Recently, the growth of Filecoin's entire network's computing power has accelerated, and more than 1 million new information has been added in 24 hours, which has caused too much congestion in the entire network, which has affected the skyrocketing gas fee. This time we will talk about the nature of gas fees, market impact, and whether we can learn from the Ethereum EIP 1559 proposal to optimize the Filecoin network. The main topics discussed below are:
How will gas fee burning affect market trends?
What is the economic significance behind the gas fee?
How to use Ethereum to optimize the Gas fee of Filecoin?
1. Looking at the supply and demand of Filecoin from the perspective of monetary policy: Is the gas fee burned to buy?
As we all know, monetary policy is that the government regulates the exchange rate of legal currency by controlling the connection between currency, output and inflation, so as to achieve the stability of legal currency. Taking this as a lesson, we understand the daily release and destruction of Filecoin as variables of storage currency, and the token economy and other mechanisms are macro-control policies, and then analyze the daily supply and demand relationship.
BTC order
Simply understand, a currency system can be divided into buying (purchasing power) and selling (market supply). From the perspective of Bitcoin, because the amount of Bitcoin burned is not large, it is temporarily ignored. Bitcoin mining can release 900 bitcoins per day (can be understood as selling). If Grayscale Investment Company buys 900 bitcoins per day (can be understood as buying). Ignoring the time difference factor in the market for the time being, the above behavior can be regarded as a long-short offset, and other external market buying or selling behaviors will cause fluctuations in the bitcoin market price. In short, the Grayscale Investment Company has been digesting the Bitcoin sell-off in the miners/market in the recent past, and coupled with some external buying, the market has been oversold and prices have risen.
So what are the buying and selling orders of Filecoin? Filecoin is more complicated than the Bitcoin market.
Filecoin order
The buying order may include the following behaviors: destruction + miner hashrate growth mortgage, maintenance + secondary market buying, the following is the description:
Recently, more than 50,000 buy orders have been destroyed every day. Destruction can be understood as a large coin hoarder who can only enter and can not exit, and can be indirectly regarded as buying. According to the display on the morning of November 30, the 24-hour destruction fee is about 56,000 FIL, of which ProveCommitSector, PreCommitSector, and SubmitWindowedPoSt account for about 98.2% of the total transaction fee, and nearly 100% of the above three are destroyed. The tip of the mine is negligible, and it is tentatively planned to burn 55,000 FIL;
miners buy more than 200,000 FIL every day. The FIL used by the miners every day is the FIL used by the miners to collateralize the growth and maintenance of computing power. Because the full income of the miners is considered as a sell order below, this part of the miners is regarded as a buy order. With the recent increase in computing power of 20PiB/day, 250,000 FIL buying orders per day (including 55,000 FIL handling fees) are required;
secondary market buying is an unknown factor, mainly based on market heat and user awareness, and there are large Uncertainty.
Selling orders may include the following behaviors: linear release + direct release + investor release + secondary market selling. The following is an explanation:
About 50,000-70,000 FIL is released linearly every day. Linear releases have different income distributions before and after the FIP-4 proposal is activated. At present, the daily release of FIL mainly includes (before FIP-4) rewards of 180 antenna releases + (after FIP-4) rewards of 180 antenna releases of 75%. At present, the total block reward is about 14.4 million. The 25% direct release part after reducing the use of FIP-4 is about 2 million. The remaining 12.4 million will be released linearly (ignoring the previously released part), and the daily release is about 12.4 million/ 180 days = 70,000;
about 50,000 FIL is directly released every day. I.e. immediate release 25% of the total daily block chain reward immediate release, probably about 25% * 200,000 = 50,000 / day;
according to prior published and calculation results, investors release FIL daily release of about 350,000;
two Market selling is also an unknown factor, mainly affected by the market panic index.
Through the above comparison, buying order = 305,000 FIL + secondary market buying order, and selling order = 470,000 FIL + secondary market selling order. The selling order will be about 165,000 FIL more than the buying order.
Although there are more selling orders than buying orders, the part of the surplus is mainly the part of investors. This part of investors will be used for mortgage lending or hoarding of coins. At present, the possibility of all selling is not very large; at the same time, there are orders in the secondary market. There is a lot of uncertainty. There are also many users or miners buying coins for value investment or mortgage backup.
All in all, the FIL trend analysis is as follows:
From the recent FIL market trend is relatively stable, the trading order is relatively balanced;
because there is currently no large amount of loose circulation FIL, once investors have a large amount of selling behavior, miners are likely to increase the purchase of coins to use as collateralized computing power;
The entire cryptocurrency market is greatly affected by the sentiment of Bitcoin, and the panic of the Bitcoin market is likely to affect the trend of FIL.
