automatically decreases
As a result, the upload price for users (in USD) remains stable.
This sounds reasonable, but it actually means:
The "value increase" brought by token appreciation is "redeemed" internally by the system
You spend fewer tokens, but the tokens haven't "become more expensive"; the system has swallowed the "appreciation" to maintain the usage price.
⚖️ 2. "Disguised Inflation": The Invisible Currency Expansion#
Although $AR has not technically increased in supply, we are experiencing a "disguised inflation in economic terms":
- Originally, uploading 1MB required 0.01 $AR
- With the rising token price, it now only requires 0.001 $AR
- In other words, for the same network service, the system only charges you 1/10 of the tokens
For miners:
- The number of tokens received as income has decreased
- The token price has risen, superficially keeping income stable, but the total uploads may not necessarily increase
- In the long run, miners' willingness to participate decreases, and storage security deteriorates
This is a silent form of inflation: it's not that the number of tokens has increased, but rather that the utility of the tokens is diminishing.
🌀 3. The Dual Personality of Functional Tokens#
The issues with $AR are not unique to Arweave. They represent a classic dilemma faced by "Utility Tokens" in all Web3 applications:
On one side, investors want token appreciation; on the other side, users want tokens to be cheaper and more usable.
| Appreciation Demand | Usage Demand |
|---|---|
| Investors hope $AR rises to $100 | Users hope the cost to upload 1MB remains $0.01 forever |
| The higher the price, the more attractive the investment | The higher the price, the more users churn |
| The stronger the on-chain asset narrative | The weaker the usage scenario narrative |
When a token tries to simultaneously play the roles of "fuel" and "asset," it inevitably leads to fragmentation. Ultimately, it either harms users or harms miners.
💡 4. Possible Solutions: Token Abstraction Layer + Dual Token Structure#
Some projects are attempting to resolve this contradiction, such as:
- Bundlr Network: Users pay upload fees with USDC/ETH, and the platform converts it to $AR for Arweave → Users remain unaware
- Filecoin (in design): Exploring a dual-token mechanism to serve "speculative value" and "usage pricing" separately
- Optimism / Base and other on-chain operations: Introducing "fee abstraction" to pay gas with stablecoins
These directions collectively point to a new paradigm:
Decoupling the "token appreciation logic" from the "actual usage cost"
Allowing investors to engage in their financial narratives while enabling users to continue using the network affordably is key to widespread adoption.
✅ Conclusion: No Longer Worshipping "Fixed Total Supply," Beware of "Value Mismatch"#
The Web3 world loves to say "fixed total supply," "no additional issuance," and "token prices will rise," which evokes thoughts of gold, while forgetting that Bitcoin itself does not provide network services; it merely anchors consensus.
However, functional tokens like $AR, $FIL, and $GRT are different; they are "tool money":
- When money becomes expensive, tools become unusable;
- When money does not appreciate, investors lose interest;
- When the system wants to be both a tool and an asset, it may ultimately fail to satisfy either side.
Therefore, we must be vigilant:
Not all "token price increases" are good, especially when they undermine the economic stability of tokens in usage scenarios; it becomes a systemic mismatch.
Arweave is great; it provides a foundation for civilization's memory against forgetfulness.
But its token mechanism is destined to struggle continuously between practicality and financiality.
✍️ END.#
If you have read this article, I hope you not only believe in total token supply, TVL, and price charts but also think more about:
"Should it really appreciate? After the appreciation, who will still use it?"