> For the complete documentation index, see [llms.txt](https://hub.bsvblockchain.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hub.bsvblockchain.org/higher-learning/bsv-academy/bsv-network-topology/essentials-of-overlay-services/economic-model-and-types-of-overlays.md).

# Economic Model and Types of Overlays

<figure><img src="https://3421145409-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FRTEKu4E7Fvtss3GI9CYU%2Fuploads%2FTFcRWTF6LIq5riFQD2PD%2Fmodel2.png?alt=media&amp;token=ca7786b4-f8ed-4822-a498-45c2d8d421b7" alt=""><figcaption></figcaption></figure>

While the transaction fees associated with on-chain data storage may appear minimal, the reality is that **hosting costs for serving content are still present and must be accounted for**.

Overlay services address this challenge by **enabling users to contract storage providers**, allowing for the payment of hosting data for a specified duration. The **blockchain records a token** that captures the **contract details**, including the **duration for which the data will be available at that host**.

This model represents a significant shift in how data storage is priced. Instead of incurring a monthly fee to a cloud provider, users can purchase storage on a **per-file basis**, offering unprecedented granularity and flexibility. Data storage overlays provide a mechanism for managing content distribution, enhancing existing solutions with hash-based lookup and immutable timestamps.

#### Types of Overlays:

* **Private Overlays**: Designed for specific individuals or businesses seeking complete control over their data and transaction processing.
* **Public Overlays**: Accessible to developers lacking infrastructure, such as ARC, which handles any valid transaction.
* **Ring-Fenced Overlays**: Tailored for financial institutions with jurisdictional restrictions, ensuring compliance while leveraging blockchain benefits.
* **Open Protocol Overlays**: Intended for experimental applications by entrepreneurial developers exploring new use cases.


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