2. Gas fee burning = tax?
In Filecoin EIP 1559, the handling fee is divided into BASEFEE and TIP, of which BASEFEE will be burned and destroyed directly. At present, this part accounts for a relatively large portion; TIP accounts for a relatively small amount and serves as a tip for miners.
The main function of taxation is to adjust social demand, that is, to adjust market transaction behavior. The macro-control of taxation is to encourage or inhibit market transactions to a certain extent through taxation methods. In this regard, the consumption of gas fees can adjust the information transaction and transfer behavior of the Filecoin network to a certain extent (increasing the computing power of miners and maintaining transactions that require information). The following analysis of gas fees is based on tax economics:
Tax Economics and Filecoin Gas Fee, Source: IPFS Force Zone, 2020-12-01
At present, the taxation of the Filecoin network will inhibit the transaction behavior in the market to a certain extent. From the above, it can be concluded that the gas fee has an impact on the Filecoin network:
There are fewer transactions and slower growth in computing power. After the introduction of after-tax, after-tax demand will decrease, that is, the transaction behavior in the market will decrease, which is intuitively manifested as the slower growth of computing power;
the surplus value created by the Filecoin network decreases. The reduction in transfer behavior in the market will result in a significant reduction in producer surplus and consumer surplus, that is, the profit that producers (miners) can obtain and the savings that consumers (transfer demanders) can save will be changed from the original A+B+C+ D+E+F is reduced to A+D, so the transaction value created by the Filecoin network decreases;
the difference between the Filecoin Gas destruction mechanism and government taxation and Ethereum gas destruction. B+C is the tax scale (BASEFEE), and this part will be destroyed directly. This part is different from government taxes and Ethereum. The tax collected by the government will be redistributed to the society after macro-control, but the Filecoin network will not; Ethereum has no fixed total circulation, and mining release will gradually make up for this part. Destroyed, and Filecoin fixed 2 billion FIL. Although the protocol laboratory mentioned that it is possible to redistribute the destroyed BASEFEE, this part has not yet been determined and is temporarily regarded as non-recyclable FIL; the
Filecoin Gas mechanism will cause unnecessary loss. Tax policy will cause a certain degree of deadweight loss, which is E+F. The deadweight loss is that the transaction demander/mining union does not take action due to the collection of Gas fees and exchanges for other alternative methods. For example, the transaction demand party can change the Filecoin transfer transaction to another lower fee transfer method.
So as demand grows, how will the price, the scale of BASEFEE destruction, and the scale of gas fees change?
Transaction demand and price, BASEFEE burn scale, gas fee scale relationship diagram, source: IPFS Force Zone, 2020-12-01
As the demand for orders increases, the gas fee price of Filecoin will increase exponentially, and the more congested order demand, the more expensive the price. Recently, November 30 was more congested than November 29. The handling fee increased from more than 50,000 FIL (November 29) to more than 80,000 FIL (November 30);
excessively high handling fees will lead to network behavior Less, neither burning nor miners gains. As the demand for orders increases and the transaction price rises, BASEFEE will reach a maximum critical value. If the price is too high, the transaction behavior will decrease, and then it will return to 0;
when the transaction price is too high, the market will avoid trading because the price is too high. Power growth), leading to a gradual reduction in the scale of gas fees.
3. Thinking from Ethereum EIP 1559
We all know that Ethereum's EIP 1559 is also in the process of optimizing, and there are some thoughts worthy of reference:
Thinking of optimization schemes, source: IPFS Force Zone, 2020-12-01
Right: When the network demand order reaches a certain amount, you can set the transaction price to a fixed value or prohibit the package transaction of the block;
Left: reduce the total standard of transaction fees, but this behavior treats the symptoms rather than the root cause, as the transaction orders Demand prices still have the possibility of skyrocketing.
In addition to thinking about some ways to reduce gas fees, increasing revenue is also a way to promote the positive development of the network. Learning from the concept of uncle blocks in Ethereum, reward miners for orphan blocks. Operation method: In Ethereum, fixed blocks in orphan blocks will be selected as uncle blocks and rewarded. The reason why Ethereum adjusted this way is because the transaction information of orphan blocks is valuable and the high orphan block rate will affect the enthusiasm of miners (Filecoin, ETH orphan block rate is about 8%).
PS: This article is for research reference only, not investment advice.