An overview of the decentralized storage track

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Filecoin, Storj, Arweave, Sia, the four storage giants, which one do you prefer?

The cryptocurrency world in 2020 is quite lively, and two major mysteries have been gradually revealed: Polkadot has been launched, and Filecoin, which is dedicated to the field of decentralized storage, has also announced that it will be officially launched around October 15. Are there any opportunities for ordinary people to participate in Filecoin? What other project parties are working on the decentralized storage track? Let's find out together in this article.

After the launch date of Filecoin was announced, I think those who have been waiting for a long time may have breathed a sigh of relief: "Three years, three years. Do you know how I got through these three years?" No matter how many controversies have occurred surrounding Filecoin, especially in the mixed field of Filecoin mining machines, some are true and some are false, and Comrade Song Jiang's "Declaration on Filecoin" directly pointed out that Filecoin is a centralized network, this manifesto also caused quite a stir.

In addition, Filecoin's forks are also hidden or revealed. At this year's Xiamen World Mining Conference, MIX Chairman Han Weiping pointed out: "IPFS wants to achieve data privacy and permanent storage, but Filecoin is gradually deviating from this original intention."

There are constant controversies surrounding Filecoin, but one thing is certain: Filecoin has finally given a definite launch date, and there will still be a lot of stories happening before and after the launch. What we are mainly concerned about here is: What are the possible opportunities for ordinary people to participate in Filecoin without having to worry about these disturbances?

Filecoin Introduction and History

When talking about Filecoin, we have to talk about IPFS. Filecoin and IPFS are often mentioned together, but the two should not be confused.

IPFS is the abbreviation of Interplanetary File System. According to the official description, it is "a peer-to-peer hypermedia transmission protocol". IPFS is not a token, nor a project name. It is just a new generation of file transfer protocol like HTTP. IPFS integrates advanced network technologies such as git, bitTorrent, SFS, etc., stores data in a decentralized way, and uses git to encode files, identify duplicate files, and reduce transmission waste. In the process, encryption technology is integrated to improve data security.

The benefit of IPFS is that it complements the HTTP protocol we are currently using. Some people even have high hopes for it, hoping that it can become an important cornerstone of the next generation of the Internet (WEB 3.0).

How to distinguish Filecoin from IPFS? The design idea of ​​IPFS is great, but it is just a protocol after all. It cannot be mined, has no tokens, and cannot be used more widely. Filecoin is an incentive network built on the IPFS protocol. In the protocol, data must be stored on a computer. So it is not enough to just rely on love to generate electricity. It can work for a while, but how to motivate users to store data over time is something that needs to be considered.

Filecoin has proposed a solution to this problem: by adding an incentive mechanism, service providers who store information can obtain token (FIL) rewards, which come from the transaction fees paid by users and the token incentives issued by Filecoin; and if you want to use storage services and store data in a decentralized network, you have to pay a certain cost, which is also paid with FIL tokens.

According to an article in ChainNews, we can get a glimpse of the development of Filecoin and IPFS:

In May 2014, Juan Benet, who was still at Stanford University, published a draft white paper describing the concept of a peer-to-peer distributed file system;

In 2015, Juan Benet founded Protocol Labs, which focuses on IPFS research and development;

In 2016, Protocol Labs created four technical modules: libp2p, IPLD, multiformats, and Orbit;

In 2017, as the blockchain industry entered the Cambrian explosion, IPFS, which is in line with the spirit of blockchain, saw rapid growth in application scenarios. By June 2017, the IPFS protocol had stored 5 billion files.

In the same year, Protocol Labs released the Filecoin white paper, building an incentive network based on blockchain technology and the IPFS protocol to promote the development of decentralized storage networks. According to CoinList, Filecoin raised more than $200 million during the crowdfunding period in 2017, with more than 2,000 participants.

However, the launch date of Filecoin mainnet was repeatedly postponed until 2020, when it began to gather more popularity again through two rounds of space race stress testing. During the three years from 2017 to 2020, there were several followers who never gave up, and there were also constant criticisms.

So let’s get back to the topic: After Filecoin goes online, are there any opportunities for ordinary people to participate?

1. Three roles of Filecoin

As a decentralized storage incentive network, Filecoin's core activities are based on storage, but also revolve around FIL tokens.

First, miners store user data, and users pay for storage services. As a miner, you need to buy or rent mining machines, install software, operate and maintain machines, invest manpower, and provide stable and reliable storage services to users.

