Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.
Blue Fox Notes (ID: lanhubiji)
Blue Fox Notes (ID: lanhubiji)
, reprinted by Odaily with authorization.
The Filecoin mainnet will launch at block 148,888. This means that Filecoin, which has been waiting for more than 3 years, is coming soon.
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What is Filecoin?Speaking of Filecoin, we must first mention IPFS. IPFS is a peer-to-peer distributed file system. Its ultimate goal is to replace HTTP. Its core is based on content addressing, rather than traditional domain name addressing. This will change the way people get information. Under HTTP, people find content and obtain services by domain name. Under the IPFS architecture, people look for content directly instead of obtaining information through domain names.》、《So, what does this have to do with Filecoin? Filecoin is the incentive layer for IPFS, a decentralized storage marketplace. To realize the vision of IPFS, a decentralized storage market like Filecoin is needed.》、《From a mechanism point of view, in simple terms, Filecoin can be regarded as a decentralized storage market, where storage users pay miners for services. The storage miners run the software and hardware to help users store files, so they get paid, and the payment uses Filecoin's native token FIL. Filecoin's blockchain will record transactions of FIL tokens, as well as storage proofs of storage miners. Regarding IPFS and Filecoin, you can also refer to Blue Fox Notes' previous article "》。
Value Capture of Filecoin
The Ultimate Guide to Filecoin: Digging Deep into the Filecoin White Paper
Why is IPFS interesting?
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Filecoin enters a fertile market
Filecoin will make efforts in at least two markets, and because of its possibility, more new things will be derived in the future. These two markets are cloud storage and CDN services. In 2019, the output value of the cloud storage industry exceeded US$46 billion, while the output value of CDN services (content distribution network) also exceeded US$12 billion. These two markets are still growing, because with the continuous popularization and upgrading of hardware such as mobile phones, people generate data faster and faster, and video and image data are increasing.
From the model point of view, in a simple analogy, Filecoin is similar to Airbnb in the decentralized storage field. It allows anyone to become a data storage service provider, and anyone can also obtain decentralized storage services. Unlike other cloud storage and CDN services, Filecoin provides services in a decentralized manner, which means that it does not rely on trusted third-party institutions to provide services. This also means that it needs to have verifiable storage, permissionless participation, etc.
Therefore, Filecoin needs to have a blockchain and requires cryptographic verification to verify whether the user's data is being stored, that is, proof of storage. At the same time, it needs to pay and subsidize through native tokens to motivate miners to provide storage services for more people. Participating without permission means that anyone can become a storage service provider on the Filecoin network, as long as they have certain hardware devices and are connected to the Internet.
In addition, since the participants are distributed, it may also develop into a more effective CDN service, giving popular content the opportunity to be distributed near users. Therefore, Filecoin must not only enter the AWS site, but also enter the CloudFlare (CDN service) site. Files that are closer to the user will be faster, especially those popular content will have an advantage, and even institutions can participate in mining to provide data retrieval services for close users.
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Sustainability Design of Filecoin Token Economy
The design of the token mechanism in the encrypted economy is very important. If it is not well designed, it may cause market instability. For example, some current DEXs have very good fundamentals, both in terms of trading volume and liquidity, but the price of tokens has been unable to support. One of the most important reasons is that the token economic mechanism is poorly designed. It considers the incentives of liquidity providers one-sidedly, but does not consider the more important value capture of tokens, the measurement of ecological builders, and the overall long-term sustainability from a global perspective. Persistent problem. These DEXs can actually integrate the interests of liquidity providers with the value capture of tokens. From this perspective, the current token economic mechanism design will undergo more iterations.
Filecoin's token economy design serves participants in the decentralized storage market. It is necessary to provide participants with a more reasonable token incentive mechanism, reduce their short-term behavior as much as possible (to a certain extent), and continue to contribute to the development of the network as much as possible under the premise of ensuring sufficient attractiveness.
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In Filecoin's token economy system, storage users pay FIL tokens to store data, and storage miners get FIL rewards by providing storage space. The proof of storage is verified through the Filecoin network. Storage pricing is defined by available storage capacity and storage period. Retrieval is also a similar market, where users pay FIL tokens to retrieval miners to obtain a copy of the data they provide.
