1. Relationship between IPFS and Filecoin

The IPFS protocol is benchmarked against the HTTP protocol. The HTTP protocol solves network transmission problems, while IPFS is a global, peer-to-peer distributed version file system dedicated to creating a network transmission protocol for persistent and distributed storage and sharing of files.

Filecoin is the incentive layer of IPFS, which is used to motivate miners to do a better job. IPFS can be understood as "distributed storage", while Filecoin can be understood as " distributed storage + blockchain + token ".

2. Filecoin market situation

① 1CO fundraising situation

Filecoin's 1CO is divided into two stages: private placement and public offering, totaling US$ 257 million.

②Filecoin token distribution

The total number of Filecoins is 2 billion, of which 70% are used as rewards for miners; 15% are retained by Filecoin (Protocol Lab) for future technology development and marketing; 10% are sold to Filecoin partners at preferential prices; and 5% are used to establish a foundation to develop the community ecosystem.

3. Project development

①Project Development

The white papers of IPFS and Filecoin were released in 2014. On February 14, 2019, the first version of Filecoin was launched. So far, the code of Filecoin has been updated for 5+ versions, and the mainnet is expected to be launched in late September.

② Testnet with rewards

The rewarded testnet is a three-week miner competition test where participants need to store packaged data into the network, and the bonus they receive will increase as the amount of stored data increases.

The competition elements for participating in the test network include: order transaction success rate , which determines whether miners can provide effective storage; sector life cycle , which determines whether miners can upgrade the committed space through sector upgrades.

③Reasons for the mainnet launch being delayed multiple times

From 2017 to now, the launch of the test network and the main network has been delayed many times. The first reason is that Filecoin is very different from the traditional Pow mining method.

Secondly, some problems that affect network usage that arise during the development process require the development team to continuously fix and deploy them, but the core team has a small number of development members .

4. Current Application Status of IPFS

①Decentralized video platform D-Tube

DTube is a decentralized video platform built on STEEM (a blockchain-based social media platform). Video files on the DTube platform are stored through the IPFS protocol. Content creators are rewarded with platform tokens for the content they upload.

DTube uses the STEEM blockchain to store user data and IPFS to store video and image data. Publishing a video on DTube is equivalent to doing two things:

1. Write the HASH and description of the video and picture to the STEEM blockchain

2. Publish videos and pictures to the IPFS network

② AKASHA, a decentralized social platform

AKASHA has received considerable attention since its birth and is hailed as the prototype of the next generation of social media networks. It also uses IPFS technology, and files are placed in the IPFS network, ensuring file security while also guaranteeing users' freedom of speech and privacy.

The project aims to create a completely free social platform, so it uses Ethereum and IPFS as the underlying technical support. Through Ethereum's numerous decentralized nodes, it eliminates the dependence on the server. Through IPFS, it ensures the security, privacy, and stability of content transmission. Currently, it has tens of thousands of users around the world, and the product is constantly iterating and updating.

Project details: https://akasha.org

③Other applications:

EOS, ETH digital currencies and imToken wallets;

The Library of Congress, WikiLeaks, Google, and Firefox;

Microsoft and IPFS jointly launched the IPFS beta application;

BitTube was developed to provide content creators with a part of the network to which they contribute.

1. Understand the core elements of Filecoin mining

① Computing power ranking

The computing power ranking is the core element of the rewarded test network . In theory, the block reward is proportional to the effective computing power provided by the miner. The higher the computing power obtained per unit time, the greater the miner's power to participate in the block and the more rewards he or she will receive, which directly reflects the miner's technical strength .

Because the technical problems that need to be solved on a large scale and a small scale are very different, involving network bandwidth, task allocation between machines, large-scale storage, etc., the difficulty coefficient in building and maintaining Filecoin distributed storage increases exponentially according to the size.

②Authenticity and transparency of mining machine information

Filecoin mining machines are assembled from some general hardware, and the threshold is relatively low, so there are hundreds of mining machine manufacturers. The hardware parameters of many manufacturers are very opaque. With the main network about to go online, the configuration of mining machines of various manufacturers has become clearer.

③ Packaging speed

In PoRep replication proof, the speed of storing files is the packaging speed, that is, how many terabytes of computing power can be obtained per 10,000 yuan per day. This depends on the optimization level of the mining software under certain hardware conditions.

The packaging speed solves the problem of rapid conversion from storage space to computing power, which requires various hardware configurations, which will be explained in detail in the mining machine hardware disassembly below.

(After the Filecoin economic model was announced, the delay period and linear release period of the mined FIL rewards were 20 days and 180 days respectively; and the deflationary casting model was adopted, with 30% of the mined coins rewarded to miners in the initial stage. This makes the packaging speed relatively less important.)