In addition, there is another point that may cause headaches for miners: when mining, they need to lock up a certain amount of FIL as collateral. Filecoin uses this design to make miners have a healthy interest in the network. If miners cheat or operate maliciously, they may face penalties and lose the collateralized FIL tokens.

Secondly, users need to store data and pay a certain amount of FIL tokens. However, these tokens will not be paid directly to miners, but transferred to Filecoin's smart contract. After the system recognizes that the miners have completed the task with high quality, the storage miners will be rewarded.

The third type of role is often easily overlooked: the wider range of FIL token holders. For speculative/investment purposes, ordinary users have participated in crowdfunding or purchased FIL tokens from the secondary market after the launch in anticipation of appreciation. However, these tokens are often left in their wallets to collect dust, and have little use other than reducing the liquidity of FIL tokens.

There is a knot in the hearts of miners, DeFIL is here to untie it

Where do FIL tokens come from? This question will cause some trouble in the early stages.

Since miners need to pledge FIL tokens to participate in the project and get mining rewards, the amount of tokens in circulation in the early stage is scarce, and only comes from the crowdfunding. As the amount of tokens mined by miners increases, they can sell tokens in the secondary market to earn income. In the early stage of the project launch, miners need to join the storage competition, increase storage capacity, continue to invest, and gain benefits.

At the beginning of last month, Filecoin announced that in the original economic model setting, the rewards received by miners were delayed in the early stage of the network launch. Although miners seem to have made a lot of money on the surface, it will take time for these rewards to arrive, and they need to wait until the storage network reaches a certain storage capacity before they can be obtained. Therefore, the circulation of tokens is still not large, and they are mortgaged or locked. On the surface, they may be in a panic. However, in early September, Filecoin announced that it had adjusted its strategy and removed the 20-day delay in unlocking part of the block rewards, so that they can be unlocked as soon as they are mined. This has eased the situation to a certain extent.

However, how to solve the initial liquidity problem and the pressure on miners brought by the fluctuation of the currency price? One way is to hedge through contracts. Futures operations introduce leverage. Although it is possible to hedge the risk of currency price fluctuations, careless operations may also magnify the risk. In addition to this, are there any other ways?

Looking back at these three types of roles in the Filecoin network, a possible idea emerges: since the FIL tokens of coin holders are idle, and miners need to pledge tokens to join mining, and users or developers need to pay FIL for services, then is it possible to lend or rent idle tokens to miners or users?

As DeFi becomes a buzzword in the industry, the design concept of DeFi can naturally be used by Filecoin. Even a member of the Filecoin team mentioned the concept of Decentralized finance of Filecoin -- DeFil on September 22, which can not only solve the previous problems, but also bring some opportunities for ordinary people to participate.

Here, there may be three possible approaches:

A third party will connect Filecoin to Ethereum’s DeFi ecosystem;

On the Filecoin chain, there are dApp teams implementing native DeFi applications;

The Filecoin team created its own native module to support the leasing or renting of FIL tokens.

Let’s take a quick look at each one.

1. Connect Filecoin to Ethereum DeFi

In early October, Consensys' CodeFi platform announced the launch of DeFi bridge, connecting Filecoin and DeFi.

Specifically, through RenProtocol, FIL tokens can be exchanged for FIL in ERC20 format; after the exchange, FIL miners in ERC20 format can pledge tokens and lend them out to earn interest; or pledge assets to obtain FIL in ERC20 format, and then exchange them for FIL tokens through DeFi Bridge for use on Filecoin.

This means that if you hold idle FIL tokens, you can use the platform to exchange them for ERC20-FIL, and make markets or lend them on platforms such as Balancer/Uniswap/Aave to earn interest income. If miners do not want to buy FIL tokens from the market themselves, they can rent ERC20-FIL through these DeFi leasing platforms and then exchange them for FIL tokens to mortgage in the Filecoin network.

This method can hedge the risk of FIL token fluctuations faced by miners to a certain extent, allowing FIL holders to receive handling fee rewards. Of course, the market is impermanent, and if you participate in market making, you will also face the potential risk of impermanent loss. Fortunately, with more platforms such as Balancer providing flexible proportional market making methods, some risks can be reduced.

The implementation of CodeFi is just one possible approach. In addition, we can also add liquidity mining to encourage more FIL holders to participate in leasing or provide liquidity, and provide FIL to those who actually need it. There are many ways to play, but the overall idea is to convert Filecoin into the ERC20 format and then connect it to the existing DeFi circle.

2. Third-party DeFi applications on Filecoin will appear

At present, I have not seen any examples of this, so I will just briefly explain this possible idea. With the help of the Filecoin blockchain, create third-party DeFi applications, use the existing DeFi design model on Ethereum as a reference, and implement it on Filecoin.

