​Filecoin Collaborative Resources and Risk Management

Last week on December 11th, ETH Global and Filecon hosted the Storage Market Summit (SMS). A portion of the day was dedicated to collaborative resources and risk management in the Filecoin ecosystem. Here are the summaries, themes, and conclusions from the different conversations during this portion of the day.

The following is a summary of a presentation given at SMS by Michael Zargham, CEO and co-founder of BlockScience.

The Filecoin network stores a lot of data, but it also generates a lot of data. With all the distributed, heterogeneous data available, we need to study how to use this data to build a richer and healthier ecosystem. We are solving the problem of how to obtain quality indicators and reputation in the Filecoin network.

When we use data from any network for decision making, there are a lot of processes that happen. You take raw data and bring it up to a level where network participants can interpret and act from it.

The tricky thing about Filecoin is that in a traditional Web2 or corporate environment, there are highly professional teams developing and maintaining data infrastructure. This is especially true when you’re talking about companies that generate a lot of data like the Filecoin network does. We keep asking ourselves: how can we achieve the same performance and quality of public data on an open network? We need network participants to be able to confidently interpret and act on the data they get from the network. We already know some of the key scenarios:

1. The lender determines the amount of FIL based on the transaction status

2. Underwriters decide which loans to underwrite based on the fault distribution.

3. Storage clients decide which miners to trade with based on uptime

4. Mining system improves return on investment through transaction capacity growth

5. Insurance companies decide which miners to insure based on the volatility of storage capacity

All of these decisions should be made in a data-driven manner. No single party owns the data at the storage or interpretation level, so we expect to see a growing provider base for this type of analytics. An example is reputation scores .

We want to make sure that reputation is not a "God's eye" like a credit score, where if you don't do it well, you are doomed to fail. Reputation will drive the network to be used by ordinary people in the end. Consumers want to use data on the network, but don't need (or want) to know low-level information on the Filecoin network. They can trust it to provide services to them and make decisions for them.

Here are excerpts from a talk given at SMS by Corbin Page and Mike Alonso of ConsenSys Codefi.

1. Codefi Network: Storage

ConsenSys Codefi builds financial applications within the ConsenSys product suite. One of our product modules, Codefi Networks, is focused on helping decentralized networks get off the ground in the months following mainnet launch. In its infancy, any new market struggles to find optimal pricing and market segments. In the Filecoin ecosystem, this includes Filecoin, Filecoin Plus, Reputation, Miner History, and more. We built the Filecoin Storage application to provide the ecosystem with products that can accelerate price discovery.

Reputation in the storage market is made up of the following: storage size (capacity), number of failures, general pricing for storage, and number of successful transactions. We view reputation as evolving. We see comments from miners and network participants and iterate based on the needs of storage providers. Reputation will continue to evolve and we will see what works best for everyone.

It has the following features:

1. Storage Price Discovery

2. Storage provider’s reputation

3. Storage provider transaction history

4. Advanced Network Metrics

5. Accessible via API

2. Codefi DeFi Bridge

Helps connect FIL to the DeFi ecosystem and its full capacity on the Ethereum blockchain. DeFi Bridge allows users to convert FIL to FIL. Recently, we launched renFIL through RenVM. Users send FIL to the deposit address, wait for confirmation, and then receive renFIL in your wallet. Users can also do the opposite. They can borrow renFIL on the decentralized market and convert it to FIL for use on the Filecoin network.

Our goal is to connect FIL to the spot market, lending market, derivatives market, and other markets to provide more options for FIL holders. In particular, we hope to allow FIL to enter the decentralized lending market on Ethereum to provide greater access to FIL for network participants such as miners who need more funds.

The functions are as follows:

1. Convert Filecoin → Package Filecoin (renFIL)

2. Convert renFIL → Filecoin

3. Borrow renFIL

4. Lend renFIL

5.renFIL DeFi Market API

6. Open to any DeFi user

The following is an excerpt from a presentation given by James Slazas, co-founder of DARMA Capital, at SMS.

DARMA Capital (Digital Asset Risk Management) is a commodity operator, commodity trading advisor, and swap firm. DARMA is registered with the CFTC and is a member of the NFA. What we (DARMA) really want to convey is the recognition that DARMA has created the Filecoin FIL asset swap. Our goal is for miners of all sizes to be able to use FIL tokens and avoid some of the very high lending rates that exist in the lending market.

An asset swap is basically a derivative contract entered into between two counterparties. The two parties exchange cash flows or assets, and the swap agreement always remains in balance.

Today, the lending market ranges from being able to borrow FIL at 1% per day to 100% annually. In order to help the ecosystem grow, we have partnered with Protocol Labs and the Foundation to be able to offer this product. We basically consider this a "below market rate" product, just to encourage the growth and capacity of the Filecoin network.

We are building this relationship with miners to better understand their business models and continue to provide services that are beneficial to both them and the Filecoin network. The two goals of the Filecoin asset exchange product are:

1. Reduce or eliminate the expensive borrowing problems that miners face when trying to obtain FIL. We hope that reducing the volatility of this cost will help them run their business.

2. Work with different groups to encourage small and large mining companies to build strong and sustainable businesses.