Preface: The author of this article is Calvin, a researcher at Taihe Capital. Wu Shuo Blockchain authorized the exclusive editing and reprinting. The topic of forking became an industry topic in 2017 due to the birth of BCH. The rise of YFII and Sushi in this DeFi wave has also attracted attention again. There has been a constant voice for the fork of Filecoin. Recently, due to issues such as gas fees, fork projects have been more popular. This article deeply analyzes the three major Filecoin "fork" projects and analyzes how to succeed in forking.

In the cryptocurrency market, once a branch track is developed, a group of followers and challengers will immediately emerge. "Imitation" is not uncommon, but how to successfully "imitate" and share the market has become a problem that every "challenger" must face.

The number of projects that a single track can accommodate is definitely limited, and eventually there will be one or two leading projects that occupy 80% of the market share. So in the early stages of the wild growth of a certain track, how to find high-quality "challengers" among many "imitators" and "followers" has also become a problem that investment institutions need to face.

This article takes the distributed storage track as an example. By analyzing and comparing three "imitators" of Filecoin: FileCash (promoted by Mix's Han Weiping), FileStar (promoted by Pomegranate Mining Pool), and Eipk Protocol, this article summarizes the following three dimensions for judging "imitators" or "challengers":

(1) Clear expression of project vision and story

(2) Differentiated technical level optimization and technical application

(3) More attractive in economic model design

In the hot blockchain technology branch track of distributed storage, before the launch of the Filecoin mainnet, there were already undercurrents of people in the market who wanted to "fork" Filecoin. For such a large branch track, even if 5%-10% of the market volume is obtained, it will be 500 million to 1 billion. But at present, the projects claiming to be Filecoin forks are basically just "imitators" of the Filecoin project, not the "forked" Filecoin they claim to be.

In the history of blockchain, if a consensus conflict occurs between two communities in a project ecosystem, causing one chain to become two chains, a certain currency will also be mapped 1:1 to generate a new currency, so the most obvious feature is that the original currency (the forked project) needs to be mapped 1:1; directly copying the code of the original project, without token airdrops, and the on-chain data (chain height) also starts running again, we call it "copycat". The simplest example is that compared to BTC, BCH is a "fork", and Litecoin LTC is a "challenger".

Obviously, the projects that claim to be Filecoin forks on the market do not have a 1:1 mapping of FIL tokens, so the possibility of Filecoin forks is basically ruled out. From a technical perspective, the Filecoin project is not like Bitcoin, which can be forked by copying code, dividing computing power, and mapping tokens. In terms of the difficulty of forking, the data stored in Filecoin must also be backed up again. Now the data stored on Filecoin is nearly 1EB, and the difficulty of forking is extremely high. In addition, most miners now have pre-staking, and Filecoin really depends on the application support of the later application ecosystem. These are not problems that can be solved by forking.

Therefore, to be precise, all the Filecoin "fork" projects should now be called Filecoin "copycats" or "imitators". Whether it is FileCash, FileStar, or Eipk Protocol, the project parties do not shy away from mentioning in the white paper that they have made modifications to the Filecoin project white paper.

How to successfully fork

The core of forking is differentiation. The core of finding differentiation is to find the pain points of ecological participants and provide them with a new choice.

Taking the Filecoin project as an example, Filecoin's economic model has brought a lot of troubles to miners: in the traditional sense, miners only need to buy a machine and plug it in, and everything will be fine. However, Filecoin miners not only need to install the machine, install the system, deploy, and then maintain the distributed storage system, but also need to solve the bugs in the official code and understand Filecoin's economic model to choose a better mortgage strategy. It puts miners in a very difficult situation, making it difficult for later miners to enter, and limiting the future development of the entire ecosystem.

Only by finding a huge pain point and using this pain point as a starting point for a forked project can you become a true "imitator" or even a "challenger".

Can you tell a good story?

Any blockchain project, whether it is a "forked" project or a new project, needs a cohesive and attractive description or "story" to shape its image in the minds of investors and gain attention and even participation.

In the fringe market of blockchain applications such as storage, many concepts are newly proposed. It is difficult for investors to find reliable or highly relevant historical data as a basis for investment decisions. In addition, the current high-speed and fragmented blockchain market gives all investors a feeling of endless investment opportunities. Therefore, the "decision-making" time for a single project is constantly diluted. In this case, it is easier to grab people's attention by listening to stories than by looking at data. Therefore, "story" is not only the key to grabbing attention, but also one of the high-weight investment decision-making conditions.

But for Filecoin fork projects (or imitations), it is not only necessary to tell stories to potential users, but also to provide another option for those who are hesitant and are hesitant and are hesitant to buy into the Filecoin project.

However, it is also necessary to adjust the focus of its "story" promotion according to market changes. For example, almost all Filecoin "fork" projects now claim that they have no pre-staking, which is obviously a crazy move to curry favor with "miners". This statement has already become extremely "homogeneous", and the disgust for this story will increase accordingly.

The most prominent innovation and transformation at the story level is the Epik Protocol. Judging from the description in the Epik white paper and official website, Epik's original intention was to use a decentralized storage technology to build a knowledge graph network to feed AI data or raw data for machine learning, which is a huge difference from Filecoin's current lack of application scenarios and difficulty in commercial monetization.

Can there be technological innovation?

Litecoin, as a copycat of Bitcoin, has made some micro-innovations based on Bitcoin technology, for example: 1. Bitcoin generates a block every 10 minutes, while Litecoin generates a block every 2.5 minutes. This means that Litecoin has a faster transaction confirmation efficiency.

2. Since the confirmation speed of Litecoin is 4 times that of Bitcoin, and the reward for each block is the same as that of Bitcoin, the total amount of currency is also 4 times that of Bitcoin.