④Technical strength

Technical strength mainly includes: operation and maintenance capabilities, block optimization, order taking and other optimization capabilities .

The first three items mainly judge the hardware strength of the mining machine. After the test network and the main network are launched, the soft power such as computing power ranking, revenue growth curve, problem location and rapid correction is very important in mining. Miners with poor skills are easily eliminated.

Currently, there are not many companies capable of independently developing Filecoin mining systems. This is why there are currently hundreds of miners conducting test mining on the development test network, but more than 80% of the mining machines have no test data.

2. Understand the principles of Filecoin mining

①Verify the effective storage of miners

In order to prevent miners from cheating and launching malicious attacks, miners are required to generate a proof of storage to the network in each block generation cycle of the blockchain system. There are two algorithms used in the proof of storage, and miners must cryptographically verify that they have complied with their commitment to store files, namely: Proof of Replication and Proof of Space Time.

② Proof of Replication and Proof of Space and Time

When miners reach an agreement to store data within a cycle, verification is required after the storage is completed. There are two key points in verifying the effective storage of miners: the first is to verify that the storage is completed within the specified time , and the second is to verify that the data is not deleted within the agreed time, and to check regularly .

The first verification is to complete the data storage within the specified time, and then pass the Prof of Replication. The Prof of Replication calculation requires miners to submit proofs to the entire network on the chain. This process consumes a lot of resources and takes a long time to complete.

After completing the first step, the second step requires proof of space time, which proves that the data still exists within the validity period after the copy proof. The proof of space time needs to be completed in a very short time.

③In-depth analysis of data computing and storage

(Compiled based on the official Filecoin mining guide)

Calculation part

The calculation is divided into four phases: PreCommit phase 1, Precommit phase 2, Comit phase 1, Commit phase 2, hereinafter referred to as p1, p2, c1, c2.

p1 stage: Improve the efficiency of proof of replication and complete it within a few hours depending on different hardware configurations.

p1 stage: GPU acceleration is preferred, and CPU will be significantly slowed down.

c1, c2: CPU alone or CPU and GPU mixed computing can be used. The time required varies depending on the hardware configuration.

Time and space proof link: Use GPU to improve efficiency. Only when time and space proof is completed within 25 seconds can the block reward be obtained. The reason for using GPU is that a large number of powt-snark calculations are performed in one block to solve the problem of fast sealing, and the most effective solution for snark calculation is GPU. The larger the difference between the time consumption of replication proof and time and space proof, the better.

Storage

The storage part is the concept of hard disk space. The mining machine vendor claims that there is 100T hard disk space, but to actually participate in network computing, the data is processed through several stages into officially recognized data, and then stored in the hard disk. This involves the computing part, and the speed of the computing part varies greatly.

④Computation and storage separation problem

If storage and computing are not separated, the first problem that will arise is load .

Computation and storage are performed simultaneously, and the machine is overloaded, resulting in slow reading and writing, and hardware failures, which may force a reboot. The two most common situations are the loss of the graphics card and the inability to kill zombie processes, which force the machine to reboot. If the machine is randomly checked during the reboot process, the computing power will be deducted.

Then there is the issue of capacity expansion .

When the disk is full, it needs to be expanded. Expanding the hard disk is not a simple problem. In the final analysis, this is related to the mechanism of Filecoin itself. The storage under a cluster has a characteristic that it cannot leave the cluster. Once the data is written, the hard disk is deeply bound to the host and cannot be removed. All disks need to remain in the cluster where they are at the beginning. This is a very important feature of Filecoin.

If computing and storage are put together, it means that the entire machine is bound to the cluster and cannot be removed. If you want to expand the capacity, it will cause the cluster size to grow linearly. When it grows to a certain extent, the network, host and rack will face unbearable consequences.

Once computing and storage are separated, all problems will be solved.

(Excerpt from Pomegranate Mining Pool's "Not That Simple, Detailed Explanation of Filecoin Mining Machine Storage and Expansion Technology")

3. The difference between Filecoin mining and traditional mining - computing power and storage power

Traditional mining uses algorithms such as POW and POS, while the algorithm used by Filecoin mainly relies on storage capacity . For example, in Bitcoin mining, the proportion of computing power to the computing power of the entire network determines the size of the computing power; in Filecoin mining, the proportion of the effective storage data generated to the total storage of the entire network determines the size of the storage capacity.

