After Filecoin, what can we expect from Ethereum’s “own” storage project Swarm?

If you ask, what is the most profound feeling for outsiders who have never participated in the mighty crypto market? The answer may be that graphics cards, hard drives and even high-end gaming laptops are in great demand. These computer hardware that are essential for ordinary people in the Internet age have experienced a surge in the past year, and the prices have even doubled at the highest point.

Graphics cards are being invested in Ethereum mining in large quantities, which has happened in previous years, but hard disk mining is the first time. Now, after Filecoin and Chia, another distributed storage project Swarm is also coming online. The Swarm Foundation previously announced that it will soft-launch the Bee mainnet on June 13 and start the token public offering on ColinList on June 15.

Swarm is well known in the community for its "Ethereum Foundation Project" label (Note: Swarm has now been separated from the Ethereum Foundation and become an independent project). Although it comes from a famous family, it is extremely low-key. It was not until the announcement of the airdrop plan at the beginning of this year that it gradually attracted widespread attention.

What is Swarm?

Swarm’s official website introduces it this way: “Swarm is a decentralized storage and communication system for a sovereign digital society.”

Swarm is a system of peer-to-peer network nodes that creates a decentralized storage and communication service that is economically self-sustaining thanks to a built-in incentive system executed through smart contracts on the Ethereum blockchain.

Let’s put aside the complicated definition and understand it literally. Swarm literally means “bee colony”. Swarm has a special liking for “bee colony”. Its latest client is named Bee, and the token symbol BZZ also simulates the sound of bees flying.

Satoshi Nakamoto, the founder of Bitcoin, once mentioned in the BitCinTalk forum in 2011, "WikiLeaks kicked the hornet's nest, and the swarm is coming towards us." The swarm represents the core of distribution and collaboration, implying that Swarm is a decentralized system that guides participants in the ecosystem to collaborate with each other through mechanism design to jointly maintain ecological stability and development.

From a well-known family: Vitalik Buterin and Gavin Wood proposed

The origin of Swarm is something that the community is fond of talking about. The idea of ​​Swarm was born from Vitalik Buterin and Gavin Wood’s early discussions on Ethereum. Vitalik Buterin once wrote an article recalling the prehistory of Ethereum, in which he mentioned:

Gavin’s contribution is largely due to a subtle change in vision, from viewing Ethereum as a platform for building programmable money, based on blockchain-based contracts (holding digital assets and transferring assets according to preset rules), to a general-purpose computing platform. It all started with a subtle change in emphasis and terminology, and later became more powerful with the growing emphasis on “Web 3”, which views Ethereum as part of a whole suite of decentralized technologies, the other two being Whisper and Swarm.

The relationship between Ethereum, Whisper and Swarm in the Trinity architecture

In the original conception, Ethereum is a trinity. The world computer consists of three parts: computing, storage, and communication. Ethereum takes on the role of computing, Whisper and Swarm provide storage and communication functions respectively. In the latest introduction of Swarm, Swarm also incorporates storage and communication.

Swarm was established in 2015 and was initially funded by the Ethereum Foundation. It was later separated and became an independent organization. Swarm completed a $6 million financing in February this year, with investors including KR1, HashKey, NGC Ventures, etc. In its financing announcement, it was disclosed that the core team has 32 people, divided into 8 groups: Leet Squad, Bee Team, Bee-JS Team, Comms, HR, DevOps, Ops and Knowledge Management.

How does Swarm work?

The expensive computing resources on Ethereum doom it to be unable to be used for large-scale data storage, but storage is an indispensable element for decentralized applications to reach the masses. As one of the original members of the Ethereum ecosystem, Swarm's main purpose is to provide decentralized storage services for DApp codes, user data, and on-chain data within the ecosystem.

In the early days when Swarm was proposed, IPFS had not yet been launched, and Bittorrent was the most popular distributed file storage protocol on the Internet at the time. However, Bittorrent had an obvious problem: it lacked an incentive mechanism, and users were not motivated enough to share files for free. How to design a system to achieve stable, persistent, and decentralized data storage and exchange? Blockchain just provides an incentive idea, and Swarm chose to implement the incentive mechanism through smart contracts.

