Investment Analysis on FIL and AR

Recently, several readers in the comment sections of a few articles have mentioned Filecoin and Arweave.

Over the past few years, although I have occasionally shared my views on these two projects, there are always readers who ask about them again after a while.

In the DePIN track, these two projects are currently among the best implemented and continuously progressing projects, and the decentralized storage field they belong to has always been regarded as an indispensable core sector of the crypto world.

Among these two projects, the first one I participated in was Filecoin. However, I completely liquidated my holdings during the last bull market.

The fundamental reasons are twofold:

First, after the project was implemented, I found that the functionalities it achieved did not present a significant advantage over its largest centralized competitors (various "cloud" services).

Second, in the process of tracking the project, I felt that the project team was handling some technical issues rather awkwardly. This awkwardness did not stem from the team's attitude but seemed more like limitations of current technological means or potential issues with the business model itself.

Therefore, I felt that if the project continued along this path, its future development might be concerning, so I did not hesitate to sell off my holdings.

After leaving Filecoin, I participated in Arweave, which has been the only decentralized storage project I have been involved with since then.

What attracts me most about this project is that its realization of "permanent storage" is unprecedented among previous storage solutions; it is the first project of its kind.

However, after getting involved, I found that its application and promotion were also very challenging. Although many projects (like NFTs) use it to store data (such as images), and some centralized giants (like Google) have closely collaborated with it, overall, the project's use cases remain very limited, and the market has not opened up.

Nevertheless, I have always believed that permanent storage is a necessity, and in this field, it is unique; additionally, I have seen the team persistently working over the years, so I chose to retain this project and dollar-cost average during the bear market.

Both Filecoin and Arweave have faced difficulties in their development over the years, but both teams have been trying to break through and innovate.

Filecoin's biggest initiative has been the development of a virtual machine, allowing users to run smart contracts directly within its system and be compatible with Ethereum.

When I first saw this news a few years ago, I was quite disappointed. For such a large project, to have been held back for so long only to produce such a clichéd and outdated solution is truly a disservice to the team's past reputation and influence. It made me question whether the team had run out of innovative ideas.

We already have countless EVMs; do we really need another new EVM? I even think that creating this EVM would be less advantageous than entering the storage-focused modular blockchain space like Celestia, where it has even more advantages.

This year, I finally saw Arweave's innovative initiatives: the team launched a comprehensive platform based on Arweave called AO.

Regarding AO, I shared some of its technical details during a Twitter discussion in March. Overall, the framework it envisions is very large, and the functionalities it aims to achieve are strong, theoretically capable of becoming a foundational platform for AI applications.

However, if we delve into its white paper, we will find that there are many technical details that need to be discussed, and several implementation paths still need to be validated.

I even doubt whether simply applying staking penalties to prevent certain types of nodes from malicious behavior in AO is truly applicable. If this method could be applied so easily, DePIN and decentralized AI should have already been implemented.

In short, the future path of AO is equally fraught with challenges.

But overall, the Arweave team's concept is logically closely related to existing businesses, and the technical approach is a very fitting extension, and this concept is very bold.

This innovation is far stronger than the virtual machine launched by Filecoin.

Some readers have asked whether it is appropriate to exchange Filecoin for Arweave now.

I would consider this question in two steps:

First, should I sell Filecoin?

Second, should I buy Arweave?

If it were me, I would not hesitate to take the first step and immediately liquidate my Filecoin holdings.

However, whether the second step is appropriate would depend on its price and potential.

I checked the trend of Arweave, and from early February to now, it has increased fourfold, rising from $8 to the current $43. This price is less than a 1x difference from the peak of the last bull market at $83.

In this situation, how much potential return could there be from buying Arweave now? If it were me, I would not buy it at this moment.