The economic prosperity of Filecoin requires the active participation of users and miners, and more large-scale usage scenarios. Just like an economy, if transactions are frequent and prosperous, then it will flourish. Ultimately, the value of FIL depends on the size of its storage and retrieval market. When the storage and retrieval demand for the Filecoin network increases, the demand for FIL will increase. Because the pledge needs of miners and the needs of users to purchase storage and retrieval services are inseparable from FIL tokens.
Therefore, Filecoin's token generation speed must match its value creation speed, otherwise it is not conducive to the overall development. Filecoin needs to form an economy that encourages real transaction demand and can still operate without FIL subsidies.
To understand Filecoin's token economy, we must first understand the main participants in its market and the rules of participation.
Filecoin storage service provider
Different from the centralized storage market, the decentralized storage market needs to coordinate the transaction parties to ensure reliable service provision without third-party trust. To this end, Filecoin has done a lot of design. These include committed capacity, sectors, miner pledges, and more.
Incentivize miners to meet real storage services
Any market is made up of transactions, and so is the Filecoin network. However, Filecoin is currently unable to distinguish between real user orders and miners' own "flushing" orders. To this end, Filecoin has designed a "committed capacity" architecture and introduced the concept of "verified users", which will make "internal transactions" gradually economically uneconomical.
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(Storage service available on Filecoin, Filecoin.io)
In the initial stage of the network launch, the storage service provided on Filecoin has the opportunity to receive rewards even if no content is stored, the significance of which is to leave free space for the system. This is Filecoin's design: "committed capacity".
Storage miners not only provide storage services, but also ensure consensus on the chain. A sector is the most basic unit of storage on Filecoin. It has a standard size and a defined period of service. When a sector has only part of the transaction order, the rest will be regarded as "committed capacity", and sectors without transaction orders will also be regarded as "committed capacity sectors". Miners can also get rewards for proving their "committed storage capacity" to the Filecoin network. Of course, if they can find the real storage demand, they can earn higher income.
"Verified users" are verified through a distributed network of validators. After being verified, sectors that trade with verified users will get more storage computing power and more block rewards. That is, storing data of "verified users" will earn higher block rewards. Such incentives will encourage miners to find real data demanders to use their storage space, thereby enhancing the competitiveness of the entire system.
Sectors of Filecoin
However, different sectors on Filecoin also have different weights. In addition to the most basic sector size and sector commitment service period, it also involves the weight of transaction orders, transaction order quality multiples, sector quality multiples, and weighted byte computing power. For example, the weight of verified user transaction orders in a sector is greater than the weight of ordinary transaction orders; different transaction order categories have different transaction order quality multiples; the weighted byte computing power will consider sector Area quality multiples, etc. Through the distinction of these weights, the quantity and quality of services can be balanced, thereby achieving a fairer distribution of tokens.
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(The impact of transaction type on sector quality, Filecoin.io)
In the design of Filecoin, sectors have a life cycle. This involves sector encapsulation, lifecycle settings, and related failure costs.
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(The Lifecycle of a Sector, Filecoin.io)
When Filecoin encapsulates a sector, it will generate the identification code of the sector, which is realized through a copy proof (PoRep). Once the encapsulation is completed, the storage miner will generate a proof and run SNARK to compress the proof, and the compressed result will be submitted to the Filecoin chain as a proof of storage commitment.
The transaction order is submitted to the chain. Storage miners start generating Proof of Spacetime (PoSt) in the sector. With the space-time proof of storage, there is an opportunity to obtain block rewards and earn storage fees. Size aside, the current commitment period for a sector is a minimum of 6 months and a maximum of 18 months. The minimum sector life cycle is set to 6 months in order to effectively utilize the bandwidth of the chain, while the longest sector life cycle is subject to the security of the proof structure. The security of Filecoin’s Proof of Replication (PoRep) Decreases as the zone lifetime increases.
Finally, it is about the failure fee processing of the sector. If a sector is in a failed state, there is a daily fee. In order to encourage miners to deal with failures as soon as possible, the amount of the fee is slightly about the expected income of the sector. If the sector is still faulty for two consecutive weeks or the sector is terminated before the sector expires, the sector needs to pay the termination fee, refund the user's remaining order fee, and delete it from the chain. Additionally, if a miner does not report a fault, but instead discovers an unreported fault on-chain, there is a one-time fee to be paid. In the latest design, Filecoin lowers the sector fault detection fee and sector termination fee to reduce miners' operation and maintenance risks.