Bitcoin mining uses PoW proof of work, while Filecoin uses PoSt (full name Proof-of-Spacetime), which is (storage) space-time proof. Based on the equity consensus PoS (Proof-of-Stake), Filecoin improved the consensus mechanism to PoSt to replace the proof of work PoW.

1. Hardware configuration and its function

①CPU

In the pre-submission stage of the replication proof packaging, after the official algorithm was modified in April-May 2020, the originally expensive Intel CPU took more than 30 hours to complete the P1 calculation, and the requirements for the CPU increased. AMD's CPU packaging performance is five times that of Intel. Using an AMD3960X CPU, it takes about 4 hours to complete the parallelization. Currently, the main AMD3 series and 7 series are on the market.

②GPU

In the packaging submission phase of the replication proof, N cards are required to generate zero-knowledge proofs. The brands currently on the market include: GIGABYTE, MSI, ASUS, ZOTAC, etc.

③SSD

The main functions of SSD in Filecoin mining are: used as a system disk; Filecoin node data storage disk; transitioning data in RAM to mechanical hard disk during the sealing process, which can be used as a large cache and for storing unsealed sectors in transit.

After P1 and P2, there is a waitseed link, which is mainly used to wait for a certain number of blocks to obtain random numbers. When including a waiting time, the official changed the initial value from 10 to 150, and the waiting time became: 150 height * 25 seconds / 60 seconds = 62.5 minutes. If the SSD memory is not enough, the machine will be idle to process this part of the data first. After the modification, the demand for SSD increases.

The mainstream SSD hard drives include 8TB, 16TB, etc., and the interfaces are generally divided into three types (taking Samsung brand as an example):

SATA interface, transfer speed is about 520MB/s

M.2 interface (SATA bus), the transmission speed is about 520MB/s

M.2 interface (NAMe protocol), the transmission speed is about 3200MB/s

④Memory (RAM)

The main role of memory in Filecoin mining is: when sealing files, temporarily storing sealed files and running various aspects of the mining program, and calculating data cache usage. When choosing memory, the main consideration is the speed of the memory. Currently, the common DDR memory is DDR2, DDR3 and DDR4 series, among which DDR4 has the highest starting frequency and the fastest speed. The second is the capacity of the memory.

⑤IDC computer room

The mining farm mainly provides electricity, bandwidth, computer room, and network security protection. Currently, the mining farms that meet the needs of Filecoin mining are mainly professional standardized IDC computer rooms. The height of the server host chassis needs to be customized to 4U.

2. Officially released hardware reference

Protocol Labs did not release specific hardware configuration plans for the computing and storage aspects, but only released hardware references.

As a rule of thumb, a multi-core CPU with a higher clock speed will increase the speed at which storage miners can submit storage to the network. Protocol Labs’ own testing has shown that modern AMD processors with SHA extensions have a significant advantage over other processors.

GPU:

A powerful GPU is required to complete SNARK computations within the required time limits. Lotus is currently designed to support NVIDIA chips. We expect to support graphics cards from other manufacturers in the future. The configurations we have successfully tested are provided in our benchmarks.

RAM:

Currently the Filecoin network only supports packaging 32GiB and 64GiB sectors. Performing calculations on these larger sectors requires correspondingly more memory: it is recommended that the mining system be configured with at least 128GiB.

storage:

There are many factors to consider when choosing the right storage solution, and the revenue model of the mining operation is probably the most important one. Storage miners are currently required to maintain 1TiB of raw storage (or the quality-adjusted equivalent; this will increase to 100 TiB for the mainnet) in order to produce blocks, but miners may find more factors to consider.

(Time consumption of configuration recommended by the official website)

3. Cost Analysis of Filecoin Mining

Filecoin mining machines need to generate effective computing power through continuous calculations , and secondly, hard drives are needed to store computing power . The cost of hardware mainly lies in these two major areas.

How can we make data calculation faster? First, improve the performance of computing resources, and second, improve the efficiency of storage on the chain. The increase in the proportion of this part of the cost investment will increase the cost per T. From the perspective of economic return, there will be a balance point in the ratio of computing and storage resources. Therefore, various mining machine manufacturers on the market provide many different mining machine hardware configuration solutions.

Hardware computing part cost:

CPU+motherboard+graphics card+flash memory+SSD+ chassis≈110,000

Hardware storage part:

Hard disk + CPU + motherboard + chassis ≈ 80,000

Calculate packaging speed: G/10,000/hour = storage/price/24 hours

According to the market cost price of the hardware part, you can find the mining machine manufacturer to provide the storage speed value. For example, if the storage speed value provided is 4000G, the hardware cost of the computing part can be calculated in a more transparent mining machine solution. Calculate the packaging speed: 4000G/11w/24h=15 (G/10,000/h) .

