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This article was originally written by Tony from IPFS Force Zone The age of knights has passed; now comes the age of the wise men, the economists, and the calculators. The cross-era background of the birth of IPFS ecology Data leaks are becoming more frequent in the era of big data, and IPFS and Filecoin are emerging In November 2013, Adobe leaked data of 153 million users In February 2014, 850,000 bitcoins were stolen from Mt. Gox In May 2014, Juan Benet launched the IPFS project In January 2015, IPFS Protocol Lab was established and released IPFS In July 2016, Yahoo leaked 3 billion data In June 2017, IPFS had stored 5 billion files. In July 2017, the IPFS project team announced the establishment of the Filecoin project In March 2018, Facebook leaked data of about 87 million users Elasticsearch leaked 2.7 billion emails, passwords, etc. in December 2019 In June 2020, Oracle's cloud data platform BlueKai leaked billions of data
Data leaks are becoming more and more serious. The main reasons are: hackers, public databases, unauthorized access, database configuration errors and website vulnerabilities . Many leakage incidents show that current network systems are unable to independently cope with large-scale data storage. Fortunately, in the new ecosystem of rapidly changing Internet technology, while traditional security rules face huge challenges, they also provide new opportunities for the development of information security protection: the rise of IPFS. The significance of the birth of IPFS: ending high maintenance costs (Figure 1) 2019 Data Breach Cost Report, Source: IBM Security & Ponemon Institute, 2019 (Figure 2) Global average total cost of data breach, Source: IBM Security & Ponemon Institute, 2019 In the 2019 Data Breach Cost Report, the average maintenance cost for each compromised data item was $150 (Figure 1), and the average total cost of a data breach in 2019 also increased by 1.5% from 2018. In the six years since 2014, the average total cost of a data breach has increased by 12% from $3.5 million (Figure 2). IPFS is a new solution to this problem. Gavin Wood, author of the Ethereum White Paper and the Ethereum Yellow Paper and founder of Polkadot: "We are looking for an initial storage solution similar to a parachain. But no matter what we do, it is likely to be integrated into IPFS technology in the end. I hope that when Filecoin goes online, we can bridge it." (Figure 3) Gavin Wood seeks IPFS as storage, source: Twitter, 2019-12 2020 may be the year of IPFS ecosystem explosion. At the World Mining Conference in May 2020, Huang Lingbo, partner of Distributed Capital, said that this year Distributed Capital will focus on two ecosystems and one track. The two ecosystems refer to the Polkadot ecosystem and the IPFS ecosystem . Current situation: The IPFS ecosystem that emerged Drawing on Darwin's theory of nature: full ecology = original ecology + competitive ecology The IPFS ecosystem can be divided into two types: one is the original ecosystem; the other is the full ecosystem. IPFS original ecology : the ecology that assists the development of the IPFS protocol and the ecology that is applied based on its functions belong to the IPFS ecology in a narrow sense. For example, the relationship between mini programs and WeChat. Mini programs are applications that parasitize on WeChat. IPFS full ecology : This concept comes from Darwin's theory of natural selection, which refers to a unified whole of dynamic balance formed by different types of biological populations and their environment through mutual support and restriction (Figure 4). We regard the IPFS ecology as the full ecology. The mutually restrictive groups are the competitive ecology, and the groups that support each other internally are the original ecology. The two also promote each other, so the full ecology = original ecology + competitive ecology . Among them, the competitive ecology can be understood as the relationship between Weibo and WeChat. Weibo is defined as a fun social software, and WeChat is defined as a social software for acquaintances. The two compete and promote each other. (Figure 4) Darwin’s Theory of Natural Selection, source: blog.sciencenet.cn, 2016-09 Full Ecological Features: Full Ecological Business Model The future market will not be a game between individual companies, but will highlight the ability to coordinate with the entire ecosystem. Future market competition will be more like competition between different business ecosystems. In this regard, we draw on the biological ecology to define the entire IPFS ecosystem, which is more closely linked to the business environment and has an additional environment of competition, coexistence, co-growth, and mutual influence than the original ecology.
