Is Filecoin still far from 1000U?

As we all know, Filecoin is a decentralized storage network that uses blockchain technology and cryptocurrency (FIL) to incentivize file storage and retrieval transactions between users and miners. Filecoin's goal is to create an open, competitive, reliable, and self-healing storage market to provide infrastructure for Web3.0. Filecoin and the IPFS protocol complement each other to build a distributed Internet.

Recently, the data of the Filecoin storage network has grown by leaps and bounds, and the price of its token has also risen sharply.

Does Filecoin still have a chance in this bull market? Is there still hope for the 1000U goal? Let’s read Messari’s latest research report with these questions in mind.

Messari’s latest report shows:

Filecoin’s storage market continued to grow in Q4’23, with active transactions up 23% QoQ and 414% YOY. Meanwhile, storage utilization increased from 13% in Q3’23 to 18% in Q4’23, as Filecoin’s storage capacity continued to decline by 15% QoQ.

As of the end of 2023, more than 1,800 customers have loaded datasets on Filecoin, of which 465 datasets are larger than 1,000 TiB, a 10% increase month-on-month and 196% year-on-year.

The Filecoin Virtual Machine (FVM) brings Ethereum-style smart contracts to enable new use cases. Since the launch of FVM in March 2023, TVL has exceeded $230 million by the end of 2023.

The proposal to deploy Uniswap V3 on FVM has been successfully executed and will likely usher in a new phase of DeFi applications built on the Filecoin network.

The FIP0001v2 community initiative was initiated to improve and expand the Filecoin Improvement Process (FIP) and governance processes.

Key Metrics

Performance Analysis

The Filecoin blockchain is used to store data decentralized by two parties:

Demanders, that is, storage users who need data storage

The supply side is storage providers with excess network capacity.

trade

Filecoin continued to adopt decentralized storage through active transaction growth in Q4 2023. Nearly 1,700 PiB were stored on the Filecoin network through active transactions in Q4 2023, a 23% quarter-over-quarter increase from 1,400 PiB in Q3 2023 and more than a 4x year-over-year increase from 332 PiB in Q4 2022.

Meanwhile, daily new transactions fell 26% quarter-over-quarter after growing for the past four consecutive quarters. While still positive, the slowdown in new transaction growth corresponds to an overall reduction in storage provider rewards (as discussed later in the Supply-Side Revenue section). Additionally, the increase in new transactions corresponds to an increase in Filecoin network utilization.

Utilization and Capacity

Filecoin’s storage utilization relative to total available storage capacity increased from 12.6% in Q3’23 to 17.6% in Q4’23. While this growth is a positive sign for Filecoin’s adoption through active storage trading, it requires the context of network capacity.

In Q4’23, Filecoin’s average raw bytes of storage capacity fell 15% quarter-over-quarter to 9.4 EiB. This gradual decline began about a year ago, when average raw bytes of storage capacity reached an all-time high of nearly 17 EiB in Q3’22.

The decline in average raw bytes of storage capacity is further reflected in the decline in the total number of storage providers, which continued to decline to 3,390 by the end of Q4’23 after reaching an all-time high of over 4,100 in Q3’22.

client

According to Messari's guide to decentralized storage networks, Filecoin aims to provide cold storage solutions (such as archiving and recovery) for enterprises and developers. Its competitive pricing and ease of access help attract Web2 customers seeking cost-effective alternatives to store large amounts of archival data. Active efforts outside of cold storage are driven by: Banyan, Lighthouse, RIBS, Retriev, Seal, and Flamenco.

As of the end of Q4 2023, a total of 1,808 customers had installed datasets on Filecoin. Of these customers, 465 customers have joined large datasets (e.g., datasets with a storage size of more than 1,000 TiB), a 10% increase from 421 customers in Q3 2023.

Industry breakdown of active storage by large dataset customers shows that the industries leveraging Filecoin the most are technology (35%) and natural resources (31%). To encourage usage through active transactions, we offer a variety of storage services, including: NFT.Storage, Web3.Storage, Seal, Banyan, and Steeldome.

According to Filecoin’s client explorer, its major clients range from the City of New York and the University of Southern California’s Shoah Foundation to Web3 platform OpenSea and Layer-1 network Solana. Other notable efforts leveraging the Filecoin network include:

Victor Chang Cardiac Research Institute protects and shares research data.

The Library of Democracy stores datasets collected by the Internet Archive at the end of its stewardship.

The SETI Institute uses Filecoin to store astronomical research data.

