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The Filecoin economic model was released, announcing new mechanisms such as five major players and the adoption of block incentives for innovation

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There are five major players in the Filecoin economy

Filecoin economic model officially released

Source: IPFS force zone

BlockBeats note: Filecoin recently provided an overview of its cryptoeconomic structure, which combines existing cryptoeconomic structures with many new ones to meet the unique requirements of the network. This article is a summary of the economic model of Filecoin published for the IPFS force region.

The goal of Filecoin is to create a decentralized, efficient, and powerful foundation for human information. To achieve this, the team created a decentralized storage network that allowed anyone in the world to store or retrieve files. The hope is that Filecoin will make storage cheaper and more reliable by helping small businesses compete directly with well-known centralized services, providing common interfaces to providers of all sizes, and dramatically reducing migration and transaction costs.

Filecoin economic profile

There are five major players in the Filecoin economy:

1. Customers, store and retrieve data through the application.

2. Developers, who build applications on top of protocols.

3. Retrieve service to pass files to clients on demand.

4. Store miners, who store files and help maintain and update the Filecoin blockchain.

5. Token holders, by using Filecoin as a value store and medium of exchange, make Filecoin a viable currency.

The customer's role in the Filecoin economy is simple, but crucial: they use FIL to pay for the storage and retrieval of documents. Filecoin's cryptographic economy

The mechanism is ultimately designed to meet the customer's file storage and retrieval needs.

Developers are the bridge between the client and the Filecoin network. They build applications to improve customer access to Filecoin's storage and retrieval marketplace.

The retrieval service is used as a content delivery network or caching layer to ensure that files are effectively stored on Filecoin. Customers can use the payment channel to pay for retrieval in small increments.

Storage miners get Filecoin services in three main ways:

Transaction costs, is a fee that a customer pays directly to store data over a period of time.

Block reward, the fee paid by the Filecoin protocol to the storage miners in exchange for participating in the Filecoin consensus (the process of maintaining and updating the blockchain) and providing reliable long-term storage.

Network message transaction fee, enabling users to encourage miners to prioritise their deals.

Most of Filecoin's cryptographic economy is designed to ensure that the storage miners, as well as the Filecoin network itself, are reliable and sustainable for their customers.

Token holders provide a bridge between the Filecoin economy and other markets. They provide liquidity to miners and customers and make it easier to build a real business on Filecoin.

Principles of cryptoeconomics

Block reward basis

The Filecoin storage miner gets a block reward based on its storage capacity. Storage capacity is a measure of how much useful storage the Filecoin storage miners provide to the network. At a higher level, miners gain storage capacity by accepting customer documents, publicly committing to storing them for a period of time, and repeatedly proving that they are actually storing them over time.

Economically, you can take into account storage capabilities like hash rates in a blockchain with a workload like bitcoin. A miner is rewarded in proportion to his storage capacity, rather than the total capacity provided by all miners. For example, a miner maintaining a storage capacity of 1 PiB with a total network size of 100 pibs will earn on average 1 percent of the block reward over a period of time.

Filecoin's unique blocks reward innovation

Filecoin needs to be a reliable and sustainable protocol in the long term. In a traditional workload proof blockchain, it does not matter whether a given miner is taken offline for a short time (or forever), because any miner can add a new block to the chain. Filecoin miners also provides its customers with irreplaceable and useful services, so customers need strong assurances that each storage miner will continue to operate. As a result, Filecoin contains a number of mechanisms that can make quality services an economically viable option for storage miners and encourage storage miners to promote the long-term health of the network.

Network benchmark

Many blockchains reward tokens based on a simple exponential decay model. Under this model, the initial block reward is highest and the miner participation lowest, so mining generates many tokens for each unit of work early in the network's life cycle and then quickly disappears.

In many cryptographic economics simulations, it is clear that simple exponential decay models encourage unhealthy short-term behavior around network startup. Specifically, this would prompt storage miners to overinvest in hardware to complete the closure phase of mining as quickly as possible. Since Filecoin gets much larger rewards per unit of storage power in the early days of the storage network, we predict that exiting the network after using up these early rewards will be profitable, even if doing so results in the loss of customer data. This damages the network: clients lose data and have no access to long-term storage, and miners have little incentive to improve the network.

To encourage consistent storage enablement and long-term storage investment, rather than just quick sealing, Filecoin introduces the concept of network benchmarking. Instead of casting tokens purely based on elapsed time, the block reward is expanded as the total storage capacity on the network increases. This preserves the shape of the original exponential decay model, but softens the network in its first few days. Once the network reaches the benchmark, the published cumulative block rewards are the same as the simple exponential decay model, but at smaller network sizes, some block rewards are deferred. The overall result is that Filecoin's rewards for miners are more in line with the utility they and the network provide to customers.

