Reviewing Filecoin after the noise: Price and ecological trends after the disappearance of FIL6

Author | Taihe Capital

Editor | Colin Wu

(This article is authorized by Taihe Capital to be exclusively reprinted and edited by Wu Shuo Blockchain)

Over the past period of time, FIL has experienced a relatively large fluctuation, from the lowest $21 to $237, an increase of more than 10 times, and recently fell back to around $140. In the Filecoin economic ecosystem, the supply and demand relationship is still one of the important factors that dominate the FIL market price trend. This article will look forward to the situation after the disappearance of FIL6 through the estimation of FIL liquidity chips, and look forward to the future development needs of Filecoin. (The data in this article is around April 22, and may be delayed)

In some simple mining coin models, the supply and circulation are basically similar, such as Bitcoin; but in the economic model design of Filecoin, there are not only pre-staking, gas fee burning, but also post-staking released in batches, so there will be a big difference between circulation and supply, and there will be a big calculation barrier for everyone to calculate the current tradable circulation of Filecoin. This article strives to restore the current liquidity of Filecoin and deduce the future liquidity.

After the mainnet was launched, Filecoin Protocol Labs updated several versions of the economic model, which also had a relatively large impact on the circulation of the entire network, including:

• 25% of the FIL mining machine output is released immediately, and the remaining 75% is released linearly over 180 days.

• Effective computing power is launched. Miners can obtain 10 times the effective computing power by packaging effective computing power. The initial mortgage also requires ten times. The computing power growth is accelerated, and the pledge volume growth rate is

• The FIP-14 proposal was passed, and the non-renewable computing power was renewed, and it would not be released in advance to create uncertainty for the FIL market

• The last day of FIL6 is April 14th. After April 15th, FIL6 will disappear, and the supply of FIL will decrease by 283,000 per day.

• The implementation of FIP-13 will significantly reduce Filecoin Gas fees, incentivizing miners to increase computing power, and thus staking may further increase.

1 SAFT Investor Section

The part released by SAFT investors has been written on the FIlecoin chain. There is basically no change in this part and it can be clearly counted.

According to the Early Investor Agreement, investors can choose different release periods to obtain different discounts. After the ICO is completed, the proportion of investors choosing different release periods is roughly as follows:

• The yellow part is the amount released to investors for three years or more, the blue part is the amount released to investors for six months, the orange part is the amount released for one year, and the gray part is the amount released for two years.

Early investors account for about 7.5% of the total supply. Based on the above ratio, we can calculate the total amount of SAFT investor tokens released in each cycle and the daily release amount:

In the first 6 months (the current stage), about 10.1 million will be released each month. After 6 months, at the end of the first year, the monthly release will be reduced to 4.6 million. In the second year, 2.7 million will be released each month, and in the third year, 2.4 million will be released each month.

It can be seen that although the amount of three years and above accounts for a huge proportion, the release cycle is long. Relatively speaking, the release of early investors in the first six months will have a greater impact on the entire supply and circulation.

Therefore, the suspension of FIL6 release on April 15th will have a huge impact on market supply.

2 Releases from the Filecoin Team and Foundation

In addition, another relatively large part of Filecoin is Protocol Labs, the team and contributors, and the foundation, which account for 10.5%; 4.5% and 5% of the total supply respectively.

The total is 20%. This part is released linearly over 6 years, so the theoretical release amount per month is: 5.55 million.

That is to say, within 6 months after the mainnet launch, SAFT investors accounted for a larger proportion of the release, and after that, the main release proportion was mainly accounted for by the Protocol Labs team, major contributors and the foundation.

The development after the disappearance of FIL6 is closely related to the way this part is released.

3 Mining Reward Release Part

According to the original design, the total block reward pool is 70%, or 1.4 billion, of which 15% is currently reserved, which is 300 million; 55%, or 1.1 billion, is used as storage mining rewards. This 1.1 billion is divided into two parts, which are the simple release and baseline release we know.

We know that simple release is carried out in a radioactive release mode with a halving every six years, which is only related to time and has nothing to do with the network status; while baseline release is closely related to the network computing power status. In other words, baseline release is not very certain and has a lot to do with market sentiment, ecology, input-output ratio, etc.

