Filecoin’s circulation volume 2: Block rewards

Continued from the previous article: Filecoin’s circulation volume 1: Investor token release

There are two ways for the Filecoin network's tokens to enter the market, which is also the source of FIL supply.

• Genesis Vesting

• Storage Mining

The SAFT and team release mentioned in the previous article is the preset release, which means that this part of the release is set in the code when the main network is launched. The release of this part will be immediately included in the circulation, which is relatively simple. The proportion of this part is roughly 27.5%. There is a 2.5% difference from the 30% originally designed by Filecoin for the team, early investors, and ecological construction. This 2.5% is temporarily retained according to the current economic model and may be used for future financing. 2.5% of 2 billion is 50 million FIL.

According to the original design, 70% is mined as a block reward by miners. In the current economic model, this part is also divided into two parts: 1) the current storage miner reward, accounting for 55%; 2) the other 15% is reserved, and the community will decide how to distribute it in the future. It can be used as a reward for retrieval miners or repair miners. Here, 55% of the token supply is released by storage mining .

A simple calculation shows that 55% + 27.5% is the total supply ratio currently set by the network, which is 1.65 billion FIL. In other words, without modifying the existing economic model, the total supply of FIL is 1.65 billion, not 2 billion. Of course, during the operation of the Filecoin network, community resolutions can be used to further determine how other parts are used.

The picture below is the distribution model of Filecoin’s total tokens that everyone is familiar with. For ease of understanding, I have adjusted the position.

The total block reward pool is 70%, which is 1.4 billion. However, as mentioned above, 15% of it is currently reserved, which is 300 million; 55%, which is 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. I have analyzed the simple release and baseline release in my early article [Filecoin] Economic Model of Block Reward Design. It is a bit outdated, but it can still be used as a reference. The simple release is 30% and the baseline release is 70%.

We know that simple release is carried out in a radioactive release mode that is halved every six years. It 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 baseline release. In Filecoin's algorithm, the maximum release is the release when the baseline requirements are met in the system. Therefore, we have the following figure to indicate the minimum (only simple release) and maximum release (also including baseline release after the baseline requirements are fully met) of mining rewards.

The actual block reward supply is between the two curves in the figure above.

Judging from the current growth of Filecoin's computing power, the baseline requirement should be met in the first year of Filecoin, that is, the total computing power should reach 5.0EiB by the end of the first year. This is not a high number. However, it will become increasingly difficult to continuously meet the baseline requirements under the current algorithm. The figure below is the current baseline requirement curve. According to the initial baseline requirement of 2.5EiB, it will grow by 100% every year.

Doubling every year, in simple terms, means it grows 1,000 times in 10 years. According to the general concept of storage units, it means that a new unit should be changed every 10 years. In other words, when the main network is launched, the baseline is set to 2.5EiB, then at the end of 10 years it will be 2.5ZiB, and at the end of 20 years it will be 2.5YiB. To put it in a more vivid way, 2.5EiB is one million times .

What does 2.5 billion mean? It is about 1,000 times the current total cloud storage. Therefore, it can be basically predicted that if the algorithm does not change, it will be difficult for the total network computing power to reach the baseline standard in the long run. However, this does not matter. The ecosystem is developing, the algorithm can be adjusted, and the network can be upgraded. It can be predicted that in a few years, this area will become something that must be discussed and decided.

The above sections actually talk about the increase in supply. What about the circulation? In the Filecoin network, the total supply minus the locked portion is the circulation. The locked portion is the reverse factor affecting the circulation.

--- to be continued.

Bitcoin price at time of posting: ¥240,594.59 Filecoin price: ¥141.42