Take the block reward as collateral

The storage miner adds a fixed amount of new data to the network, called a sector. When a storage miner adds a sector, it is promised to store it for a period of time. This gives the customer more certainty that the stored data will be available for the time required.

In some cases, miners may agree to storage agreements and then wish to drop them later because of increased costs or other market dynamics. Customers need reliable storage. A system that stores files that miners can discard freely or cheaply can keep customers away from Filecoin due to severe data loss and poor service.

Filecoin miners works with customers in a two-way data market. To ensure that all the incentives in the partnership are aligned correctly, Filecoin penalises miners who fail to store documents within the commitment period. The fine is imposed on each deposit miner's Filecoin pool of collateral, known as lock-up money. The lockup funds included a small amount of upfront FIL and a large number of tokens from the miners' big prize.

If a miner goes offline for a day, he will lose some money by locking up funds. If the miner stops storing his papers entirely, he may lose all his papers. If the miner successfully completes the full term of the warehouse contract, he can recoup all the locked money after a short lock-up period.

Using block rewards to mortgage miners is another improvement to our cryptographic economy simulation. Early models required miners to post substantial upfront collateral for all their storage. But this will cause a shortage of Filecoin when it starts, when the total supply of FIL will be reduced and many miners will try to join the network. By transferring some of the upfront costs into later block awards, we were able to reduce the entry costs for miners.

Adjust incentives to store useful data

The Filecoin client and the storage miner run in a dynamic system. At any given time, storage requirements cannot match supply exactly. Early Filecoin builds forced the storage miners to choose between two wrong options: waiting for a client transaction to arrive (which meant the miners' hardware would be idle) or storing useless data in search of a block reward (which reduced the network's ability to store useful data). Filecoin introduces several mechanisms to ensure that miners who store customer data also maximize their FIL.

Commitment to capacity

When the miner finds that he has no customer data to store, the promised capacity sector (the verified but empty sector) of Filecoin indicates that he does not have to leave his hardware idle because Filecoin has available sectors that have been proven to be empty, indicating that the miner is ready to provide storage to the customer. The promised capacity sector verifies that the miner has available space to store client data, but can be upgraded to store client data at any time. This lessens the need for a miner to choose between block rewards and customer data -- he can immediately store the promised capacity, start earning block rewards and then upgrade them at any time to store customer data in exchange for transaction fees.

Validation data set

The promised capacity can increase the incentive for miners to store customer data, but it cannot solve the problem entirely. Storing real client files adds some operational overhead to storing miners. In some cases, for example, if the miner's reward for the value of the block far outweighs the transaction fee, the miner may still choose to ignore the customer data entirely and simply store the data it generates to boost its storage reward as quickly as possible. This reduces Filecoin usage and limits the client's ability to store data on the network.

Filecoin solves this problem by introducing the concept of validation data. Departments with validated data will gain more storage capacity and thus more block rewards than departments without data. This gives the storage miners an extra incentive to store customer data.

Validation data is data stored by validation customers, which in turn are validated by a decentralized network of verifiers. Validation doesn't mean it's scarce -- it's easy for anyone with real data to get it and store it in Filecoin. Even if the verifier is free to allocate validated data to simplify the registration process, the overall effect should be to significantly increase the proportion of useful data stored on Filecoin.

Demand or

A decentralized storage network that allows anyone in the world to store or retrieve files is a great tool. However, the Filecoin network is only useful to the world if there are applications built on top of it. The good news is that a number of amazing applications have already been built on Filecoin, and more will follow between now and the release of the main web.

reliability

Built from day one, Filecoin can store the world's most important data reliably and efficiently. To improve reliability, the agreement provides customers with unlimited flexibility to use redundant copies of files stored by different miners and to verify that a unique copy is actually stored. Unlike centralized cloud storage services, which back up data in a way that the client cannot change or verify, Filecoin allows the client to easily express its preference for reliability and cost.

The efficiency of

Filecoin's offline data transfer mechanism is another example of how the protocol supports a variety of client requirements. Many data sets are so large that transferring them over the Internet is slow and expensive. For example, if the 2.5 petabytes of Landsat 8 open source geographic image data set were stored in a centralized cloud, it would take more than seven months and cost $125,000 to transfer the data over a dedicated gigabit line over the Internet. Filecoin's offline trading protocol allows you to store big data on a hard disk, ship the drive to the miner, and then continuously verify that the file is safely stored.

With the introduction of the Filecoin main network startup method, you can expect to hear more about applications that already use the network's unique capabilities to store large amounts of critical data.