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This article was originally written by IPFS Force Zone Filecoin officially released a blog today, revealing how Filecoin tokens enter the circulating supply, as well as suggestions on how different stakeholders can participate in the Filecoin economy. In particular, this article discusses some of the implicit goals behind the design of the Filecoin economic model, and clarifies how people should treat and think about Filecoin's token economics. 1. Overview of the Filecoin Ecosystem In a little over three months since the launch of the Filecoin mainnet on October 15, 2020, the Filecoin network has achieved many important milestones: More than 700 miners, with a total storage capacity of nearly 2EiB More than 90 ecological projects are building applications, developing tools, and participating in infrastructure construction on Filecoin 200+ new projects entered the ecosystem through hackathons and accelerators More than 5,400 developers have contributed to the Filecoin project’s GitHub repository Numerous Filecoin use cases are being developed, including storage consumption applications, archival storage, DeFi, decentralized video, and many other projects
Interpretation: The key to the public chain is the economic model, and the Filecoin economic model is an important driving factor for the current achievements of the Filecoin ecosystem. Regarding the complexity of the Filecoin economic model, the official quoted Elinor Ostrom, the 2009 Nobel Prize winner in Economics, who ended the tragedy of the commons: In this sense, it is not beautiful and concise. Many people always want to abandon complex creative solutions, but society is complex and people are complex. It is not a good idea for us to use simple methods to solve complex problems. Ostrom proved that the privatization of natural resources cannot prevent environmental degradation, but the responsible collective management of the user community can. In addition, how to design an economic model to drive a blockchain storage network? How to design an economic model to drive a global large-scale distributed system with global stakeholders? This blog summarizes the thinking behind the design. 2. Filecoin is a utility token Filecoin is a utility token that gives token holders the right to use the network. One can think of Filecoin as an island economy where participants come together to produce valuable storage goods and services and export them around the world. On the network, we can see storage providers, smart contract systems, lending services, various use cases, and more with their own unique characteristics. Each of them can become their own unique business. The utility of the network is reflected in the attractiveness of the goods and services produced by participants in the network. The primary goal of the entire economy is to efficiently produce attractive storage-related goods and services that can be exported to the outside world. An economy that produces more valuable goods with greater efficiency will lead to more demand for goods and network tokens. The increase in purchasing power of participants in the economy will enable them to expand and improve their businesses, providing better and cheaper services to the world. Interpretation: The island economy is an export-oriented economy, which can be understood by referring to the Robinson Crusoe fishing model in macroeconomics: if we compare the economic prosperity enjoyed by Robinson Crusoe to a public chain, we find that the income level of a public chain participant mainly depends on the ability of the participants in this public chain to produce products and services. The book "Island Economics" explains three important views of the Austrian School of Economics: first, the fundamental reason for promoting economic growth is production, not consumption; second, to improve the deteriorating economic situation, savings are needed, not consumption; third, when the economy is in recession, deflation is needed, not inflation. To understand Filecoin's strategy in this way, it is to increase supply first, and then win more customers by improving the services provided, and then Filecoin can prosper. Token Minting: The Network’s Utility Curve Aligns with the Miners’ Minting Curve As a utility token, aligning participant incentives with the network's long-term goals and vision requires Filecoin's token minting to be aligned with the network's overall provable utility. This means that most of Filecoin's token supply will only be minted when the network achieves huge storage growth and utility goals. Unlike most other blockchain networks, Filecoin innovatively adopts a dual minting model: Baseline minting: 770M FIL tokens, released based on the network's capacity. These tokens will only be fully released when the Filecoin network's storage capacity reaches yottabytes (2 to the 80th power bytes) in 20 years . According to analysis, less than 1 gigabyte of data is currently stored in data centers around the world (although growing rapidly), a goal that is 1,000 times larger than current estimates of cloud storage. Simple minting: 330M FIL tokens, released over time with a 6-year half-life. A 6-year half-life means 97% of the tokens will be released in about 30 years. This amount is small but significant and can provide counter-pressure to shocks. Mining Reserve: 300M FIL tokens to incentivize future mining types. It will be up to the community to decide how these tokens will be issued and which stakeholders should be incentivized, but for now this portion of the total supply is kept in reserve.
