Filecoin is possibly the most complex thing the blockchain industry has ever brought to market.
The Web 3.0 data storage project, funded by a $ 257 million coin offering completed in September 2017, has since expanded its technology.
While Filecoin was quieter than most of the others during this time, Filecoin is currently packing a very active test network with incentives called the Space Race. Testnet attendees will be allocated 1.5 million FIL tokens, although it will be difficult to gauge the value of this offering if the company has refused to discuss details that could affect FIL’s underlying price. Nevertheless, this test network was very popular.
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“Miners learn a lot,” Filecoin’s Ian Darrow told CoinDesk. More than $ 100 million in hardware went online to serve the test network, he said. More than 200 pebibytes of data capacity have been proven. “Overall, it exceeded expectations,” said Darrow.
There are also futures markets for the upcoming token. Gate.io is currently trading futures at a price of 18.50 USDT. In a recent investor letter, Pantera Capital said that Filecoin futures “trade well above our cost base.”
Filecoin creator Juan Benet has a brilliant vision for the future of the web. Hence, the Filecoin network is intended to be a next-generation marketplace for storing and retrieving data, potentially competing with the web giants who control data storage space – Amazon, Microsoft, and Google – and content delivery networks like Cloudflare.
September 15, 2020 | 4 p.m. ET
We’re having a conversation with Juan Benet, Filecoin Founder, Colin Evran, Filecoin Project Leader, Joe Lubin, Ethereum Co-Founder, and Brady Dale, CoinDesk Senior Reporter.
See it live on CoinDesk.com, Twitter or YouTube.
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The story goes on
True, the cost of storage has only gone down, and the sale of bearings has actually turned it into a commodity product. However, the Filecoin thesis has two reasons:
The demand for data storage will soon skyrocket.
What is needed is a new type of storage that can demonstrate redundancy and accessibility.
The last Filecoin roadmap update, which dealt with the launch of the mainnet, said it would take place in mid to late September. When we spoke to Darrow, he said this was still on the right track.
“Unlike centralized cloud storage services that back up data in a way that customers cannot change or verify, Filecoin allows customers to easily express their own preferences for reliability and cost,” states a new document published above was published at the start of the network: Engineering Filecoin’s Economy explained. It addresses several key elements of the new system.
Here are some of the top takeaways.
1. Miners must provide substantial collateral to participate.
“One thing that I think wasn’t very well understood before this came out is the mechanics and rationale of how miner collateral works in Filecoin,” Darrow said.
Mining on Filecoin is mainly about providing storage space with conventional storage systems. This is standard hardware. Almost anyone with an internet connection can participate. A high-quality one-terabyte hard drive can be purchased for around $ 50, although most participating companies will do far more.
The point is, Filecoin doesn’t enjoy the expensive specialty hardware (like Bitcoin or Ethereum ASICs) to discourage dubious participants. Hence, a collapsible stake must be required to prevent malicious actors from accepting offers on terms they do not honor.
The Filecoin system requires collateral in advance. Block rewards are also subject to a lock-up period to ensure attendees stay long enough to meet commitments.
2. The incentives are intended to avoid early land grabbing.
Filecoin wants the network’s storage capacity to grow, but without triggering an ugly “day one gold rush,” Darrow said.
“There’s this really nasty incentive for people to gather early,” Darrow said of other projects. “Mining rewards are highest early, total mining output lowest, so they attract a lot of people jumping from project to project.”
Filecoin has a preset storage capacity growth plan and 70% of the mining rewards are tied to that baseline. If the network has not achieved this goal, block rewards will be reduced to the percentage achieved.
Darrow explained the idea was to reduce the first mover advantage. “Since the network reward increases as the mining performance increases, it is less important when a miner enters the network,” he said via email.
“The overall result is that Filecoin rewards for miners are more in line with the benefits they and the network as a whole offer customers,” the Economy document said.
Filecoin increases the baseline by 200% annually, only giving the community the option to slow its growth once the network reaches more than 1% of global storage.
Based on the Space Race experience, Darrow said, “It seems like we won’t have any problems making pretty loud numbers in the first year.”