How to butcher an ox: IPFS's entire ecosystem and development trends The whole ecosystem does not only refer to the upstream and downstream ecological chains, but also includes a series of products derived from IPFS, similar competitive distributed storage projects, etc. There may be more in the future. In short, the whole ecosystem = original ecosystem + competitive ecosystem. 1) Competitive ecology: Exogenous technology is the product of competition, and blockchain technology highlights the value of technology IPFS is a project proposed by Potocol Labs in 2014, but its slow implementation led to the birth of other similar distributed storage projects during the development process to seize the market and improve the concept. First, let’s take a look at the scale of distributed storage projects. According to incomplete statistics, on July 5, the total scale of mainstream distributed storage projects was 3.683 billion yuan (because the Filecoin mainnet has not been launched and there is no circulating market value), of which projects with a market scale of more than 100 million yuan include BTD, STORJ, SC, YTA and MAID (Figure 5). (Figure 5) Data source: feixiaohao.com, produced by: IPFS Force Zone, 2020-07-06 The total 24-hour trading volume on July 5 was 659 million yuan, of which Filecoin futures trading volume accounted for 40% of the market, or 265 million yuan; STORJ, which ranked second, accounted for 15%, or 98.9763 million yuan (Figure 6). (Figure 6) Data source: feixiaohao.com, produced by: IPFS Force Zone, 2020-07-06 At present, the distributed storage market is in its early stages. Because distributed storage has not been fully commercialized, only Sia has been implemented. The Sia official website shows that the storage capacity is 2P and the transaction fee is about 2 US dollars/T, and its transaction scale is less than 10,000 US dollars. Compared with Bekry Maket Analysts' forecast of 53.625 billion US dollars in the global storage market in 2020, the current transaction volume in the distributed storage market is very small. At present, Filecoin technology development is relatively solid, with good market prospects and large futures market transactions. Its implementation in the future will greatly promote the development of the distributed storage ecosystem. At present, the same-direction development of the competitive ecology is particularly beneficial, but the actual transaction volume is small, and the joint progress of technology is the main driving force. (Figure 7) Competitive ecological projects, source: official website, produced by: IPFS Force Zone, 2020-07-08 Competitive ecology promotes the development of exogenous technology, and exogenous technological progress drives ecological development. From an ecological perspective, we can refer to the academic literature once proposed by Solow: Assuming that capital and output rates remain unchanged, and introducing technical variables, the marginal return of capital decreases, the perfect competition economy and exogenous technological progress and returns remain unchanged, when the exogenous technology level grows, the economic scale will grow on the equilibrium path; when the exogenous technology level is fixed, expanding capital or labor will eventually stagnate. The conclusion is: investment can only compensate for the depreciation of fixed assets and equip new workers, but in the long run, only technological progress is the source of growth (Figure 8). (Figure 8) Left & middle: Expanding investment and labor (labor includes the quantity and quality of labor, of which labor quality involves exogenous technological components), right: Introducing exogenous technology, Conclusion: Technological progress is the source of growth, Source: slideserve.com, Produced by: IPFS Force Zone, 2020 The blockchain concept of "incentive compatibility" as an exogenous technology drives the common development of the ecology. Morris, the Nobel Prize winner in economics, believes that it is feasible for the market to achieve incentive compatibility. Incentive compatibility refers to a mechanism that enables people to take actions driven by self-interest, which can also be guided to achieve collective predetermined goals and achieve the optimal market configuration. As an exogenous technology, blockchain can drive the healthy development of the ecology through the design of a token economy and an incentive system, which is in line with Solow's concept of promoting economic growth. The grand ideal of the "new consensus" theory is promising. The incentive compatibility of blockchain also has certain drawbacks, mainly because the release of tokens is set in advance by smart contracts. Although market inflation/deflation factors are taken into account, they are different from the real feedback in the market. The "new consensus" macroeconomics that emerged in the 1990s proposed that the difference between the real interest rate and the natural interest rate will lead to uneven supply of market output, which in turn affects inflation/deflation. Project parties should adjust the inflation level in a timely manner to move closer to the natural interest rate. In this regard, we can bring token projects closer to the "new consensus" theory, and set up some token release systems that can reflect the real market situation, reflecting the supply and demand of different markets, rather than the simple rule of halving every N years. Filecoin has tried a new mechanism for releasing tokens, which mainly refers to the decay law of C14 to make Filecoin closer to the real market exchange rate. In general, the current Token "incentive compatibility" model of distributed storage projects is not so mature, but the ecosystem will gradually try new ways to approach the market and make the economic model fit the real market. After all, artificially adjusting the market currency is contrary to the concept of decentralization, and a new generation of economic models is urgently needed. Therefore, at this stage, innovative attempts are necessary for the ecosystem to promote exogenous technological progress. 2) Original ecology: co-evolution and competition are the main axes The original ecology mainly includes the IPFS genealogy ecology, Filecoin ecology contributors and IPFS technology application projects. IPFS Relationship Family Tree (Figure 9) Protocol Labs family tree ecosystem map, source: IPFS Force Zone, 2020 The following is an introduction to the Protocol Labs family tree: Application data : IPFS is a distributed file system used to store and access files, websites, applications, and data, and is the application layer of the system.