The design of termination fees and failure fees can motivate miners to improve the quality of their services.
To become a Filecoin miner, you need to pledge FIL tokens
In terms of the security of the PoW mechanism, miners purchase dedicated ASIC mining machines, which are difficult to resell after purchase. If they are used for attacks, this part of the cost is difficult to recover; PoS uses token pledges as a security defense, and attackers Purchasing a large number of tokens to attack will push up the price of tokens, thereby increasing the threshold of attack.
Currently, Filecoin miners need to pledge tokens to participate in mining, including storage pledge, consensus pledge, and block reward pledge.
Storage pledge means that miners need to pledge a certain amount of FIL tokens for each sector. Its main purpose is to ensure the quality of network storage services to deal with sector failures and fines. Filecoin deals with a two-sided market problem between users and miners. If miners can easily give up their storage commitments, it will cause data loss and service quality degradation for storage users. Therefore, a pledge is required to prevent miners from acting casually. However, if the pledge cost is too high, it is not conducive to more miners to enter. Therefore, in the design of Filecoin, block rewards locked or unlocked rewards can also be used as collateral.
Consensus pledge depends on the weighted byte computing power of the sector and the supply of FIL in network circulation. When the network reaches or exceeds the baseline (described specifically below), about 30% of the circulating supply of FIL is locked in the initial consensus pledge.
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Filecoin Storage Users
Realizing decentralized storage on Filecoin is attractive for storage users. It is relatively simple for storage users to obtain Filecoin's storage services.
First of all, storage users need to obtain FIL tokens, and then perform verification to become verifiable users. Of course, this step can also be skipped. Then start looking for miners and initiate transactions to the corresponding miners. The two parties reached an agreement to verify storage for users and pay fees to miners through the Filecoin chain, while users obtain storage files from miners.
(Get storage service on Filecoin, Filecoin.io)
During the transaction process, the transaction information is transmitted through the Gossipsub network, and the transaction can be matched by a third party to speed up the transaction. Once storage demand and supply orders are matched, trade orders are fulfilled. Storage requirements include capacity, price, term, and the number of pledges of miners. Because the state and bandwidth of the chain are limited assets, in order to ensure that providers provide users with high-quality services, the protocol will set the minimum provider transaction pledge. If the total amount of network transaction orders reaches the network baseline, the sum of transaction pledges is targeted at 5% of Filecoin's circulating supply.
The transaction payment is locked when the transaction order is on the chain, and the payment is distributed to the miners in batches in each payment cycle. If the miner terminates before the order expires, the miner needs to pay the sector termination fee, and the provider's transaction pledge will also be punished and destroyed. The remaining transaction payment is also refunded to the user.
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Network Baseline Regulates Token Allocation
The total amount of Filecoin's token FIL is 2 billion. In the allocation of the genesis block, 10% of it is allocated to early investors (7.5% has been sold, 2.5% is retained), 20% is allocated to project parties (15% is allocated to Protocol Labs, and 5% is allocated to Filecoin Foundation) meeting).
The remaining 70% is allocated to Filecoin's storage miners, retrieval miners, and maintenance miners, etc., subsidizing miners to provide data storage services, maintain blockchains, distribute data, and run contracts. Among them, storage miners have the highest proportion of rewards, receiving 55% of the token allocation, because they are not only responsible for providing storage services, but also maintaining core functions. This part of the rewards is issued through block rewards, which are used to reward the maintenance of the blockchain, running contracts and storage services. Retrieval miners, maintenance miners, etc. can get 15% token incentives.
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(Filecoin token distribution, Filecoin.io)
Filecoin is different from Bitcoin's halving mechanism every four years, and it is also different from the previous DeFi's short-term rapid halving mechanism. In order to achieve sustainable development, Filecoin introduces a hybrid index casting mechanism. The casting mechanism of the hybrid index involves the concept of network baseline.
If the early rewards are too high, it will cause storage miners to package storage mining as soon as possible, invest a lot of hardware, and quit after obtaining early high rewards, which will lead to the loss of storage users and affect its long-term sustainability. In this case, users are not willing to store on the Filecoin network, and miners are not willing to provide services for a long time.
