Editor's Note: This article comes fromChain News ChainNews (ID: chainnewscom)Editor's Note: This article comes from
Chain News ChainNews (ID: chainnewscom)
, author: Qian Bojun, working at HashKey Capital Research, reviewer: Zou Chuanwei, chief economist of Wanxiang Blockchain and PlatON, published with authorization.
We believe that the Filecoin economic model is logically feasible and solves two problems: the first is the serious loss of early miners; the second is the effectiveness of storage capacity. Of course, the current Filecoin economic model has not announced the governance mechanism and algorithm parameters, and further observation and verification is needed to see how effective it is.
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Understand the Filecoin mechanism
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Filecoin is an incentive mechanism and public chain system based on the IPFS (InterPlanetary File System) protocol. The IPFS protocol defines how files are stored, retrieved and transmitted in a distributed system, and can permanently and decentralized save and share files. This is a Content-addressable, peer-to-peer distributed protocol. FIL is a token issued by Filecoin, which is used to incentivize the behavior of various roles in the storage and retrieval market in the Filecoin network.
The total circulation of FIL is 2 billion pieces, 70% of which are rewarded by miners, 15% by Protocol Labs, 10% by public and private investors, and 5% by the foundation for ecological development.
The issuance speed of FIL is divided into three parts: 50% of the miner rewards will be issued within six years; the foundation and Protocol Labs will be released linearly within six years; investors will be distributed within one year. Most of the FIL supply will depend on miner rewards.
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Understand the consensus mechanism
Filecoin adopts a hybrid consensus mechanism: Expected Consensus (EC) as the main, Proof of Replication (PoRep) and Proof of Time and Space (PoSt) as supplementary.
The expected consensus elects one or more miners to create new blocks in each round, and the probability of a miner winning the election is proportional to the miner's current storage capacity. The expected consensus is fair, unpredictable and verifiable. Each round of election is an epoch, and the expected consensus mechanism presets an expected value of block generation for the Filecoin network. The expected value of blocks generated in each epoch is 1, which means that there may be empty blocks or multiple blocks in an epoch. The circumstances of the block generation. Therefore, in the Filecoin blockchain, each block height corresponds to a block set (Tipset), and each block set contains a variable number of blocks. This chain structure is a directed acyclic graph (DAG).
There are two advantages of Filecoin adopting the expected consensus: the first is that the transaction efficiency is high, and the work of miners will not be wasted. The second is that forks can be controlled. Filecoin encourages miners to choose the most effective chain through the weight and mortgage mechanism, and punishes miners who mine multiple chains at the same time.
In expected consensus, the probability of a miner winning an election is proportional to the miner's current storage capacity. The storage capacity of miners is proved by Proof of Space-Time (PoSt) and Proof of Replication (PoRep). Proof of space-time can use the proof chain and timestamp to prove that the miner has stored data within a certain period of time. Even if the verifier is not online, he can verify that the miner has generated the proof chain within this period of time in the future, effectively preventing temporary data generation attacks.
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Understanding the Filecoin Market
There are two major markets in the Filecoin economic model: the storage and retrieval markets, where there are customers and miners respectively. In addition to the above two roles, there are developers and investors in the Filecoin economic model ecology. Developers develop new tools, applications, and provide proof-of-concept suggestions to optimize the Filecoin ecosystem and storage retrieval market. Developers submit proposals to receive foundation grants. Investors provide liquidity to miners in the secondary market to increase the value of the Filecoin network. The following describes the Filecoin storage and retrieval markets respectively.
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storage market
The Filecoin storage market is a verifiable market, verified by the blockchain network. In the Filecoin storage market, customers put forward the demand for data storage, and the storage suppliers are storage miners, who provide their storage space. A complete storage cycle is as follows:
First, storage miners provide their own prices and storage requirements to the order book (Order book). The order book is public and can be viewed by anyone, and the service price of the storage market is determined by the market.