3. Litecoin uses the script encryption algorithm. Compared with the SHA256 encryption algorithm used by Bitcoin, the computing power of Litecoin LTC is slightly lower than that of Bitcoin, making it easier to mine and more suitable for graphics cards (GPU) to perform calculations.

In addition, the relationship between the Litecoin project and the Bitcoin Core team is particularly good. Litecoin has always been used as a test product for Bitcoin's new technology. If there is a problem with the new technology, the loss will be much smaller than directly experimenting on Bitcoin. Moreover, Litecoin is not as decentralized as Bitcoin, and the decision-making speed for deploying a new technology is much faster than Bitcoin. Therefore, many technologies (such as Segregated Witness) will be deployed on Litecoin for experiments first, which is a bit like the Kusama network of the current Polkadot DOT network.

By analogy to the Filecoin fork project, we can actually see that both FileCash and FileStar have made modifications to the original Filecoin code. For example, FileCash will upgrade the P1 core algorithm and the SHA256 algorithm to SHA512; reduce the number of P1 stage calculation layers from 11 to 8, greatly improving economic efficiency; change the sector size to 16G to reduce memory usage.

Let me focus on why FileCash changed the fan blade size from 32G to 16G instead of further reducing it. It is obvious that the FileCash team has carefully considered this issue, and this is still related to the throughput bottleneck of the blockchain.

The 32G fan blade size means that the smallest storage unit on this storage network is 32G, which is very large for general file storage. The reason why it is set so large is that the TPS of the Filecoin network is not high. The smaller the fan blade size, the more it will occupy the Filecoin network throughput. While keeping the network TPS unchanged, the larger the fan blade, the less congested the network will be. However, the cost of a large fan blade is that the miner packaging time is long.

Therefore, the careful technical choice made by FileCash on this detail issue is indeed worthy of praise.

Are modifications to the economic model attractive?

For "forked projects", a good economic model design can attract participants in the ecosystem. After all, most ecosystem participants are not loyal to the ecosystem, but to their interests.

The most direct example is: Sushiswap is a "fork" of Uniswap. In the early stage, Uniswap did not launch its own token. This gave Sushiswap the opportunity to seize Uniswap's liquidity pool through token economic model design and value capture mechanism, thus becoming one of the most successful "fork" projects in the Defi field this year.

However, value capture and token empowerment are only the most basic economic model design. In the economic model design of distributed storage incentive layer tokens, the difficulty of economic model design lies in establishing the game structure of each participant in the ecosystem through the design of the token economic model.

A successful economic model design should allow all ecological participants to spontaneously and continuously participate in ecological construction. When the internal circulation of the ecology is opened, the infinite cycle will expand and amplify, rather than a zero-sum game within the ecology.

Let’s take the design of Ethereum’s gas fee model as an example. Network congestion will cause the gas fee to rise, which will cause the number of messages to decrease, and then alleviate the congestion. This is the manifestation of the "negative feedback" mechanism in the economic model design. It is only a very small part of the economic model design, and this "negative feedback" mechanism can be seen everywhere in the Filecoin economic model.

For example, Filecoin’s baseline release economic model design:

1. The amount released is related to the computing power of the entire network. In the early stage of the network operation, as time goes by, the number of participants increases and the amount released also increases, thus ensuring the basic balance of participants' profits. The current operation of the Filecoin network is basically like this. Due to the setting and adjustment of the baseline reward, the single T income will basically remain balanced for a long time.

2. Another aspect of baseline release is that it has an expectation for network computing power. When computing power exceeds expectations, the baseline reward will no longer increase, thus ensuring that there will be no excessive rewards. When the network computing power exceeds the designed baseline, the miner's reward may come mainly from the increase in the coin price.

In addition, Filecoin's pre-collateralization will also play a role in stabilizing prices, which is why FIL appears to be extremely stable in this round of high volatility.

Let’s talk about Filecoin’s three “forked” projects. FileCash, FileStar, and Eipk Protocol have not made major changes in the economic model, which is the most worthy of discussion. The only prominent change is that FileStar has cancelled the pre-staking, but this looks more like a simple cancellation. We don’t see how FileStar ensures the security of user data storage after canceling the pre-staking.

Summarize

Eipk Protocol: It has found an accurate market positioning and differentiation point based on its project positioning and vision description, but apart from the "story", the technical solution optimization and economic model design of the corresponding application have not been modified much, or have not been clearly stated in the white paper.

FileCash: We do have a sufficient understanding and in-depth knowledge of the underlying technical protocols of distributed storage, and have made customized changes to some detailed technical parameters; however, there is no difference between what we want to do and what Filecoin does, so there is no way to spread the word and attract miners, and there is no way to gather consensus among the miner group.

FileStar: The economic model simply canceled the pre-mortgage, but no changes were made to the key technical parameters. Even the already implemented FIP-0004, 25% of the post-mortgage was immediately released and changed back, so the stability of the network is still in doubt.

The successful "fork" we advocate should be more of a creative imitation. "Innovative imitation" was first proposed by Levitt of Harvard Business School, and Drucker regarded it as a type of successful entrepreneurial strategy.

Imitation is not creative in itself. Creative imitation means that the imitation is innovative in application or application scenario. Creative imitators do not innovate a technology or service. They just improve the technology or application and reposition it. For example, they highlight the characteristics of the product and adapt it to a slightly different market.

"The latecomers will be the first to arrive, and the latecomers will strive to be the first" is the core idea of ​​the "fork" project. When the creative imitators start to act, the market has been verified and the demand has been generated. It is an extremely effective strategy to be a successful "fork" project to divide the market.