The most basic token on Filecoin is FIL. What is needed as collateral to borrow FIL? The possible answer is, contrary to the first idea mentioned above, to introduce assets such as Ethereum to Filecoin as collateral through a bridge method, so as to realize FIL lending. If this idea is to be realized, it will inevitably test Filecoin's scalability and support for development flexibility. Since the author has not studied this direction in depth, readers are welcome to correct me.

3. The Filecoin team provides system-level support to enable lending or renting

There is a difference between lending and renting. In this case, for token holders and miners, the best way is to rent rather than lend, after all, FIL provides functional purposes as collateral. However, this also weakens the original intention of Filecoin to create a skin-in-the-game effect for miners.

If Filecoin supports third-party collateral, it means that FIL token holders can pledge the tokens in their own addresses, but entrust the rights and interests corresponding to the FIL tokens to miners for use; the advantage is that the tokens do not need to leave the user account, but only lock the liquidity, and miners do not need to pay additional collateral, only interest. At present, EOS is natively supported in this regard, and EOS corresponds to the right to use resources.

However, according to the actual design of Filecoin, if the Filecoin team improves the circulation mechanism of FIL in the next step, it is more likely to design it as a lending type rather than a leasing type. This can also be seen from the speech of the Filecoin team members in the video conference of the first round of the space race on September 22.

Considering the upcoming launch date of Filecoin, I think there may not be enough energy to transfer to the development of FIL lending function module in the short term, which means that if FIL token holders want to earn income by renting FIL tokens, they will have to wait for a while. Fortunately, the implementation provided by platforms such as CodeFi mentioned above is still a viable channel. Where there is profit, funds will find their own way out.

Regardless of the idea, for FIL holders, the rewards they receive are all gained by sacrificing liquidity. What is done here is just a forward-looking inference. How to use and design it specifically depends on the future development of the Filecoin community.

2. Who are the other players in the storage arena?

Although it has not yet been officially launched, Filecoin quasi-token spot or contracts have been listed on multiple exchanges.

We need to look at the sector when we look at coins, so we have a little time left, so let's take a quick look at what other players are there in the decentralized storage sector. I would like to remind you that this is only for sharing data information, not investment advice. You still need to do your own homework when it comes to investment.

Due to limited space, we will skip the LAMB and BitTorrent projects and start with Storj.

Storj: A standard corporate approach to S3

Currently, the largest storage service provider is Amazon S3, and Storj is a competitor to it. It is also one of the projects most likely to realize commercial-grade decentralized storage applications. The project was founded in 2014 and conducted its second round of fundraising in July 2017.

With the help of the https://tardigrade.io/ trading market created by Storj Labs, users can purchase storage space services, supporting two payment methods: Storj tokens and bank cards. tradigrade provides an S3-compatible data interface for developers to access. If users pay with fiat credit cards, there is no need to buy back Storj tokens from the market at present, because the Storj tokens sent to miners will come from the tokens held by the team itself.

Storj tokens are in ERC20 format and run on Ethereum. However, data coordination and storage are done off-chain, and miners who provide storage services use Storj tokens as a means of payment. Storj will split the data uploaded by users into multiple data blocks, perform redundancy operations, and then distribute the data to the network nodes composed of miners.

Storj calls itself the Uber of the storage industry. Storj is not like a blockchain application system, but more like a traditional business company's approach. The main difference between Storj and S3 is that the physical layer of data storage is not on the computer itself, but through incentives to introduce miners to participate, contribute idle hard drives and bandwidth, and get Storj token rewards. With the help of a series of means such as SLA (service-level agreement) and the growth of the miner node network, Storj currently performs well in terms of stability and availability, providing a way for commercial-grade applications to be implemented.

Storj currently has a certain number of users and has also attracted a number of projects to join through the open source partner incentive program, which provides certain rewards to open source project partners if they use Storj.

On April 22, during the epidemic, Storj also announced that it would provide free storage services to organizations researching COVID-19.

In addition to storing file data, Storj's two recent cooperation cases have also expanded the use scenarios of storage: providing storage support for blockchain public chain projects. When a node is newly added to a blockchain network, or when a data failure occurs and data needs to be replayed, the synchronization process may take several days. Introducing Storj as a storage service opens up new possibilities.

Storj and the ETC team worked together to build a decentralized architecture for GETH, helping ETC nodes and developers to synchronize block data faster. Some community users also wrote to Vitalik, asking if Ethereum could also work with Storj to use a similar approach to speed up the data synchronization process for newly added nodes in the Ethereum network? Vitalik said that he has not yet contacted the Storj team.

