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Decentralized Storage Network Filecoin’s mainnet launch last week was touted as an alternative to big centralized competitors like Google Cloud and Amazon Web Services, but five of the project’s biggest miners gave up in protest, potentially throwing a key to ambitions by Filecoin.
Miners complain about Filecoin’s economic model, which requires a substantial amount of collateral to begin mining, according to a report by 8btc.com.
“The main network is online and all the miners are stopped there,” said Lai Chuhang, a leading figure in the Chinese IPFS community and president of Space Cloud Technology, according to 8btc.
“It’s not really a so-called ‘demonstration’,” Lai said. “He’s helpless! It’s because everyone has no coins.”
Filecoin is a peer-to-peer network designed to store and share data through the use of Filecoin (FIL) tokens, and is built on top of the InterPlanetary File System (IPFS) distributed file system. Both projects are developed by the open source research and development company Protocol Labs.
Strike or not?
Despite reports of a miners’ strike, said Molly Mackinlay, head of the IPFS project and head of the Filecoin network Forkast. News who have not seen any major miner disrupt their operations.
“I wouldn’t call it a strike,” Mackinlay said. “In something like a strike, miners would have been cut and penalized for going offline and breaking their promises about storage reliability, a key to the usefulness of the network.”
According to Mackinlay, miners were proactively advised before Filecoin’s mainnet launch to focus less on rapid capacity growth in the network’s early days, and instead focus on storage reliability and usefulness. This means that Filecoin was expecting a slowdown in data onboarding.
“The miners are still actively demonstrating their storage capacity – and we have seen 2 more pebibytes added in the last 3 hours,” Mackinlay said, at the time of writing. (One pebibyte is roughly equivalent to 1.1 million gigabytes.) “So all the claims about a strike so far seem to be political maneuvers or FUDs (messages of fear, uncertainty and doubt) by speculators.”
However, one of Filecoin’s top miners who had over 8,000 IPFS mining machines, Zhihu Cloud, left only 276 of his miners running on October 17. Other mining companies are choosing not to increase their mining power due to complaints about the project’s economic model, according to 8btc.com.
Filecoin rewards successful miners with tokens every day for 180 days, but miners must also provide enough FIL as a guarantee to ensure that the commitment is honored and protect data from loss.
“But this is a chicken and an egg [problem], since no one has $ FIL to start extracting and get $ FIL “, Twitter user @NicoDeva said.
@filecoin moved from calibration network to core network at block 148,888 after a 200M ICO and 3 years of development.
Within 24 hours of launch, the majority of miners are already on strike and talk about a failed marriage and forks.
Because? (1 / n)
– Nico Deva (@NicoDeva_) October 18, 2020
“Here in China people are disgusted, 恶心 (nausea), this is the repeated word. A napkin calculation shows you right away that your mining system requiring $ 20k hardware is also forcing you to * buy * more coins. In a country where ponzinomics is an art, the 2017 poster boy simply [blew] it, “tweeted Nico Deva_, referring to Filecoin’s initial 2017 coin offering, which raised over $ 200 million in token sales.
According to Mackinlay, pledging start-up capital as mail that can be reduced if users participate in network manipulation is a common business model that helps align network participants with long-term success and value creation.
Space Race 1 and 2, which Forkast.News previously dealt with in collaboration with Filecoin, they were “expressly designed to help miners on board and help bootstrap the network,” Mackinlay added.
Filecoin sought to address miners’ concerns by accepting an inclusion in their next update that would allow 25% token rewards to be immediately available for withdrawal once a miner successfully creates a block on the blockchain.
Most of the mining rewards will still remain accrued for 180 days as a guarantee to incentivize long-term mining and to ensure storage reliability, according to the project update on Github.
Filecoin price volatility
Fluctuations in FIL’s token price since its launch last week have also been a cause for concern for miners who may choose to buy the token from exchanges.
Opening trading Thursday at $ 26 US, Filecoin token prices peaked at $ 63 before dropping to around $ 31 at the time of writing. At its peak, Filecoin’s market capitalization reached $ 952 million, but is now $ 539 million. Market capitalization shows how much a company or cryptocurrency asset is worth determined by its market.
FIL’s listing was supported by a number of cryptocurrency exchanges such as Kraken, Huobi, and Gemini.
Eric Turner, director of research at online database and crypto research firm Messari, told CoinDesk that volatile trading could imply that the market is “gauging future inflation” for Filecoin’s offering.
Mackinlay said Forkast.News that the core Filecoin community focuses on creating long-term network value rather than daily price fluctuations.
“Filecoin’s crypto design rewards long-term actors, so the network participants who will be most rewarded are those who take a long-term orientation and focus on building, mining and storing on the network,” he said.
Said Kyle Samani, Managing Partner of Multicoin Capital Twitter that Filecoin trading was “one of the most memorable market dislocations in the history of cryptocurrencies.”
Get out of scam allegations
FIL’s launch has also sparked some controversy as TRON blockchain platform founder Justin Sun commented on token sales on Twitter, arguing that the allegedly blocked tokens for developers are being sold without community consent.
“Everyone at @filecoin, including miners, investors and founders, should follow the linear maturation rules here: Breaking the maturation rules has serious legal and compliance consequences. Do you really think downloading like this is okay?” Sun tweeted.
This was stated by the founder and CEO of Protocol Labs (PL) Juan Benet Forkast.News that Sun’s allegations are false. “Neither PL nor any team member has sold any FIL as Justin Sun claims, nor have there been any trade of the magnitude he claims.”
800,000 FIL tokens were reportedly transferred to crypto exchanges like Huobi and others soon after the launch of the Filecoin mainnet.
According to Benet, those transactions were part of a market stabilization program that has become an industry standard for the benefit of the community.
“These programs commit companies to provide liquidity and stability to the market in the first few days after launch, when prices are at risk of volatility,” Benet said. “In the early hours of a market, having liquidity available helps prevent price manipulation, ensures small purchases do not cause excessive price movements, and helps prices converge between exchanges, preventing speculative trading arbitrage opportunities.”
Sun is a controversial figure in the cryptocurrency community, who recently attracted public attention following reports that a branch of his Chinese company received a $ 2 million Salary Protection Program loan, aimed at helping American businesses during the peak of the Covid-19 pandemic.
“His lies here are just another example of his attacks and jealousy of our success,” Benet said.
Filecoin is launching a “Filecoin Liftoff” event today with a series of panels including ConsenSys CEO and founder Joe Lubin to chart the future of the network.
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