However, there is an upper limit to the baseline release. In Filecoin's algorithm, the maximum release is the release when the baseline requirements are met within the system. Therefore, we have the following chart to indicate the range of the minimum (only simple release) and maximum (also including baseline release after the baseline requirements are fully met) release of mining rewards.

Judging from the current growth of Filecoin computing power, the computing power of the entire network has reached the baseline standard for the first year.

Daily staking consumption of mining machines

Currently, the computing power growth rate of the entire network is still in an accelerated stage, with an average daily increase of about 40P.

The mining cost per P is 18,000 pieces, which means that 720,000 pieces are needed for packaging every day.

We roughly calculated that the amount of FIL flowing out of the mining machines is about 320,000 per day, which means that there is a gap of 400,000 FIL on the mining machine side every day.

However, before April 15, the private placement of FIL will reach 680,000, which can make up for the gap; but after April 15, the daily release of 360,000 FIL will be less than this gap, so the FIL in the market will be in a more scarce state by then.

4 Current FIL liquidity situation and trend chart

First of all, we need to understand a concept, the free circulation of FIL in the whole network (the actual amount of FIL in circulation). Due to the mining model of FIL and the linear release of private placement, some coins cannot be circulated even though they are in the state of output, such as the post-staking of 75% of the output of the mining machine;

Therefore, we use this logic to calculate the total actual circulation value of the entire network:

It can be seen that after April 15, the slope slowed down again. The reason is that FIL6 has been released, and the unlocking speed of FIL other than mining has dropped significantly. So far, it can be seen that the amount of circulating FIL must have increased, but the growth rate is slowing down.

In addition, we have worked with mining machine manufacturers to calculate the daily outflow volume of mining machines:

The amount of FIL that can be sold from the mining machine means the amount of FIL that can be sold from the mining machine. It can be seen that the amount of FIL that can be sold from the mining machine began to decline after March 26, which is probably due to two main reasons:

• The price of FIL began to rise, reaching the psychological price of some miners, and some miners began to sell the output stored in the mining machines.

• The daily computing power of FIL mining machines began to increase, the FIL that needed to be pledged and gas burned began to increase, and the FIL in the mining machine wallet began to decrease.

From this, we can take a step further and think about how the price of FIL will affect the supply and demand of FIL, and how the supply and demand of FIL will reflect the price of FIL?

The current situation is that the price of FIL is rising, the income of miners is also rising, the effective computing power of the entire network is increasing, the staking consumption is increasing, and the demand is greater than the supply, which continues to support the rise in the price of FIL.

5 FIL Ecosystem Outlook

The "overheating" brought about by the rise in Filecoin prices is more about its short-term profit attributes. For the long-term development of the project, the growth and expansion of the ecosystem is the most fundamental and underlying logic of the project.

The emergence of each hot spot is accompanied by the process of "explosion" and "cooling", and the process of "cooling" is the process of "sifting the sand" in the ecology, that is, the process of highlighting long-term value, so we still look at Filecoin and the distributed storage market from the perspective of long-term value.

The most exciting thing about the Filecoin ecosystem is that it has "jumped out of the circle", that is, out of the encrypted digital currency circle. Strictly speaking, Bitcoin has not yet entered the mainstream business world. Ethereum is close to simulating and reproducing a mainstream business world, but it has not yet completely "jumped out of the circle", while Filecoin has completely embraced the real business world. Now some Internet cloud storage companies have begun to seek grafting and cooperation with IPFS technology.

The future market prospects and ecology of Filecoin can be viewed from both horizontal and vertical dimensions.

Now the Filecoin ecosystem requires a lot of related service layouts horizontally. Filecoin’s current main mining machine manufacturers, mining machine upstream service industries, Filecoin asset management value-added, Filecoin lending, and Filecoin custody. The industry has gradually shifted from early technical barriers to capital barriers and has become a capital-intensive ecosystem.

From a vertical perspective, it is mainly the distributed cloud storage service architecture. The technical bottom layer of distributed cloud storage is definitely the IPFS network itself; the second layer is Filecoin, which is the IPFS incentive layer; the third layer is related to tools, which are some relatively friendly clients and storage technology services; the fourth layer is the distributed storage application itself, which may be combined with some traditional projects. Currently, some browsers or streaming media generally use distributed storage. They have a relatively large storage demand and are more supportive of the distributed storage field. (The recent combination of NFT and Filecoin is particularly important and may become the first application scenario for Filecoin to be fully implemented)