Block rewards are one of the many encrypted economic structures of Filecoin's mission
The key component of the Filecoin economy is block rewards, which reward storage miners for providing reliable and useful storage capacity and maintaining the Filecoin blockchain. The Filecoin blockchain has grown through successive rounds of leader elections. Any miner who wins the leader election and is therefore selected to mine a new block will receive a certain amount of Filecoin tokens as a block reward.
Filecoin's overall reward system is unique, both in the way it determines who wins the collective reward or the reward method used in the process of obtaining the reward. This improves the usefulness of the Filecoin network to miners and customers and ensures its long-term health.
Miners: Win block rewards by storing data
Miners obtain storage capacity by allocating hard disk space to the Filecoin network through a process called "sealing". Sealing divides the storage space into multiple sectors dedicated to storing data on Filecoin. The more storage departments miners add to the network, and the more client data they can store, they are eligible to use more Filecoin.
Miners obtain the right to participate in leader elections by providing storage functions for the network. According to Filecoin storage miners can award block rewards based on the storage capacity provided by the quality multiplier of different transaction types in their storage. The overall reward for miners is directly proportional to the quality adjustment ability; over time, it is expected that miners who contribute 1% of the overall network quality adjustment ability will receive approximately 1% of the block reward.
The traditional proof-of-work blockchain requires miners to perform computationally intensive but useless tasks to win block rewards, while Filecoin miners obtain block rewards by proving that they provide reliable and useful storage for network clients. Anyone can contribute storage resources to the network and immediately start receiving block rewards.
Block rewards greatly encourage miners to store useful data, and cryptoeconomics greatly subsidize the storage of actual customers on the Filecoin network. This incentivizes legitimate use cases and emphasizes Filecoin's core mission of storing humanity's most important information.
Customer: Use overall rewards to subsidize reliable storage
The Filecoin network is designed to provide customers with reliable and useful storage, which requires Filecoin miners to provide continuous storage services to their customers in accordance with their contractual agreements. If Filecoin miners go offline while signing a contract with a customer, this will damage the value of customer service and damage the health and reputation of the network. In order to incentivize miners to provide stable services, the Filecoin network requires miners to use their overall rewards as collateral. If the miner terminates the contract prematurely or goes offline, the miner will be punished and his collateral will be called "substantially reduced."
The Filecoin protocol uses block rewards to not only incentivize miners to store data in the first place, but also to do so in a lasting way and maintain a commitment to customers and the network. Storage customers have the right to share the products of the Filecoin network because they incentivize miners to meet customer needs. Meeting the needs of storage miners and building applications and tools on Filecoin to better meet customer needs are also the best interests of storage miners.
Network: Minting block reward based on network utility
Many blockchains encourage early adoption by applying exponential decay models to the rate at which miners receive block rewards. This means that in the early stages of the blockchain life cycle, participation and utility are usually the lowest, and then rapidly decline, while mining is profitable exponentially. This model encourages storage miners to make excessive investments in hardware as soon as possible during the closed phase of mining, without considering the reliability and practicality of their storage. In addition, this will result in most network subsidies being paid only on the basis of time, rather than on the actual storage (and value) provided to the network.
In order to encourage consistent storage support and long-term storage investment, not just fast sealing, Filecoin introduced the concept of network benchmarking. The concept of "network time" is defined based on the progress made by the network in meeting its benchmarks. Instead of minting tokens based only on elapsed time, it is better to expand rewards based on elapsed "network time". This preserves the shape of the original exponential decay model, but it can be softened in the first few days of network establishment.
The overall result is that Filecoin's rewards to miners are more closely matched with the practical tools they and the entire network provide to customers.
Specifically, a hybrid exponential conversion mechanism is introduced, in which part of the reward comes from simple exponential decay, that is, "simple conversion", and the other part comes from the network baseline, that is, "baseline conversion." The total reward for each period will be the sum of the two rewards. Through this mechanism, mining Filecoin should be more profitable.
Simple casting allocation will reward early miners disproportionately and put pressure on the impact. As more value is created for the network, the baseline minting distribution will mint more tokens. When the network can release greater potential, more tokens will be minted to facilitate greater transactions. This will lead to an increase in network value creation and reduce the risk of excessive coinage.
There are many features that can make passing benchmarks more efficient and economical, and release more benchmark casting. The community can unite to achieve the following goals:
The high-performance anti-copy algorithm, the chain occupies less, the verification time is faster, the hardware requirements are cheaper, and the security assumptions are different, so the service life of the sector is longer and it can be executed without resealing the sector. A more scalable consensus algorithm that can provide greater throughput and process larger quantities with a shorter termination time. More trading functions make the industry last longer.
Finally, it is important to note that although collective rewards can motivate people to participate, they cannot be viewed as resources to be utilized. This is a common subsidy pool that can seed and expand the network to benefit the economy and participants.
Conclusion: Block rewards are one of the many encrypted economic structures that Filecoin uses to fulfill its mission of establishing a reliable and useful storage economy, where participants convert raw materials into valuable storage-related goods and services. Through a unique block reward structure, the Filecoin protocol aligns the incentives of miners and customers with the long-term utility of the network.