In addition, the IoDLT project from the NEM community also uses the storage service provided by Storj and introduces it into the architecture of its own products. Specifically, Tardigrade (a service provided by Storj) and MongoDB have built a decentralized and flexible solution that allows application developers to use on-chain data conveniently and quickly.

Storj has been in existence for six years and is currently a solution with greater commercial infrastructure potential in the field of decentralized storage.

Siacoin: An old storage project, niche, controversial

Siacoin has a story. Its token symbol is SC. It uses PoW to distribute tokens based on computing power rather than storage capacity. Launched in 2015, Siacoin is one of the veteran storage projects. This involves an old story.

Due to the use of ASIC mining, the mining machines built by Sia were intercepted by Bitmain and Innosilicon. Sia community members invested millions of dollars in the ASIC project, but the computing power was later crushed by Innosilicon's mining machines, which became the largest computing power at the time. After a year of discussion, Sia announced a hard fork in 2018.

There are constant disputes in the community. Some critics believe that the Sia team monopolized the mining machines for their own interests and thus initiated a fork. According to data, there are currently four chains on the market: Sia main chain, Sia Prime, Sia Classic and the forked Hyperspace. However, the Sia main chain is more often mentioned. The website of Sia Classic can no longer be opened.

The PoW proof-of-work mechanism is adopted, and the distribution of Sia tokens SC is used as an incentive for miners. In Siacoin, data is also stored off-chain, and is dispersed on a decentralized network through splitting and distributed storage.

Arweave: Storing Data on-chain

Unlike Storj and Sia, Arweave adopts an on-chain data storage design, with a one-time payment and no monthly payment required. Arweave uses the PermaWeb storage network to write content to the on-chain storage. According to the official website, Arweave is a shared hard drive that will never lose data. Arweave allows valuable information, applications, and history to be remembered and saved indefinitely. By saving history, it prevents others from rewriting history.

Arweave's token is AR. It adopts a proof of access (PoA) mechanism to identify whether miners have stored certain types of data through random examinations. Unlike the contract system of Sia, Filecoin, and Storj, Arweave stores data permanently. Each round of verification related to miners' block rewards will be related to a certain block in the past (memory block). Miners who can answer the questions and answer them faster will be rewarded.

Professor Liu Yi wrote an article analyzing Arweave, comparing Arweave with Filecoin, Bitcoin, Ethereum, and encrypted assets one by one. In his opinion, Arweave is not a runner-up to Filecoin, but a different approach and an atypical decentralized storage project.

Projects like Filecoin store available data and can be deleted after use, while Arweave can potentially preserve more important knowledge and content permanently through permanent storage. The question is what content is worth preserving permanently? This may also cause Arweave to face the problem of insufficient usage scenarios.

BLueZelle: Focus on decentralized database

The token of BlueZelle is BLZ. Like EOS, the project adopts the dPoS consensus mechanism and is committed to becoming an on-chain database for blockchains and dApps. In fact, the term on-chain database should not be unfamiliar to friends in the EOS community. BM and BB have also made relevant remarks on Twitter. However, they will only mention it whenever there is a hot topic, including DeFi, so don't take it too seriously.

There is not much information about the BlueZelle project at present. It is reported that the development progress has stagnated. However, with the rise of the DeFi craze this year, BlueZelle has mainly started its oracle business.

three,

summary

Before and after the launch of Filecoin, the popularity of the storage sector is bound to rise. This article sorts out several projects in the field of decentralized storage. Through a rough comparison, we can perceive that, at least in the short and medium term, the usage rate of Filecoin may not be the most groundbreaking, but the popularity around the Filecoin ecosystem should be the highest.

DeFil will definitely appear. The combination of DeFinance + Filecoin will provide ordinary FIL token holders with the possibility of participation. Without participating in computing power mining or acting as miners, they may also have certain profit opportunities. However, new fields will be accompanied by new risks, so readers are reminded to make decisions after studying.

Today, Huobi and OKEx also officially announced the listing of FIL tokens. Do you think Filecoin is promising? Is the decentralized storage field a scam or a bubble, or is there a real demand for use? Please leave your comments.

References

https://www.chainnews.com/articles/167884845895.htm

https://bihu.com/article/1653461089

https://bihu.com/article/1718267674

https://docs.filecoin.io

https://www.hulianmaibo.com/posts/info/35092

https://www.feixiaohao.com/news/9358887.html