The theoretical daily income of mining and the time required for the mining machine to fill up the storage can also be calculated based on the packaging speed.

1. Filecoin is a miner-friendly token :

The rewards or income for Filecoin network miners mainly come from newly minted tokens and mining fees for using the network.

2. Market value:

The total number of Filecoin tokens is 2 billion, and miners can obtain 70% through mining. Based on US$22 (the price on September 1), the market is US$30.8 billion.

3. Testnet rewards:

The 4.25 million testnet rewards are shared among the top 100 in the world and the top 50 in each continent, and miners will receive considerable personal income.

4. The amount of new Filecoin circulation each day:

10% of the private placement and 1CO sales, i.e. 200 million tokens, will be released linearly over 6 months, 12 months and 3 years.

70%, or 1.4 billion, will be released through mining, and 153 million will be released in the first year.

It can be calculated that the 1CO private placement and mining parts mine about 600,000 coins every day. Based on the current (September 1) coin price of US$22, the circulating amount increases by about US$13.2 million every day.

1. The initial investment cost of mining has increased significantly

Lock-up period + linear release:

The official lock-up period for FIL is 20 days, and it will be released linearly every day for the next 180 days.

Staking mechanism:

In the latest published "Filecoin Economic Model White Paper", there are three different staking mechanisms: initial staking, block rewards as staking, and storage transaction provider staking.

The first is that miners must provide filecoin as an initial commitment for each sector. The second mechanism is to reduce the initial token staking requirements by locking block rewards. The third is to establish an incentive mechanism between miners and users to make miners stand out in the market.

①Pre-pledge

Pre-staking means that mining can only be carried out after staking coins, and a large proportion of pre-staking is required. The rewards obtained on the test network may need to be pledged, and miners without coins need to invest funds again.

② Post-staking

Post-staking leads to uncertainty in back-end returns, which means that miners can only obtain all issued rewards after completing all storage contracts. The returns may be subject to a freezing period or be released linearly, which has a great impact on investment returns.

(Initial parameter settings)

According to the official initial staking function: equivalent to 20 days of block rewards + 30% of Fil's circulating supply.

Therefore, the initial mining cost can be calculated: Assuming that the current cost of increasing 1T computing power is 800 yuan, 32 FILs need to be pledged. Assuming that the growth rate on the first day is the same as the space race, and the block reward of 10PB daily computing power growth, combined with the above simple supply and baseline supply formula, it can be calculated that the expected 20-day income pledge is 354,954 FILs, and 10PB of the entire network computing power is equivalent to a single T, which requires a pledge of about 34.7 FILs.

The current coin price is $22 (September 1st). The input cost is 7*22 dollars*34.7 Fil+800 yuan=6143 yuan. The input of mining machine per T computing power: Fil token input≈1:6

In addition to the cost of mining machines, miners need to invest more than 6 times the cost of tokens.

2. Technical risks of mining with mining machines

If you use the officially published hardware reference solution, the efficiency and benefits will be relatively low.

The technical requirements for miners are extremely strict, and a penalty mechanism is set up . If miners make mistakes or act maliciously, they may be punished by losing their accumulated pre-staking and post-staking, and their effective computing power will be cleared.

Network interruptions or delays may occur, and the time-space proof required by the network cannot be completed. At the same time, the "storage capacity" will also be affected, so the requirements for network environment and power stability are relatively stringent.

3. How to avoid

① Choose a mining machine solution with transparent information

At present, some teams are making optimizations and upgrades on the official hardware solutions, and the transparency of the solutions is becoming increasingly higher. It is necessary to understand information such as the brand parameters used by each hardware, and conduct detailed price comparisons in the market to prevent excessive hardware premiums.

Moreover, a transparent solution can greatly reduce the probability of purchasing second-hand hardware, which may lead to hardware damage.

② Company background check

The seller of the mining machine needs to be investigated in detail. The most important points to consider when selecting a mining machine/mining company are the degree of information disclosure and the reliability of the manufacturer. This requires a detailed understanding of the hardware, software system and operation and maintenance of the entire mining process.

③ Software and hardware separation

Filecoin mining machines are currently a combination of general hardware. The prices of CPU, GPU, memory, hard disk and other hardware in the traditional market are transparent. Therefore, separating software and hardware and keeping the hardware property in your own hands can avoid some risks. When encountering investment risks, you can sell them as second-hand servers at a depreciated price, with about 40% of the funds to be withdrawn.

Risk warning : The content of this article is only the author’s personal opinion, does not represent the views or position of Zhikuang University, and does not constitute any investment opinion or recommendation.