The Force Research | Filecoin Mainnet Strategy: The faster the computing power grows, the higher the profit?

The army has no constant position, water has no constant shape. Those who can win by taking advantage of the changes of the enemy are called gods.

--grandson

The recent space race has one characteristic: change. At the same time, investors and miners also adapt to the changes. Investors adjust their investment ratios, and miners adjust their operations and hardware and expand the output of operations and maintenance technology.

This article will deduce the annual income based on the latest economic model adjustment proposed by the official as of September 8 and the current growth of the space race computing power . This article mainly analyzes the reasoning process of the four articles in the mortgage series and combines it with the latest situation of the space race. If you don’t understand the deduction details, please review the following articles in order:

"A Must-Read Before the Space Race"

"How much FIL do you need to pledge to make a profit?"

"The most comprehensive interpretation: 1T computing power, how much FIL income can be obtained in a year?"

Creating the Filecoin Economy

《Interpretation: 34.76 coins pledged for a single T on the first day》

The main conclusion of this article is: if the post -mortgage is not fully released and part of it is not used as the initial capital of the pre-mortgage, the annual returns of the daily 10PB and 20PB computing power growth are 65.08% and 49.72% respectively; if the post-mortgage is not fully released and part of it is used as the initial capital of the pre-mortgage, the annual returns of the daily 10PB and 20PB computing power growth are 135.29% and 67.83% respectively. At the same time, the author also proposes that the entire network can jointly increase the computing power appropriately in the early stage to cope with the risk of high mortgage costs and shorten the cycle of currency price fluctuations.

1. Model Adjustment and Prerequisite Basic Data

The latest adjustments made to the economic model are as follows:

• Cancel the 20-day freeze period and directly start the 180-day linear release;

• The part of the post-mortgage that has not been fully released as the initial capital of the pre-mortgage has not yet been determined, and no changes have been made at the code level;

• The upper limit of the sector early termination fee is 70 days or half of the sector service time, whichever is smaller;

• The transaction mortgage portion was adjusted from 5% to 1%;

• The sector error detection fee is adjusted from the initial 5-day profit to 3.5-day profit;

• The initial baseline standard is adjusted to 2.5057116798121726EB , and it increases at a rate of 100% every day , which means that the benchmark will reach 5EB by the end of the first year and 10EB by the end of the second year.

• The 20-day freeze period will be cancelled , and the income will be released linearly 180 days later. This will directly benefit the early release of miners' income.

• The number of lucky tickets for each height is revised to 3.82616233973628 times. The last rule before the 10242 height showed that the average number of blocks per height would be 4.23911741214058 times (including nodes and lucky tickets). This time, the number of blocks per height will be 3.82616233973628 times as many as the 43834 height. The large amount of data is more in line with the actual situation.

• 30% of the circulating collateral minus the cumulative collateral amount of the expected daily expenditure of the first 20 days. The real FIL circulation = the release of investors, foundations and development teams + mining release - the total collateral of the expected income in the first 20 days;

• The space race is expected to release 2.65 million FIL in the first phase . According to the latest forecast, the global rewards are estimated to include 1.5 million global rewards + 500,000 in Asia + 100,000 in Europe, North America, and Oceania + 100,000 global block ranking rewards + 250,000 BUG rewards, a total of 2.65 million FIL rewards, which is nearly half less than the official plan of 4.85 million FIL;

Figure 1: According to the proposed adjustment, approximately 33.4357 FIL will be released every day. Source: IPFS Force Zone, 2020-09-09

• Based on the collected samples and the simulation adjustment and improvement of the baseline supply law according to the new benchmark situation , the author will formulate the baseline supply standard of 2.5EB to 5EB in the first year based on the samples with increased height, and use the baseline supply law of 43834 height as the basis for demonstration (the last cutoff height was 10242), and simulate to find the baseline supply law.

Now that we have understood the basic elements, let’s talk about how miners will earn if the mainnet is launched based on the current space race computing power growth (10PB/day) ? What about 20PB or 30PB?

2. 10PB , 20PB or 30PB, the faster the computing power grows, the higher the annual rate of return?

1) Daily growth of 10PB: annual income of single T is 47.94 % /72.10 % ( preliminary unreleased starting mortgage income )

This section will make an assumption based on the daily growth of 10PB as the main network launch situation, and take the post-mortgage portion as the initial mortgage funds as a comparison condition, and substitute the adjustment data proposed in the previous section for calculation, and obtain the following 90-day, 180-day, 270-day and 365-day income comparison, resulting in the following figure.

Figure 2, comparison of annual revenue of a single T daily growth of 10PB, source: IPFS Force Zone, 2020-09-10

As can be seen from the above figure:

• The number of staked FILs on the first day is 29.3330655772007 . There are some differences from the previous article because the number of highly lucky lottery tickets and the baseline supply are revised based on more data, initial benchmarks, and growth rate changes.

