Filecoin recently published a blog that summarized the part of Filecoin network economics in the Storage Market Summit (SMS) hosted by ETH Global and Filecon on December 11.
In-depth discussion of the Filecoin economy
The following is a summary of the "In-Depth Discussion on Filecoin Economy" speech given by ZX Zhang of SMS Protocol Lab.
The Filecoin network is a complex ecosystem with many different participants. These include Filecoin customers, miners and developers, as well as FIL token holders and ecosystem partners.
There are still many shortcomings in the modern storage environment. Reliable storage can be expensive; as a result, more data is created than actually stored, and the stored data is highly concentrated, with the top five providers controlling nearly 77% of the cloud storage market. This creates an environment that makes it difficult for new entrants to gain a foothold in the ecosystem.
Filecoin aims to build an open storage economy that solves these problems and provide a platform that makes it more feasible for independent participants to compete and innovate in the face of established competition. Its network realizes complete storage and retrieval economy, and is the basis of various differentiated services.
Every participant in the Filecoin ecosystem should play a role and bear the benefit of its success. Encourage participants to cooperate and compete in a way that maximizes the utility of the network. These roles often overlap; for example, miners are still the main contributors to development, and token holders’ investment in miners and developers is critical to the growth of the ecosystem.
The underlying protocol of Filecoin pushes network participants toward behaviors that benefit the network. The mechanism of rewarding and penalizing storage miners-participants on the Filecoin network who provide them with storage capacity-is a good example.
Anyone can create a storage miner, but they are not eligible for the reward until the miner puts the minimum amount of network storage on the storage. Built-in storage can prove the reliability and capacity of the network. If these storage promises are easily broken, the network will lose its reputation. Therefore, miners who promise capacity to the network must pledge Filecoin tokens called FIL as collateral to ensure that miners cannot fulfill their promises.
In return for the risk they took, storage miners are eligible for block rewards, which will be paid to storage miners in proportion to the amount of storage they provide to the network. Storage miners can also conduct mortgage transactions with customers, and customers pay them FIL in exchange for the cost of storing specific data.
The network also authorizes customers through Filecoin Plus, a community-managed notarization program that allows approved customers to conduct special storage transactions. These transactions bring multipliers that make them more valuable to the storage miners who win them, thus providing customers with leverage.
In addition to storage economy, Filecoin also implements all the components required for retrieval services, thereby providing the foundation for the global content delivery network.
The Filecoin mainnet is now eight weeks old and has achieved tremendous growth in terms of new miners and new applications that utilize the platform. These new goals are aimed at emerging business opportunities in the Web2.0 and Web3 spaces.
Filecoin circulating supply: mechanism and scheme
The following is a summary of the "Filecoin Circular Supply" presentation given by ZX Zhang and Colin Evran of SMS Protocol Lab.
Modeling the circulating supply of Filecoin tokens is not easy: the actual supply is determined by many interdependent factors, and any model must make assumptions about these factors. Although any serious modeling should be done in close consultation with the Filecoin economic white paper, Filecoin specification, and Filecoin's Lotus implementation, we can briefly outline the main modeling considerations.
First, it is important to highlight the difference between maximum token supply and circular token supply. The maximum supply refers to all tokens that will always exist, while the circulating supply refers to the tokens that can be used for market transactions at any given point in time.
The fixed maximum supply of Filecoin is 2 billion Fijian dollars; however, many of these tokens have not yet been issued. In addition, unlike Bitcoin, these outstanding tokens are not subject to a fixed release schedule. Rather, their distribution speed is related to the overall utility of the Filecoin ecosystem.
The unliquidated tokens released over time constitute a token flow into the circulating supply. There are two sources of unissued tokens: tokens used to reward storage miners, and tokens owned by SAFT investors on a variable schedule.
70% of the total supply of Filecoin tokens (1.4 billion tokens) is allocated to reward miners. These tokens are divided into three categories: simple minting reward (330M), baseline minting reward (770M) and mining reserve (300M). Simple minting rewards are based on time and are released in a half-life of six years. However, the baseline minting reward is based on performance, and the goal is the growth of network storage capacity. The overall rewards obtained by miners are also vested: although 25% of the rewards can be used immediately to improve the cash flow of the miners, 75% of the rewards will be vested linearly within 180 days. The mining reserves are not planned to be released; it is up to the community to decide how to best distribute the content.
There is also an outflow of tokens in the circulating supply. In Filecoin, this happens when tokens are locked, for example when they are provided as collateral for transactions-Filecoin Plus transactions provide miners with ten times the block reward and also require ten times the collateral. Network transaction fees can also lead to capital outflows. These fees will consume some tokens to compensate for computing and storage resources, thereby placing them on the chain.
Therefore, modeling liquidity requires at least assumptions about the growth of the Filecoin network. Decompose network capacity into committed capacity, regular storage transactions and Filecoin Plus transactions; and daily network transaction fees. Based on these assumptions, estimates of circulating supply may vary greatly!
First of all, it is important to note that the economic mechanism in the Filecoin ecosystem enables stakeholders to adapt to the long-term participation and investment of the network. For the community, the most important goal is to make the network as useful as possible by increasing its use cases, improving its tools and infrastructure, and helping it expand.
Filecoin Economic Questions and Answers
The following is a summary of the SMS "Block 1 (In-depth Discussion on Filecoin Economics) Q&A" section conducted with Juan Benet, ZX Zhang, Colin Evran of SMS and Protocol Labs of SMS.
The Filecoin ecosystem is huge and prosperous, but what is missing to achieve more balance and harmony? Where can people help build an ecosystem?
Filecoin is real-time, but the protocol is only at the base layer. To build new features and services on the protocol, many things may happen. Generally, two types of services can be built on the basis of Filecoin. First, the product needs to be integrated with Web2. Second, products that interact with the Web3 system.
Web2.0. In particular, Web 2.0 can benefit from financial services that allow ordinary users to interact with cryptocurrencies. For most people interacting with Filecoin, a smooth experience is important. Discovery platforms are also vital to any booming economy. We must answer this question: How can demand and supply be met? How do we support the reputation of the supplier? Finally, there are still great opportunities for data services on top of the basic protocol. For Web2.0 users, this also depends on good UX.
Web3.0. For Web3.0 interaction, cross-chain integration with other smart contract systems is essential. Through this integration, new products and services can be built. Especially when we start to consider how Filecoin owns and operates data from another network. These ideas are especially creative.
Overall, the incredible developer tools will prove especially game-changing by allowing more developers to use Filecoin. The work done by Powergate and Fleek is excellent, and there are many other implementations that allow developers to join Filecoin without having to understand everything behind the scenes.