Who is forking Filecoin?

Is Filecoin fork a $500-1 billion business?

On July 17, cryptocurrency analyst Bitsha mentioned on Weibo: "Recently, there has been an undercurrent of people wanting to fork Filecoin in the market. Bitsha knows that there have been 4-5 waves of people who want to fork Filecoin. From a strategic point of view, if two of the three elements of the project team, investors, and miners are achieved, the fork can be successful. If one of the three is achieved, 5-10% of the market value can be secretly obtained. Therefore, the fork of Filecoin is a business worth 500-1 billion US dollars."

Six days later, when he was discussing his participation in the Filecoin project, he mentioned Filecoin fork again: "There are even more talented people who are brave enough to gather a team to fork Fliecoin. If they do well, they will be famous all over the world. If they do poorly, they will be cursed by thousands of people as an ecological tumor."

Sun Ming, partner of Distributed Capital, mentioned in an interview: “Miners who have invested a lot of hardware resources are pushing for the fork of Filecoin.”

Hu Feng, FILPool mining pool operating partner and Spacetime Cloud Technology COO, told Bibi News: "At present, big miners all have ideas, but it will only be possible after the mainnet is launched."

Filecoin's economic model is not friendly to miners

The core reason why miners want to fork Filecoin is that Filecoin's economic model is very unfavorable to miners.

The pledge and reward and punishment mechanism was proposed at the beginning of the establishment of the Filecoin economic model, and has undergone many adjustments. The latest three adjustments have made the mechanism increasingly stringent.

In April this year, the Filecoin project introduced its thoughts on the economic model on its blog and detailed the reward and punishment mechanism. Miners can obtain corresponding block rewards for completing file storage, and will be punished for failing to store files within the promised period. This fine is imposed on the Filecoin collateral pool (locked funds) provided by each storage miner. The locked funds include a small amount of initial FIL and token rewards obtained from miners.

Miners need to pledge a certain amount of tokens in the early stage. If the pledge amount is large, it will cause a shortage of FIL in the early stage. The improvement made by the economic model is to transfer some of the initial costs to future block rewards.

The harsh punishment mechanism has made some miners dissatisfied, and some miners have commented that the mechanism is too "rough".

In May, Filecoin made major adjustments to its economic model. According to an article by Li Bai in the currency circle, this adjustment has raised the threshold for miners to leave the market. Filecoin continues to strengthen the miner mortgage mechanism, and a portion of the rewards mined by miners will be locked. The penalty mechanism has also been changed accordingly, and the mining rewards can only be unlocked when the file hosting task is completed. If miners want to make a profit, they need to have strong computing power and be able to provide stable storage services for a long time.

If this can still be accepted by miners, then the recent concept of "pre-mortgage" has left miners at a loss.

Pre-mortgage is proposed in the latest Calibration version of Filecoin. Pre-mortgage means that a certain amount of FIL needs to be pledged in advance before mining can start for each Sector packaged. The pledged coins need to be locked for 180 days and then released linearly in 180-day increments.

The consequence of pre-mortgage is that the liquidity of Filecoin mining will be worse in the early stages.

Li Bai from the cryptocurrency circle said that a large amount of FIL collateral is needed in the early stage, which will force miners to buy coins from the official. The long lock-up period also causes most miners to choose to sell coins instead of packaging. "Miners have invested money in hardware, so where can they get the money to buy coins?"

Since there is not enough money to buy coins as collateral, you lose the qualification to mine. Even if you save up collateral funds, it is almost difficult to make back the investment with the small amount of coins issued in the early stage.

Sun Ming said: "The mining output is too small, making it difficult for early miners to obtain sufficient mining income to maintain operations."

The adjustment of the economic model continues to squeeze the early miners' profits, and the voices of miners proposing to fork Filecoin are getting louder and louder.

Sun Ming believes: "The potential reasons for the fork are, on the one hand, the protest of miners against Protocol Labs (demanding it to modify the economic model), and on the other hand, the desperate struggle of miners out of desperation."

Li Bai from the cryptocurrency circle posted a message on WeChat Moments to express his attitude. As shown below:

Another very important point is that according to the current reward mechanism, China’s Filecoin competition is tantamount to the “college entrance examination”.

Take the Filecoin big miner test competition as an example. Miners can only get rewards if they rank in the top 50 in their region or in the top 100 among miners. Looking at the situation of Chinese miners, 9 of the top 10 nodes in the world are from China. According to people familiar with the matter, about 80% of Filecoin miners are concentrated in China. The fierce competition can be imagined.

Wang Qingshui expressed his concerns in an AMA held by Bibi News: more than 90% of miners may not make money. Seeing that they can’t make money, many miners have the idea of ​​opening up "other tracks" for Filecoin, so the call for Filecoin fork is strongest in China.

Unbearable mining costs and barriers

In addition to Filecoin's economic model, another point that miners complain about is Filecoin's threshold and cost.

The cost of Filecoin mining and the technical threshold of operation make it unaffordable for many miners and mining farms.

Shawn Wang Qingshui, founder of 1475Fund, introduced the high threshold of Filecoin to Bibi News.

Filecoin has a severe punishment mechanism, which can ensure the security of data parties, but at the same time it will bring high thresholds for mining professionalism and operation and maintenance stability.

In order to ensure that there is no power outage and no network disconnection, it must be hosted in a high-level IDC room. In order to ensure mining efficiency, the network, computing power and storage hardware equipment cannot be too bad. Therefore, miners need to spend a lot of money to buy high-end hardware equipment.

Real-time window-POST verification submission has high requirements on algorithms and error repair capabilities, and requires a professional algorithm and operation and maintenance team.

In addition, the threshold for Filecoin mining may be more than 10T, or even higher.

There are storage capacity thresholds and technical maintenance thresholds for entering the mining field, and it also requires spending a large amount of money on purchasing hardware equipment.

A blogger earlier calculated the cost of the Blue Whale mining machine, and calculated that if 30 mining machines were a cluster, the cost of purchasing the mining machines alone would be as high as 6 million yuan. Adding the cost of computer room construction, operation and maintenance, the cost of Filecoin mining may be more than 10 million yuan.

Wang Qingshui also mentioned the flaws: "Many ordinary mining machines and even servers cannot participate, which is contrary to the original intention of the project."

Some people in the community expressed their concerns: "I have invested so much. What if something goes wrong after Filecoin goes online? I will lose a lot of money."

So some miners are thinking, is it possible to lower the threshold for mining while ensuring security?

Some miners have suggested that not all mining machines need to be hosted in an IDC room. If all mining machines are placed in an IDC room, the cost will be high and resources will be wasted. If each mining machine can be hosted in a different room according to its performance, it can ensure safety and reduce costs.

According to an interview with Bibi News, many industry insiders are taking a wait-and-see attitude towards the Filecoin fork.

Li Bai from the cryptocurrency circle said: “There are many people with ideas, but few who can put them into action.”

Wang Qingshui believes that any popular project will be forked, BTC and ETH are not the least forked, but how many forks can surpass the original version?

Some miners think that the fork is just talk: "There will still be people who follow the official instructions." "Who will write the code for you after the fork? Do you dare to use the code you wrote?"

Filecoin fork is "undercurrent". As the Filecoin mainnet is about to be launched, miners will take more actions, and we will continue to report. What do you think of Filecoin fork? Please tell us in the comments section.