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Your FAQ Guide to Arweave: The AR Token and its Utility

By
Rohit Pathare
November 2, 2023
5 min read
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The AR Token is Arweave’s native currency that serves as the “fuel” powering the various functionalities of the network.

Why is the AR token essential for users?

To engage with the Arweave network, be it for data storage or token transfers, users need the AR token. For data storage users pay a one-time fee in proportion to the size of their data to afford its life on the network, while token transfers require the transfer amount and a processing fee. Notably, most simple transactions, like token transfers or storage of data like images, music or videos under 2 MB, typically cost less than $0.01.

Checkout this calculator for a quick estimate on the latest cost of storage.

How many AR tokens are there?

Initially, 55 million tokens were created on 8th June 2018 at the time of network launch. Another 11 million tokens are slowly being released into circulation as block rewards for mining, thus having a maximum supply of 66 million tokens altogether. It is worth noting that the system is designed to reduce the number of tokens in circulation over time. This in the decentralized world is known as being “deflationary”.

How can users store and manage AR tokens?

Users can manage AR tokens through accounts, also referred to as wallets. These accounts act as digital identities, enabling interaction with the network while also serving as secure vaults for AR tokens and other assets. Tools like ArConnect streamline account management through an intuitive interface for a seamless user experience.

Here’s a short video to learn more about accounts on Arweave.

How can users purchase the AR token?

AR tokens can be acquired via various exchanges or services. For a detailed guide on obtaining AR tokens, checkout this blog.

How is the AR token used to incentivize data storage on Arweave?

It can be challenging and costly for general users to set up the extensive infrastructure required to directly interact with Arweave. Miners are unique participants that help general users interact with the network, store new data on their behalf, and regularly validate this information. When miners add new data to the network, they’re rewarded in AR tokens. This reward is a mix of fee rewards, block rewards, and rewards from a special reserve called the “storage endowment.” While miners directly receive 5% of the fees users pay, the remaining 95% goes in this reserve for future use. The “block reward” is predetermined based on the block number (the location of the block in the blockchain network).

The storage endowment acts as a safety net, only releasing rewards when the standard rewards drop below a threshold. As of the time of writing, Arweave hasn’t needed to tap into this reserve.

In Conclusion

For all the crypto enthusiasts out there and those just getting started, the AR Token in Arweave's world offers a fascinating peek into how cryptocurrencies can be so much more than just digital money.

New to Arweave? Dive deeper into our beginner-friendly blogs on “What is Arweave?” and “How to interact with Arweave?”. And for regular updates on this exciting ecosystem, don't forget to follow Community Labs on X!

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