Where did the nearly 20 million FIL burned go?
As of March 19, 2021, according to the block explorer, Western World has destroyed nearly 20 million FILs, accounting for 6.81% of the FIL circulation.
The Western World explained here that Coin Burning refers to the permanent removal of tokens from circulation. The destroyed tokens are equivalent to being permanently frozen and can no longer flow into the market.
Regarding the destruction of Filecoin, it can be summarized into the following two aspects:
1) During the mining process of Filecoin miners, the miners may have problems such as storage failures and consensus failures. If they cannot be repaired in time, they will be punished. These FILs that are punished by the system are not attributable to the government, nor are they retained in the system, but are directly destroyed. Mariobtc understands the Filecoin program.
In layman's terms, for example, mining machine power and network interruption, interruption during data encapsulation, sector failure, early termination of transactions, etc., will cause the system to punish miners, and the FIL deducted by the system will be penalized. Used for destruction.
2) Mining needs to continuously seal sectors to increase computing power and obtain block rewards. In this process, miners themselves need to submit various messages to the blockchain network, copy proofs, time-space proofs, etc., and consume a lot of gas fees in this process.
According to the EIP1559 protocol, Filecoin's message on-chain Gas fee is composed of two parts, one fee is paid to the miner who packs the message, and the other is directly burned according to the agreement. This part mainly includes the network that pays for the calculation and bandwidth on the chain. Transaction fees, both of which are also directly destroyed.
The burning of Filecoin tokens is a common method to create a deflationary model, which enhances the scarcity of the token FIL and distributes the benefits to all FIL holders. We also know that according to the law of conservation of energy, under the circumstance of constant value, the smaller the quantity, the higher the price. Therefore, to some extent, it can encourage holders to continue to hold or purchase additional tokens, thereby creating a virtuous circle.
Simply put, the total amount of Filecoin is constant at 2 billion, and Filecoin itself has a strict mortgage mechanism and release mechanism, and most FILs are locked for reproduction. Filecoin has a large miner base and is currently in its early stages. The FIL market is in great demand, and it is already in a state of supply less than demand.
If Filecoin is destroyed, it will accelerate the deflation of Filecoin, resulting in insufficient circulation in the market, imbalance between supply and demand, and it is difficult to meet the pre-mortgage requirements of the new sector, resulting in an increase in the price of the currency.
At present, many blockchain projects adopt the design of "permanent destruction" as a lever to adjust the price of the project. We can also give a few examples and use real data to see what happens after "destroy":
1) On February 10, 2020, OK/E/x announced that when the public chain OK/Chain goes online, all the unissued 700 million OKB will be destroyed. The initial circulation of OKB is 300 million. After the news was announced, OKB quoted US$5.49, an increase of 38.6% in 24 hours.
2) On February 10, 2020, ZB (China Bitcoin) stated that it will permanently destroy the 293 million ZB held by the team, and at the same time destroy 107 million ZB in the user protection fund. The platform guarantees that it will never issue additional ZB. After the news was announced, ZB quoted at $0.37, up 17.68% in 24 hours.
3) On March 1, 2020, (HUO) (coin) announced that it will burn another 150 million HT for the 22nd time. After the news was announced, HT rose by more than 25% daily, reaching a maximum of 5.48 USDT. Therefore, Western World believes that Filecoin has a strict system in terms of the amount of pledge and the amount of destruction, which not only protects the interests of miners, but also has a strong and timely interaction with the market. Feedback effect. Note: This article does not make any investment advice. Home Mariobtc discussion.