Interpretation of Filecoin's new rules: Officials bowed and small and medium-sized miners gained a glimmer of hope (POC Series 6)

Starting from today, there is less than a week left until the end of the space race. The space race has always been one of the focuses of everyone's attention on Filecoin, but in addition to the space race, the most controversial issue is Filecoin's economic model, because the economic model is ultimately related to the distribution of interests among the various players in the ecosystem, which is actually the formulation of the rules of the game.

In the early morning of September 8, the Filecoin official account announced an update to the Filecoin economic model coefficients. It is called an "update", but in fact it is more like an official adjustment direction of Filecoin for the future economic model parameters, releasing a lot of important news and signals.

The content is very brief, but it has aroused a lot of discussion in the industry. The original text has the following 5 points:

1. The baseline initial value is raised and the growth rate is lowered to provide more lasting incentives for economic development.

2. The block reward unlocking delay of 20 days will be removed, and the unlocking will start as soon as mining begins.

3. Sector fault detection fees and sector termination fees are reduced to reduce miners’ operation and maintenance risks.

4. The minimum storage order pledge is lowered, making paid orders more attractive.

5. The sector failure fee is actually low, but it will not be increased for the time being because the network is in its early stages.

Previously, we have discussed in the article "Filecoin releases the most stringent mining model. What should we do if 80% of mining machine manufacturers may eliminate cloud computing power? (POC Series 5)" that the current Filecoin economic model is extremely unfriendly to small miners, and may even discourage a large number of small miners, because the payback period of the FIL pledged in the early stage is too long, and the existence of error penalties also further amplifies the uncertainty factors in the process.

The five points of this adjustment (which we will interpret one by one later) can be seen as a concession and compromise made by the official to FIL miners. All five points are beneficial to miners, especially long-tail mining machine manufacturers with more than half of the mining machine equivalent. Without drastically increasing the initial liquidity of FIL, it will stimulate more small miners to participate in mining, which will in turn stimulate the market's initial demand for FIL.

This wave of operations not only benefits miners, but also attracts more long-tail small mining factories to participate. We all know that the more players there are in the industry, the more funds will be attracted to settle in, which also guarantees the initial value of FIL (pledge demand & price). It has to be said that this wave of adjustments is a win-win situation, allowing the Filecoin ecosystem to operate more prosperously.

This update did not determine the specific parameters, but gave an adjustment direction for the main network economic model. The specific economic model parameters must wait until the end of the space race, because the specific parameters of the economic model must be formulated according to the market situation. For example, the official needs to estimate in advance how many mining machines and how much funds will participate in this market, and what the computing power growth strength of everyone in the market is. After the space race, the final main network parameters can be determined based on the specific situation in the market.

Next, we will interpret the five changes released by the official.

1. The baseline initial value is raised and the growth rate is lowered to stimulate economic development in a more lasting way

Since FIL mining distributes incremental FIL within the network based on the proportion of effective computing power, the model itself will see a sharp drop in the amount of coins earned per T as the effective computing power of the network grows. If, in this case, an exponential decay model like BTC and ETH is used to reward miners, the profits of early miners will explode, and later miners will not have enough motivation to enter the market again.

In order to prevent miners from short-term arbitrage by using machines to mine the first mine, and to ensure that more new miners enter the market later, Filecoin introduced the concept of network benchmarks to delay the release of block rewards. The basic idea is to increase the size of block rewards as the total storage computing power on the network increases.

In the economic model released at the end of August, the official initial value of the baseline was set at 1EB (1EB=1024PB). According to the current speed of the space race (10PB/day), it will take about 100 days to reach 1EB. This update intends to increase the initial value (1EB), which means that it will take longer for the network scale to reach the baseline, that is, the growth curve of miners' income across the network has become slower, but the growth rate has been reduced, which means that the growth of the network baseline has slowed down, and the block rewards will be smoother in the long run, which is conducive to retaining more high-quality miners for long-term benefits.

2. Block reward unlocking will be delayed for 20 days and unlocking will start as soon as mining begins.

Previously, the official set a 20-day "lock-up period" for the FIL mined by miners, and after 20 days it needs to be released over 180 days, which fully punishes and restricts miners who want to make short-term profits and escape the market.

The 20-day "lock-up period" has been removed this time, but the 180-day linear release rule has not been changed. This rule has thrown an olive branch to many small miners. Mining on the same day will release it immediately. They did not dare to mine before because they were afraid that the price of the pledged FIL would fall after 20 days and they would not be able to get their money back at all. Now mining on the same day will release it immediately, which has also eliminated some of the psychological barriers caused by market price instability factors and guided more small miners to participate in mining.

3. Sector fault detection fees and sector termination fees are reduced to reduce miners' operation and maintenance risks

In the previous economic model, the Filecoin network requires storage miners to actively detect, report, and repair sector failures. If a blade failure is detected, a fine of 5 days of the blade's revenue must be paid. This is the fault detection fee. In addition, if a sector is in a faulty state for too long (14 days), it may also receive a penalty of a sector termination fee (90 days of block rewards).

The reduction in fan blade fault detection fees and fan blade termination fees, on the one hand, reduces the operation and maintenance losses of miners. After all, with the increase in the number of effectively packaged fan blades, even if the fan blade failure rate is low, failures will occur, and the frequency will become higher and higher, which will put higher and higher requirements on operation and maintenance, and is extremely unfriendly to small mining machine manufacturers with a long tail. On the other hand, it also alleviates the cost of mining machine manufacturers whose technology is wrong in the initial stage of operation, so as not to punish the FIL that they have worked hard to mine, and help miners take a long-term path.

4The minimum deposit for storage orders is lowered, and paid orders are more attractive

Filecoin mining is full of regulations and shackles. It is very complicated and even a bit clumsy.

In addition to pre-staking and post-locking, Filecoin miners also have an order pledge. If you accept someone else's storage order but fail to complete it, your order pledge will be confiscated. There is a minimum requirement for this order pledge. Filecoin officials lowered the order pledge because they must have seen a large number of miners who failed to place orders in the space race. If the order pledge penalty is implemented, it will discourage a large number of miners.

This update lowers the order pledge requirements to provide a buffer period for some miners whose technical skills are not up to standard, allowing miners to participate in the early stages and gradually increase the order success rate.

The actual fault fee for sector 5 is low, but it will not be increased for the time being because the network is in its early stages.

When a sector is in a faulty state, the Filecoin network requires miners to pay a fault fee per sector every day. The initial value of the sector fault fee is 2.14 days of fan leaf rewards. If a sector is found to be punished, 5 days of fan leaf rewards will be required.

The official voice-over of this statement is, "Fan blade failure is very harmful to distributed storage. If a fan blade of distributed storage fails, the entire file may become invalid. As the designer of IPFS, the penalty for fan blade failure should be increased in the Filecoin incentive model so that you miners can pay attention to the seriousness of this problem. However, the network is still in its early stages, and it is difficult to judge what level or limit the fan blade failure rate can maintain, so it will not be increased for the time being, but it will definitely be increased significantly in the future. Miners, please pay attention to this issue."

Finally, to sum up, the signal released by the official adjustment this time is very clear - "lowering the threshold for mining and attracting more miners to participate." The specific final economic model parameters will have to wait until the end of the space race. The official will decide based on the actual data of the space race, and we will analyze them one by one at that time. (Special author: Bu Meng Editor: Wu Shuo Blockchain)

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