The Swarm incentive system is built around three important contract components: Swap (exchange), Swear (guarantee), and Swindle (fraud). Its operating mechanism is as follows:

• Swap: The exchange contract records bandwidth usage, compensates nodes that provide content services, and promotes wider dissemination and faster access to popular content.

• Swear: Guaranteed contracts handle long-term storage, allowing nodes to sell their storage space while also allowing users to store data reliably for a long time on Swarm.

• Swindle: The fraud contract consists of a litigation engine for resolving disputes, and it is a candidate for state adjudication in the system.

Through three key smart contracts, Swarm provides a solution for tracking responsibility. Storers are responsible for specific content, while Swarm uses smart contracts to process node deposit payments and retains mandatory measures as a deterrent to fraud. Logically, Swarm provides the basic conditions for ecosystem users to freely exchange data value.

Token Economy

Swarm's native token symbol is BZZ, which is a functional token and is also used for bandwidth and storage rewards. The initial issuance of BZZ is 62.5 million (note: not necessarily the final total token supply).

The initial token distribution plan is as follows:

• Early token sales and public offerings: 50%

• Team: 20%

• Foundation: 7%

• Ecosystem funding: 20%

Swarm has released little information about its economic model. The specific application of BZZ in the ecosystem and the mining rules after the mainnet is launched are still unclear.

Testnet Airdrop

Swarm launched a testnet airdrop plan in February this year, which will airdrop 1 million BZZ tokens to Bee nodes participating in the testnet to reward early users and stress test the network. In view of the wealth effect of Filecoin and Chia in the early days of their launch, Swarm, which is also highly anticipated, has attracted a large number of community users to participate, and currently has more than 240,000 test nodes.

Swarm said that before the end of the test, the network will identify 35 trusted nodes as "queen nodes" (qBZZ nodes), and nodes that have exchanged bandwidth with these 35 queen nodes will be eligible for airdrops. The number of BZZ tokens sent out by the airdrop is exactly 1 million, and the final number of individual node allocations is determined by the value of the node's qBZZ check.

CoinList Token Sale

After completing a round of private financing at the beginning of the year, Swarm soon launched a public token sale. Swarm's public sale will be launched on CoinList at 1:00 am Beijing time on June 15. The public sale will provide two methods, both priced at $1.92, and the tokens will be unlocked around August 2, 2021.

The first method is from 1:00 on June 15, 2021 to 12:59 on June 15, 2021 Beijing time, and the minimum purchase amount is 100 US dollars and the maximum is 500 US dollars; the second method is from 1:00 on June 16, 2021 to 12:59 on June 17, 2021 Beijing time, and the minimum purchase amount is 100 US dollars and the maximum is 10,000 US dollars. When there are tokens left from the first method, the second sales method will be opened.

The prospects are bright, but there are also obvious problems

As the "son" of Ethereum, Swarm not only has the support of a star team and brand effect, but more importantly, it has the unique advantage of integrating with the Ethereum ecosystem. Relying on the strong network effect of Ethereum, if Swarm successfully attracts DApps in the Ethereum ecosystem to use its decentralized storage service, its development prospects are not difficult to imagine.

At the same time, Swarm also attaches great importance to the construction of its ecosystem. It launched an ecological project funding program in 2020 and currently has funded 26 projects.

However, Swarm also has some obvious problems, including slow engineering progress and unclear economic model.

Swarm was launched in 2015 and remained silent for the first few years. It was not until June last year that a series of actions were launched, including the release of the white paper "The Book of Swarm" and the launch of the network. According to the project development route, Swarm has been in the research stage from 2015 to 2020, which inevitably makes people doubt the project's true qualifications and engineering advancement capabilities. In contrast, Filecoin's engineering actions were much faster from 2017 to its launch last year, and from the perspective of mechanism design, Filecoin is more complex than Swarm.

The unclear economic model is also a problem that needs to be solved. From the Swarm white paper and public information, there is no clear positioning of BZZ in the network. How to capture the value of BZZ tokens? In addition, the mining mechanism has not yet been announced, and the mining part is not included in the token distribution plan, which may mean that the network will incentivize miners by issuing more. The importance of the economic model to the project is self-evident, but Swarm has not yet announced relevant specific information before the launch.