Second, when the customer's demand price matches the storage miner's order, the transaction is automatically matched.
Third, the verifier verifies whether the miner stores valid data, and uses zero-knowledge non-interactive proof for verification, effectively protecting privacy.
One is the transaction fee;
The second is block rewards;
The third is Networking Message Transaction Fees. Transaction fees and network transaction acceleration fees are paid in advance by customers, and block rewards are generated by the system.
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The Filecoin retrieval market is an off-chain market that provides the data needed by customers for retrieval, and retrieval services are provided by retrieval miners. Retrieval miners do not participate in the block generation process, and directly obtain corresponding service fees from the client. The source of retrieval miner data can be from other clients, storage miners, or the IPFS network.
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block reward
Dissecting the Filecoin economic model
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block reward
In the storage market, Filecoin miners get block rewards according to their storage capacity. The storage capacity is measured by how many units of effective storage space the miners provide in the Filecoin network and the storage time. The storage capacity of miners in Filecoin is equivalent to the computing power of miners in the Bitcoin network. The block rewards obtained by miners depend on the proportion of their storage capacity to the storage capacity of the entire network. For example, if a miner provides 1 PB of storage computing power when the network size is 100 PB, then he will receive one percent of the block reward for the corresponding time.
The difference between Filecoin and the Bitcoin network lies in the difference in the nature of the services provided: storage is a long-term service, and Filecoin requires miners to maintain the stability of the network for a long time, unlike the Bitcoin network, where miners can freely enter and exit. Therefore, Filecoin adopts the Network Baselines reward model instead of the time exponential decay model. The network benchmark model has two mechanisms:
First, block rewards decay exponentially over time in the long run.
One is to link block rewards with the growth of the storage market to prevent miners from exiting the network after receiving large early rewards.
Pledge mechanism
The second is to smooth the exponential decay model to avoid large-scale changes in the storage capacity of the entire network due to the halving of rewards.
Pledge mechanism
The pledge mechanism is a miner punishment mechanism to protect the data of Filecoin storage market customers from being lost. In each storage agreement between a user and a miner, the miners in the storage market will store the data provided by the customer in the network, which is called a sector (Sector). The sector added by each miner will contain the content of the storage file and the promised storage time, ensuring that customers can freely use their own stored data during the agreed storage time. When a miner adds a sector to the Filecoin network, the miner needs to pledge a locked fund.
Locked funds consist of two parts: the miner's own FIL tokens and a portion of the block reward. If a miner goes offline for the promised storage time, he loses a portion of the locked funds. If a miner stops storage altogether, he may lose all locked tokens. Locked funds are unlocked after the miner fulfills the storage agreement, and the miner can recover all funds after a short lock-up period. Mortgaging part of the block rewards has two benefits: The first is to avoid the liquidity shortage of FIL in the secondary market in the early stage. The second is to reduce the entry cost of miners.
What about incentives?
In the Filecoin storage market, the roles of all parties operate in a dynamic balance. The demand and supply of storage in the early stages cannot be fully matched. When the demand for Filecoin ecological storage is lower than the supply, miners have two options: one is to idle equipment and wait for customer transactions; the other is to store useless data to seek block rewards.
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Committed Capacity
Committed capacity is a mechanism that allows miners to avoid idling equipment. When miners have idle equipment due to insufficient customer storage demand, they can provide committed capacity sectors to the Filecoin network. Through the Filecoin network, it is proved that the mining tool has effective storage capacity and can provide storage services for users, and the miner can obtain block rewards. Then when there is a customer storage demand, the miner promises that the capacity sector can be immediately upgraded to an effective storage sector, storing customer data and obtaining transaction fees. This mechanism can prevent miners from obtaining block rewards by storing invalid data, and increase the effective storage capacity of the entire network.
