Special Report: Walrus Protocol

GM,

This report is a preliminary glance at Walrus, an upcoming decentralized storage and compute protocol being built on SUI. This project has not launched a token yet and isn’t investable currently. However, we believe it has the potential to be successful. This industry vertical (storage and compute) should continue to grow exponentially and Walrus us being built on one of the networks that is seeing a lot of mindshare this cycle. We will be monitoring Walrus as it launches a token and its products to determine whether it fits our investment criteria. We recommend you keep it on your radar as well.

-Will

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Walrus is a decentralized data storage protocol designed to deliver efficient, cost-effective, and highly available storage solutions. Built on the Sui network by Mysten Labs, Walrus leverages innovative erasure coding techniques to reduce replication costs while maintaining high levels of fault tolerance and data availability. Walrus's scalability, integration with Web3 applications, and its own native governance token, WAL, position it as a strong contender in the decentralized storage space. However, its market remains nascent and competitive, requiring careful monitoring of its adoption and scalability.

Project Overview

Walrus is designed to address two critical issues in decentralized data storage: high replication costs and limited fault tolerance. Traditional decentralized storage solutions like Filecoin and Arweave replicate data across multiple nodes, sometimes requiring 10x or more replication. Walrus significantly reduces this to 4x-5x by using erasure coding, allowing smaller pieces of data to be distributed across multiple nodes. This ensures that even if two-thirds of storage nodes fail, the data can still be reconstructed and recovered.

Walrus is built on the Sui network, an advanced and scalable blockchain born out of Meta’s Diem project. Sui is also increasingly looked at as a leading alt L1 this cycle which adds significant potential for cross-ecosystem integration. Additionally, the upcoming launch of Walrus’s WAL token will drive participation in governance, staking, and node incentivization.

Technology and How it Works

1. Erasure Coding for Decentralized Storage:

Walrus's core technological advantage lies in its use of erasure coding, which encodes large blobs of data into smaller pieces, called slivers, which are then distributed across a decentralized network of storage nodes. The key innovation here is that only a subset of the slivers is required to reconstruct the entire data blob. This allows Walrus to maintain data availability and integrity even if a significant portion of nodes are offline or compromised.

2. Reduced Replication Factor:

Compared to competitors like Filecoin, which can have replication factors of 10x or more, Walrus achieves the same or better data availability with only 4x-5x replication, making it far more efficient in terms of cost and resource utilization. This positions Walrus as an ideal solution for decentralized storage in Web3 environments where cost-efficiency is a critical factor.

3. Integration with Sui:

As part of the Sui network, Walrus benefits from the blockchain's scalability, transaction throughput, and low latency. Moreover, Sui’s ability to handle complex smart contract operations complements Walrus's data storage functionality. WAL, Walrus’s native token, will handle governance and staking within the network, and is expected to play a major role in incentivizing node operators and securing the network.

Valuation and Competitor Comparison

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