3. The main concern is to start a network that is operational.
One of the features that Filecoin may seem strange at first is that subscribers can earn rewards for saving nothing.
This is known as committed capacity. It is practically an empty room that has nevertheless received the cryptographic treatment of Filecoin and is logged and rewarded on the system.
At first glance, this might not make sense, but it’s about having some space in the system.
“What you don’t want is a network that has no extra capacity or you don’t know that extra capacity is available,” Darrow said. Since all nodes are also involved in securing the Filecoin blockchain, they also contribute to the consensus.
Even so, Filecoin doesn’t want so many participants to set empty blocks. So an incentive system was put in place to get people to find real customers.
4. ‘Verified customers’ are an important incentive.
When you serve verified customers, you will receive significantly higher block rewards. These are real companies with real needs doing real business on data. The idea is that it won’t be that difficult to become a verified customer, but its business should be far more attractive to those on the network.
“Verified customers are certified by a decentralized network of verifiers,” explains the new document.
This will be a series of large, recognizable entities in the ecosystem, Darrow said, although the list is not public. There will be groups like: nonprofits that store a lot of data, academic units, and the main fundamentals of the blockchain world.
Saving verified client data receives higher block rewards than unverified data or blank blocks (since these are encrypted, the Filecoin network cannot tell the difference between the two). In fact, Filecoin has already populated the world with verified data.
Because verified data is so attractive, Darrow said the team believes that as business development miners will try to do deals with verified customers to improve the competitiveness of the entire system.
5. AWS isn’t the only thing Filecoin could potentially remove.
Filecoin is usually described as entering the Amazon Web Services or Dropbox area, but it’s a little more disruptive.
Filecoin also tries to consider CDN (Content Delivery Network) services.
The most famous CDN is probably Cloudflare, and these networks play a surprising role on the internet.
Data moves fast, but the world is big, and it’s still true that a file closer to a user will get there noticeably faster than a file farther away. Most of the data stored is never touched and therefore never needs these services. However, some stored data becomes very popular.
For such popular data, companies can provide on-demand services, which means that they are paid to provide the data to customers. One example Darrow gave was when a particular video went viral. A CDN could cache copies of this video around the world and provide the ability to make it available to viewers.
These additional copies would not count towards the copies the customer paid to keep Filecoin safe, but they could be used in an on-demand market.
In many, if not most, cases, Darrow said, the storage providers will also provide the retrieval services, but there are likely cases when it makes sense for CDN-like entities to intervene on certain files.
6. Everything in the Filecoin system has upfront costs.
Customers pay for storage in FIL, which is volatile. The Filecoin system requires storage customers to pre-set their payments over the life of a business. However, miners are only paid for fulfilling their obligation. The document “Economy” highlights the advantages of this arrangement:
“In addition to the security commitments from both parties, there is also a contract payment from the customer to the miner. This payment is initially blocked by the customer when the business is added to the blockchain. As a result, the customer’s risk of Filecoin price volatility ends the moment they enter into a storage contract. Payment is released to the miner as a fraction of the total deal fee per payment period. “
On the flip side, many storage clients may be used to paying on the go instead of paying a flat fee at the start. Darrow said the compromise here is that they only pay for what they need.
As money becomes more complex on the internet, this will likely also offer third parties the ability to fund upfront payments for companies that want to use Filecoin but pay at flexible regular intervals.
7. Filecoin treats each data block as something special.
One of the most important facets of Filecoin is that it relies on a concept called content addressing.
Most of the addresses on the internet depend on the locations. Go to a url and see what you want there. As the Internet ages, more and more of these links are dead. Labeled “Link Rot”, there is growing pressure among bloggers to link to archives rather than the original sources.
However, Filecoin references the content and not the location. This means that it may be found in any number of places.
Filecoin goes one step further and cryptographically proves the uniqueness of each copy. If a customer wanted to know that there are 101 copies of files around the world, they can use proofs to verify that each copy is unique and that it is well distributed around the world.
This is Filecoin’s $ 257 million bet: Storage customers will have significantly more differentiated demands on storage providers as the Internet becomes far more important than it already is.
Update (September 15, 13:47 UTC): In the second section, clarifying information about the intent of Filecoin’s incentive structure has been added.