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The verification database mechanism encourages miners to access valid data. The main purpose is to prevent miners from gaining income through invalid data attacks and consuming the storage capacity of the entire network. After the data stored by the customer is verified by the Filecoin network, it becomes valid data. Both miners and customers are motivated to verify data. Miners can obtain higher block rewards for storing valid data after verification, and customers will also increase the priority of miners to process their own transactions because they provide verified data.
There are two factors that affect miners' storage of valid data: The first is the ability of the system to distinguish valid data. The second is the proportion of transaction fees to block rewards. Because the cost of miners accessing invalid data is lower than the cost of accessing valid data, including differences in electricity costs and equipment loss. When the cost gap between the two is greater than the transaction fee, miners may ignore the gains brought by accessing valid data, and continue to access invalid data generated by themselves to obtain block rewards, resulting in a decline in the effective storage capacity of the entire network. Filecoin has not announced the method of judging valid data. Assuming that the algorithm is not accurate enough or judged subjectively by humans, there will be the possibility of miners’ fraudulent behavior in the market.
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Full analysis of FIL price and miners' behavior
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Storage Market Supply and Demand
The demand of the Filecoin storage market mainly comes from users' demand for decentralized storage. Compared with centralized storage, decentralized storage has four advantages:
One is the value of data:
The second is higher data security:
Third, the cost of data backup is low:
The supply side of the Filecoin storage market is storage miners. Traditional centralized operators such as Amazon or Google have significant scale and technical cost advantages, which are difficult for decentralized storage miners such as Filecoin. According to the theory of market supply and demand, miners' quotations need to be lower than those of centralized storage in order to survive in the storage market. Therefore, combining the supply side and the demand side, we can find two points:
First, in the early days, there was a distinction between Filecoin storage market customers and centralized storage customers. The Filecoin market demand is mainly small and medium-sized customers with high privacy sensitivity and high cost sensitivity. In the long run, low quotations mean that the demand for Filecoin storage will gradually increase.
Second, the low quotations and high costs of miners mean low profit margins or losses, and the source of miners' benefits will shift from transaction fees to an increase in the price of FIL. The optimal strategy for storage miners is to appropriately reduce the quotation to obtain more storage orders and increase the probability of obtaining a block.
Retrieve market supply and demand
In the early days, the market demand for Filecoin retrieval mainly came from blockchain users who needed valuable information. The content stored in the early IPFS network has not yet been scaled, and the search service has no advantages compared with the centralized network. Regardless of whether miner transaction fees are competitive, the amount of content stored in the system is a key factor in market adoption. With the gradual scale of the IPFS storage market, more and more files can be retrieved by users, and the importance and income of retrieval miners will gradually increase. The price of FIL has little impact on retrieval miners, whose income is only transaction fees and does not include block rewards.
The optimal strategy for retrieval miners is to become a storage miner at the same time, and lower the quotation appropriately to obtain more retrieval orders and improve network bandwidth utilization. In this case, the Retrieval Miner can fetch data directly from the client. They can also retrieve files from other storage miners if there is too much data to retrieve. The search market is operated off-chain. When the IPFS ecosystem develops to a certain extent, search miners can rely on abundant storage resources to efficiently operate the search market.
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Since miners need to pledge FIL to obtain block rewards, and FIL tokens are released linearly and gradually, it is expected that the supply side will grow slowly and the growth rate will decrease exponentially. On the demand side, due to the gradual increase in service demand, all market participants must continue to purchase FIL.
In summary, the optimal strategy for miners is to hold FIL for a long time. There are two reasons: First, mining needs to pledge FIL, which reduces the supply of FIL and increases the demand for FIL. Second, the increase in the currency price determines the miner's rate of return, and the transaction fee cannot cover the mining cost.
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Elastic data backup
Filecoin provides multiple options for customer data backup. Customers can backup data to different nodes without limit, and can verify the storage status of any node at any time. Compared with decentralized backup and verification with high cost of centralized storage, the Filecoin storage protocol is more flexible.