• As time goes by, the amount of FIL pledged by a single T (including expected 20-day yield pledge + 30% circulation pledge) increases. Although the expected 20-day yield pledge part is reduced, the main reason is that the 30% circulation pledge is gradually increasing.

• If the pre-mortgage is used as the starting mortgage, the income can increase by 24.16 % . From the results, the post-mortgage, as the starting capital of the pre-mortgage, has an annual income of nearly 10 FILs more than the former . At the same time, because the former needs to pay more costs (assuming: 2,000 yuan 1T + 1FIL/100 yuan), more FIL can be withdrawn, so the latter has an annual income of 24.16% more;

• 10PB daily growth supply formula. Because the main network launch baseline standard setting has changed, the author proposes that the main network baseline supply is 1/2.5 times of the space race , which is more suitable. It is concluded that before the total network computing power reaches 5EB, the daily supply is {330000000×EXP(-1.09897764548444E-07×((T×2880+1)-1))×(1.09897764548444E-07)/5）+（0.0634×T -0.0164）}×3.82616233973628×2880 (T is the number of days).

2) Daily growth of 20PB: annual income 63.41 % / 86.92 % (pre-released unused tokens as startup mortgage income)

It is proposed that the computing power will increase by 20PB per day, and the revenues on the 90th, 180th, 270th and 365th days are compared as shown in the figure below.

The IPFS Force Zone can conclude that:

• 7.68568111796023 FILs were pledged on the first day . Because the initial baseline value was large and the early computing power was small, the 20PB daily growth would not significantly increase the number of blocks. At the same time, the early 30% liquid pledge was very small (early computing power was small, and the circulation was small). It is expected that the 20-day profit pledge will be evenly distributed by more computing power, so the single T pledge will be greatly reduced;

• The mortgage income and growth are slow. It can be seen that the growth rate of single T mortgage and total income is gradually slowing down, mainly because more and more computing power is involved in the equalization in the later period;

• If the pre-released funds are used as the starting mortgage, the income can increase by 24.51 % . Because more computing power is involved, the mortgage cost can be shared to a certain extent, and the sharing is more obvious than the income, so the total income is higher than the income of 10PB growth per day . At the same time, the income difference between the post-mortgage and the pre-mortgage funds is 24.51%;

• 20PB daily growth supply formula. Because of the adjustment of the main network launch baseline standard setting, the author proposes that the main network baseline supply is 1/1.9 times of the space race , which is more suitable. It is concluded that before the total network computing power reaches 5EB, the daily supply is {330000000×EXP(-1.09897764548444E-07×((T×2880+1)-1))×(1.09897764548444E-07)/5）+（0.0834×T -0.0216）}×3.82616233973628×2880 (T is the number of days).

3) Daily 30PB growth: annual income 68.72 % / 89.43 % (pre-released unused tokens as startup mortgage income)

Similarly, a 30PB computing power growth is proposed every day, and the revenues on the 90th, 180th, 270th and 365th days are compared in the figure below.

Figure 4, comparison of annual revenue of a single T with a daily growth of 30PB, source: IPFS Force Zone, 2020-09-10

The conclusions of IPFS Force Zone are as follows:

• 3.3048196382271 FIL were pledged on the first day . As the computing power increases, the pledge gradually decreases;

• The income and mortgage balance starts three months earlier than 10PB and 20PB. By comparison, it can be seen that the former two can realize FIL withdrawal in the sixth month , while the daily growth of 30PB can realize withdrawal in the third month without further adding mortgage costs;

• If the unreleased tokens are used as starting mortgage, the income can increase by 20.71 % ;

• 30PB daily growth supply formula. Because of the adjustment of the main network launch baseline standard setting, the author proposes that the main network baseline supply is 1/1.2 times of the space race , which is more suitable. It is concluded that before the total network computing power reaches 5EB, the daily supply is {330000000×EXP(-1.09897764548444E-07×((T×2880+1)-1))×(1.09897764548444E-07)/5）+（0.1321×T -0.0342）}×3.82616233973628×2880 (T is the number of days).

4 ) Comparison among the three: The faster the computing power grows, the higher the return and the lower the risk

Figure 5, Comparison of the annual revenue of 10PB/20PB/30PB daily computing power growth, source: IPFS Force Zone, 2020-09-10

From the above figure we can see:

• As the computing power increases, the mortgage burden is light and the annual income is high . Because in the early stage, when the block revenue growth is not large, more computing power growth is conducive to sharing the mortgage risk . At the same time, the annual income is also gradually increasing, which are 47%/72.10% (10PB), 62.41%/86.92% (20PB) and 68.72%/89.43% (30PB);

