In the Web2 world, people choose centralized cloud-based platforms to store their private data. However, those storage systems compromise user privacy by exposing sensitive information to third parties or censoring user data. Therefore, decentralized storage facilities and distribution networks like Swarm have come up for private and permissionless cloud storage.
Swarm is an open-source, peer-to-peer network offering a base layer for Web3 developers to create, host, and store decentralized applications (dApps).
The main difference with other decentralized storage solutions is the permissionless upload and censorship-resistant data architecture, working de facto as a serverless operating system for running dApps.
Swarm has now introduced a storage incentive system on the mainnet, a long awaited feature to reward storage providers and maintain equilibrium in storage supply and demand.
Anyone with stable internet connection and a computer with 20 GB storage can become a storage provider. These requirements make the Swarm network one of the most accessible decentralized storage solutions in the market.
Swarm’s Storage Incentives Program
The incentives mechanism provides a self-sustaining data storage economy where storage providers could earn financial rewards for storing user data. These rewards come in the form of Swarm’s native utility token, BZZ. The incentive program is open to everyone in the Swarm community who can provide data storage facilities.
To receive BZZ tokens from Swarm, storage providers have to initially stake or deposit a non-refundable amount in the protocol. In a similar fashion to Ethereum’s Proof-of-Stake consensus mechanism, Swarm probabilistically chooses storage providers for rewards distribution depending on their staking proportions. Currently, providers have to stake a minimum of 10 BZZ to participate in the redistribution system.
Those who require storage space pay rent to storage providers, according to data volume and usage duration. Currently, the storage rent price is fixed, but in the following weeks it is expected that an on-chain oracle system will automatically determine prices based on the supply-demand forces.
The incentives program will help in the expansion of the Swarm economy and make it a self-sustainable network. It will also help establish a new bootstrapping alternative for storage providers and users.
Elaborating on the incentives scheme, Daniel Nagy, chief scientist and vice president for Swarm Foundation, said, “Proper incentives for storing information and making it available upon request are what makes Swarm self-sustaining and viable in the long term, without subsidies or reliance on altruism.”
Paving Way For Future Innovations
The Swarm team is working on a Web3 PC, a new network connected computer prototype, that can store data and provide privacy-preserving computing services. Developers expect the first model to be ready by June 2023.
Moreover, Swarm users can avail of Fairdrive, a decentralized file storage solution, offering sovereign ownership of user data. They can also use Fairdrop to securely send data files in a decentralized manner without relying on central servers.
Swarm has been growing rapidly in the last five years, raising over $6 million in 2021 from VCs like HashKey Capital, KR1, and NGC Ventures. In September 2022, they launched a new roadmap, leading to a 40% rise in BZZ token prices.
The company will continue to develop innovative solutions in 2023 for a stronger decentralized storage ecosystem.
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