Filecoin founder: No big miners have left the network, they are "making a lot of money"

Original title: Filecoin Categorically Denies Any 'Mining Crisis'

Original source: Decrypt

Original translation: 0x26

Full text abstract

Filecoin has denied reports of miner unrest following the launch of its mainnet.

Miners have complained about the token’s economic model, which they say is not enough to incentivize them to continue participating in Filecoin mining.

Filecoin has denied the accusations and is offering a new loan program to help miners in need.

Decentralized storage network Filecoin launched to much fanfare last week. But less than 24 hours later, reports of miner unrest surfaced and Filecoin’s token, FIL, has fallen 25%.

The much-anticipated Filecoin offers an alternative to centralized cloud storage providers like AWS.

But Babbitt said that since Filecoin launched on Thursday, the five largest mining pools have begun to walk out, and there are rumors that they may fork Filecoin. Critics claim that the project's economic model does not give enough incentives to miners.

Filecoin official rebuttal

Today, Filecoin founder Juan Benet strenuously refuted these reports.

Officials also said that as far as they know, no large miners have withdrawn from the Filecoin network. "We believe that miners will be very well incentivized to participate in the Filecoin network," said Ian Darrow, Filecoin business director. "We don't know which miners have gone on strike."

Earlier today, Filecoin officials also released a detailed report trying to refute the criticism and provided a new loan program to help any miners who need support. Protocol Labs, which oversees Filecoin, is working with partners (TBA) to provide small loans to miners from now until the Filecoin loan business matures. "There will be more reports on this issue this week," Bennett wrote on Twitter today.

Darrow disputed reports of a miner strike, saying miners are still providing storage capacity, adding 2 pebibytes (PiB) in the last three hours alone. (A pebibyte is equivalent to about one million gigabytes.) “No major mining pool has indicated they are going on strike,” he said.

“In fact, the Filecoin network continues to grow rapidly, just surpassing 600 PiB today,” Darrow said. “Some miners who have been working on the project for months or years before the mainnet launch do choose to sell their mined FIL rather than invest more. We don’t know what cash flow situations these miners may have — they may have loans coming due or be under pressure from investors to pay dividends. Ultimately, we fully respect miners’ choices in how to manage their funds.”

However, Babbitt quoted Lai Chuhang, a well-known figure in China's Filecoin community and chairman of technology startup Space Cloud, as saying that miners are "powerless" and no one has the money (coins) to continue mining.

Filecoin’s token economics model has been criticized

The Filecoin economic model ensures that miners will receive tokens as rewards every day for 180 days, however, miners must provide FIL as collateral to ensure that their rewards are redeemed. Filecoin has established a lock-up mechanism that requires investors to hold FIL for at least 6 months after the main network is launched.

An anonymous Twitter user named Nico Deva published a lengthy post on Sunday that carefully criticized the model.

Many people in China are sad about Filecoin’s token model. A simple calculation shows that in addition to investing $20,000 in hardware in the early stage, you also have to spend money to buy more Filecoin as collateral. This does not conform to the basic common sense of the token economic model at all. It is obvious that this 17-year-old "star" project has failed.

In Benet’s extra-long tweet today, he noted that they have been trying for weeks to ease miners’ concerns by allowing them to withdraw 25% of their earnings immediately after a block is completed.

"After the mainnet went live, we saw some miners choose to sell some Filecoin tokens, which is completely understandable as miners have not had any income for years, so it is not surprising that they want to reduce risk slightly before continuing."

At the same time, he added that almost no large miners have sold all the FIL they have produced, and most are investing more. "The end result is the continued growth of the network."

About Filecoin Mainnet Launch

“Overall, we’re very happy with what was a very successful launch,” Darrow said. “The transition to mainnet has been very smooth, and the software is working well — that’s the most important thing so far. Sure, we’ve seen some crazy stuff, but it’s not beyond our expectations given the environment around Filecoin and the excitement in the community, and things are leveling off.”

But despite the team’s best efforts, the token’s price continued to fall, opening at $26 on Thursday and peaking at $63 before falling to $31, with the market cap dropping from a peak of $952 million to $539 million.

There are also concerns that Filecoin’s token economic model may need further study.

Filecoin started the "Filecoin Liftoff" event today, which aims to outline the future of the network. It is expected to attract the attention of many investors.