UC Berkeley partners with Seal Storage to store physics research results.

GenRAIT uses Estuary to store critical genomic data on Filecoin.

The research center Starling Lab stores sensitive digital records of human history.

Ewesion (China's fastest growing graphics file host) uses Filecoin for data storage.

DeSci Labs uses decentralized data storage on Filecoin to enable research results to be replicated and independently verified by other researchers.

An overview of featured clients utilizing the Filecoin network can be accessed here.

FVM Use

The Filecoin Virtual Machine (FVM) brings Ethereum-style smart contracts to Filecoin. Since its launch in March 2023, TVL has exceeded $230 million by the end of 2023. DeFi applications provide storage providers with more access to FIL, potentially making data loading more efficient. As of December 31, 2023, there are more than 2,700 unique contracts deployed on FVM and used by more than 22,000 monthly active users. These users have generated more than 1.8 million transactions in total.

The proposal to deploy Uniswap V3 on FVM was passed and successfully executed in October. The deployment of Uniswap contracts on FVM could usher in a new phase of DeFi applications built on the Filecoin network. As Filecoin continues to gain new users and valuable datasets, it can serve as a foundation for developing monetizable FVM-enabled use cases around data.

Ecosystem Overview

The Filecoin ecosystem has been actively developing a builder funnel. It regularly participates in hackathons and accelerators to help early-stage projects and teams obtain funding from Protocol Labs or affiliated entities. The ecosystem aims to support a variety of use cases in different fields: namely data infrastructure, media streaming, metaverse, and gaming. As of December 2023, there are more than 100 known projects developed within the Filecoin ecosystem, including focus projects - Glif and Titan Network.

Glif

On February 6, Filecoin ecosystem liquidity leasing agreement Glif announced the completion of a $4.5 million seed round of financing led by Multicoin Capital, with participation from Zee Prime Capital, Fintech Collective, Big Brain Holdings, Protocol Labs and other investors.

In short, Glif provides a way to earn income for FIL token holders and others through its "liquidity leasing" model. According to Filfox data, Glif is currently the largest protocol in the Filecoin ecosystem, with a TVL of over $139 million.

The Glif protocol enables Filecoin token holders, storage providers (SPs), or miners to earn rewards by depositing tokens in its protocol. Mechanistically, Glif is like a liquidity staking platform, but since Filecoin is not a proof-of-stake (PoS) network, it is called a liquidity leasing protocol.

Prior to launching the Glif protocol, Glif team leaders Jon Schwartz and Peter Andersen have been building basic products in the Filecoin ecosystem since 2019.

Titan Network

Titan Network is a developer of software and services that aims to create a trustless, distributed smart contract network around the production and delivery of computing power using shared proofs.

Titan consists of three parts: software, trading market and protocol. The software product is for the management of computing power, the trading market is used for the distribution of computing power, and the protocol part provides a global computing power integration and distribution platform.

Titan also officially cooperated with Filecoin to launch the Titan Ultra Network.

Titan Ultra Network is a resource platform based on Filecoin (a decentralized storage project) and IPFS (InterPlanetary File System) that provides decentralized shared CDN acceleration services for Web3.0. It uses edge technology to make full use of the bandwidth, storage, computing and other resources of lightweight idle devices in thousands of households to build a large-scale edge cloud computing network.

Anyone can become an edge node of Titan Ultra Network and participate in building a "shared computing" cycle model that transforms idle household resources into valuable shared services and reuses idle resources.

It is reported that Titan Network has previously received US$1 million in support from the Filecoin official foundation.

Final Thoughts

Data storage on Filecoin experienced significant growth in Q4’23, with active storage transactions increasing 23% QoQ and 414% YOY. As Filecoin’s storage capacity continued to decline by 15% QoQ, storage utilization increased from 13% in Q3’23 to 18% in Q4’23.

As of the end of 2023, more than 1,800 customers have loaded datasets on Filecoin, of which 465 customers have more than 1,000 TiB of data, a 10% increase from the previous quarter and a 196% increase from the previous year. In the fourth quarter of 23, storage fee revenue calculated in FIL fell by 58% (down 58% in US dollars), consistent with the overall decline in demand-side revenue in the decentralized cloud storage field.

The proposal to deploy Uniswap V3 on FVM has been successfully executed and will likely usher in a new phase of DeFi applications built on the Filecoin network. As Filecoin continues to gain new users and valuable datasets, it can serve as a foundation for developing monetizable FVM-enabled use cases around data.

Is Filecoin still far from 1000U?