Figure 1: Maximum and minimum storage mining rewards Figure 2: Exponential change in network storage baselines The number of tokens that miners can mine lies between the two lines in Figure 1. Figure 2 shows how much storage the network needs to grow to reach the maximum token release. Reaching the baseline requires competitive collaboration among all stakeholders, researchers, miners, developers, token holders, ecosystem partners, and storage customers. Interpretation: Double minting is a brilliant innovation that not only guarantees the network’s storage goals but also guarantees the deflation of tokens. Token reservation also leaves room for more incentives in the future. 4. Investor Token Release: Aligning Stakeholders with Long-Term Behavior This is a core principle. The token release mechanism encourages investors to align with the long-term goals of the network, guides participants away from short-term speculation, and encourages all stakeholders to work together to make the Filecoin network more useful in the long run, including the vested interests of stakeholders. This applies to every core stakeholder of Filecoin, including: 1. Mining rewards. Mining rewards encourage miners to align with the long-term goals of the network. For example, 75% of the block rewards received by miners are released linearly within 180 days, while 25% are released immediately to improve miners' cash flow and profitability. Unreliable storage reduces the utility of the network, so the block rewards received by these sectors will be punished and burned. Of course, all rewards will be punished and burned. 2. SAFT investors. All SAFT holders receive their FIL from the date of network launch according to the linear release terms of 6 months, 1 year, 2 years and 3 years. Most SAFT tokens are released linearly within 3 years: 58% of SAFT tokens are released linearly over 3 years 5% of SAFT tokens are released linearly over 2 years 15% of SAFT tokens are released linearly within 1 year 22% of SAFT tokens are released linearly over 6 months
3. Filecoin Foundation. The 100M Filecoin Fund of the Filecoin Foundation will be released linearly over 6 years starting from the launch of the network. 4. Protocol Labs. Protocol Labs’ 300 MFIL will be released linearly over 6 years starting from the launch of the network. When Protocol Labs encourages the development of the ecosystem through collaboration with important partners, these collaborations usually last for 6 years. The long-term investment plan for these tokens helps ensure that participants have risk-sharing characteristics and ensure that their actions on the network are long-term. Interpretation: Delayed gratification and risk sharing. The official considers the delayed release of 75% of mining rewards and the release of investor tokens together. 5. Staking and Penalties: Aligning the Interests of Participants with Reliable Storage Filecoin has a lot of mechanisms to reward the diligent and punish the lazy. When punishing, you can punish both the pledge and the future block rewards. From providing storage capacity to the network to meeting the storage needs of customers, miners must lock Filecoin tokens to achieve various goals such as consensus security, storage reliability, and contract guarantees. Likewise, the amount of stake and penalties is determined by the community. At the network level, the amount of stake depends on the storage capacity committed to the network and the circulating supply of the network at the time of the commitment. At the individual miner level, the stake is determined by the expected block reward. As long as there is storage on Filecoin, there will be Filecoin tokens locked at any point in time. The number of tokens locked for transaction stakes and payments is the result of a joint effort by all participants to make storage goods and services on Filecoin more attractive. Over the life of a sector, all rewards earned by stakers and miners can be slashed. Unreliable storage reduces the utility of the network, so block rewards earned by these sectors will be penalized and burned. Interpretation: Staking is a growing trend in all blockchains. Reference article: Looking ahead to 2020: Don’t overestimate yourself, and don’t underestimate yourself . 6. Filecoin Plus: Aligning Useful Storage with Participants’ Interests Filecoin is a global marketplace powered by blockchain technology. Since there is no reliable way to algorithmically distinguish between real and useful data and randomly generated data, the Filecoin network innovatively and pragmatically introduces a layer of social trust on top of the technical layer, Filecoin Plus. Filecoin Plus puts power in the hands of storage clients, who are notarized through a network of notaries, and miners who store these clients' transactions gain a 10x advantage in storage power, thereby receiving a 10x share of block rewards. This mechanism incentivizes all participants to invest in business development, find useful data and use cases, and make Filecoin more useful. When miners receive 10 times the share of block rewards, they need to pay 10 times the pledge and 10 times the penalty to ensure incentive consistency. This is also a big step forward for community governance and decentralized crypto-economy, as operations and processes are being publicly shaped by the community. Interpretation: Equivalence of rights and responsibilities. Community governance is the embodiment of Ostrom's thought. More community governance is also a trend in the development of blockchain. Reference article: Dfinity: The Internet Computer That Never Stops . 7. Network Transaction Fees: Aligning Token Supply with Network Usage As long as there is any operation or practical application on the network, Filecoin tokens will be consumed to compensate for the computing and storage resources consumed by the message on-chain. Similar to the token casting rate of miners, the consumption rate of tokens is also in the hands of the community because participants need to compete for on-chain resources. As of today, Filecoin token consumption has climbed to 180,000 FIL per day, a sign of the Filecoin network's economic prosperity. Interpretation: Blockchain will set prices for all resources on the network, which will be an important way to resolve the tragedy of the commons. The economic mechanisms embedded in the Filecoin protocol ensure that network activity and stakeholders are fully aligned with the long-term health of the network. Mechanisms such as variable minting based on network growth, vesting structure, token consumption, staking requirements, and more align the incentives and motivations of participants with the long-term success of the network. The success of Web3 requires the efforts of all ecosystem participants. The incentives of the Filecoin protocol must balance the interests of all stakeholders, storage clients, miners, developers, token holders, and ecosystem partners. A thriving economy benefits everyone in the network and aligns with the long-term incentives of all participants. Most importantly, the future of Filecoin is in the hands of the community. Interpretation: The whole article has been emphasizing a point that the various mechanisms of the Filecoin economic model and its future development are in the hands of the community. This means that please do not challenge the tragedy of the commons, Filecoin will set prices for all actions. Statement: This article is an original article from IPFS Force District. The copyright belongs to IPFS Force District. It may not be reproduced without authorization. Violators will be held accountable according to law.
Tip: Investment is risky, so be cautious when entering the market. This article is not intended as investment and financial advice. |