• Post-mortgage is used as the initial startup mortgage fund, which has higher returns and will alleviate the insufficient circulation of FIL and the mortgage costs of miners in the early stage . Post-mortgage is more beneficial to miners' income as pre-mortgage funds, but as the income becomes less and less, the gap between the former and the latter is gradually decreasing, and the gaps are 24.16% (10PB), 24.51% ( 20PB) and 20.71% ( 20PB) respectively. However, the author predicts that as the computing power gradually increases, the mortgage income will gradually decrease, and the gap between the two will gradually decrease. However, this policy can alleviate the early miners' mortgage pressure to a certain extent;

• Post-mortgage as start-up capital can shorten the income cycle. If it is used, it can basically be withdrawn within 3 months, otherwise it will be delayed to 6 months;

• In the 10-30PB range, the faster the growth rate, the less the mortgage, and the higher the return . Although the annual total return of 10PB daily growth is up to 66.24 FIL, due to its high mortgage, the amount of FIL that can be withdrawn is relatively small to a certain extent. On the contrary, the annual total return of 30PB is 27.61 FIL, the mortgage cost is low, and the return is indeed the highest.

In this regard, it ultimately depends on the speed of growth of the computing power of the entire network, which will determine the early mortgage cost, payback period and rate of return.

3. Speculations on the mainnet launch: Rapid growth in computing power in the early stages may be an appropriate approach

Considering that the early mortgage costs will be too heavy, IPFS Force believes that there may be two approaches for miners: the early computing power growth is too slow or the early computing power growth is too fast.

Earlier computing power growth was too slow : baseline network delay solution

• Slow growth in the early stage is not necessarily beneficial to early miners . If the computing power of the entire network grows too slowly, assuming that the baseline supply is close to 0 , the expected income in the first 20 days is mainly reflected in the simple supply block explosion. At the same time, because the computing power is reduced, the probability of block explosion and the number of votes at a single height may decrease to a certain extent, the income will decrease, and the mortgage will also decrease accordingly. However, when the computing power is reduced to a certain extent, the simple supply may have a higher income under the condition of a high probability of block explosion and a single height vote;

• Miners who enter later may have certain high expected returns mortgage expenditures. When the computing power slowly comes in, and the computing power grows to a certain level and the income increases, the latter miners who enter during a high-income period need to pay a higher initial mortgage (mainly for the mortgage of 20-day expected income). At the same time, the benefits for the earliest miners are: low computing power mortgage and maximum accumulation of effective computing power;

• This may delay meeting the needs of the benchmark network. However, this approach will also delay meeting the standards of the benchmark network and the increase in the circulating disk (released by investors, foundations, and open teams) in the market, which will increase the cost of 30% circulating mortgage and indirectly lead to a chain reaction that is difficult to keep up with in the second year, and the rewards obtained from the block explosion will be difficult to return to the normal decline standard.

The rapid growth of computing power in the early stage : more advantages than disadvantages

Reasonable growth can achieve a greater profit sharing than mortgage sharing, and gradually increase annual income . If the computing power of the entire network is too fast, it can share the mortgage and risk to a certain extent, resist the risk of currency price fluctuations, and meet the baseline network requirements. If the growth is reasonable, it may be possible to maximize the annual income in the first year. The main reason is that the amortized income is greater than the amortized mortgage. For example, the previous chapter demonstrated that the 30PB day will realize withdrawals three months in advance and the annual income is also higher than 10PB and 20PB;

The rapid growth of computing power is also likely to lead to unprofitability in the first year. Assuming a certain extreme situation, the entire network reaches 3EB on the first day and maintains a level of 3EB for the whole year (not a realistic assumption), and considering the 180-day linear release, the total income per T year is about 29 FIL. At the same time, considering the early computing power cost (2,000 yuan), the circulation (released by investors, foundations and open teams) is too large, and the 30% liquidity mortgage cost that is too heavy in the early stage is required, the later income is slow to obtain and the price fluctuates, it is very likely that it will be difficult to achieve profitability.

In summary, the author believes that a faster growth in computing power is a more optional method. On the one hand, it needs to face the release of investors, foundations and open teams. The longer the time and the greater the circulation, the greater the mortgage cost of this part, which is not suitable for the long-term growth of computing power; on the other hand, too fast growth in computing power can indicate that miners across the entire network have a relatively mature level of operation and maintenance, and can allocate computing power growth according to the situation of the entire network, reducing investment risks while ensuring stable returns, so that early miners can obtain returns, promote the involvement of later investors, and more benignly promote the gradual growth of the storage and retrieval market.

PS: Due to limited data samples, differences in model building and setting standards, and the fact that the space race environment may not meet the actual situation of the main network launch, the supply rules and the growth rules of the baseline network standards mentioned in this article before meeting the baseline may be different from the official mention or actual situation. This article is only for research and analysis, not investment advice. Investors are advised to invest with caution.

Statement: This article is an original article from IPFS Force District. The copyright belongs to IPFS Force District. It may not be reproduced without authorization. Violators will be held accountable according to law.

Tip: Investment is risky, so be cautious when entering the market. This article is not intended as investment and financial advice.