Data transmission : The main function of Libp2p is to discover nodes and content, and enable different network protocols to smoothly transmit data to each other, lowering the threshold for developers.
Filecoin Ecosystem Contributors (Figure 10) Filecoin ecosystem contribution organizations, source: IPFS official, 2020-05 The following are the characteristics of the Filecoin ecosystem contribution organization: Based on the continuation of ETH and Polkadot ecosystem, many developers in IPFS ecosystem are transferred from Ethereum and Polkadot to jointly develop IPFS infrastructure, including ChainSafe, Sigma Prime, SORAMITSE, OB1, Zondax, etc.
Institutional diversity, companies with more than one blockchain business also participate. Ecosystem cooperation includes cybersecurity testing, financial technology companies, foundations, research institutions, etc., among which there are many technology companies. There are also single blockchain business companies such as Zondax, Finality Labs, Subvisual, etc.
IPFS technology application projects (Figure 11) IPFS technology application projects, source: IPFS official, 2020-05 This chart mainly includes projects based on IPFS applications, including social content, audio and video, scientific research and education, practical tools, storage platforms, shopping, finance, and business. The sub-sectors of this ecosystem divide the market, provide targeted services for areas with strong privacy storage needs, and improve the ecosystem. The following are some of the more prominent projects: (Figure 12) Akasha, OpenBazaar and Spotify, source: official website, produced by: IPFS Force Zone, 2020-07 Akasha is the first decentralized social network based on ETH and IPFS, developed by Ethereum co-founder Mihai Alisie. The project supports multiple operating systems such as Linux, MacOS, Windows, etc., and is committed to creating a social network with free information and permanent data. OpenBazaar is a decentralized commodity trading market that combines the features of eBay and BitTorrent. It is known as the eBay on the blockchain. Currently, it has small and medium-sized enterprises from more than 30 countries settled in it, and supports BTC, ETC, LTC, ZEC, and Dash payments. Spotify is a decentralized open media library built on IPFS, allowing content creators to annotate their creative works, cryptographically sign them, timestamp them in the Bitcoin blockchain, and store them in IPFS. Co-evolution is the core of the original ecology. "Corporate Strategy from an Industrial Perspective" proposes that co-evolution is needed in the business ecosystem. Co-evolution is the core of the business ecosystem. Co-evolution emphasizes evolution, pointing out that in an environment where individuals and ecology depend on each other for survival, other species in the environment have a mutual influence on individuals. Just like in the natural ecosystem, symbiosis and competition are also eternal themes. After the horizontal development of peers, there will be vertical competition. Just like the e-commerce on Douyin, if you don't unite and work hard to launch Douyin content products and let Douyin occupy a larger market share, it will be more difficult to seek to jump out of Douyin and compete with Taobao and Pinduoduo in live broadcasts. Competition is an essential element to promote the personalization and diversity of the ecosystem and keep evolving. The lower the ecological level of the early enterprises, the weaker their ability to control their own destiny, so their own development depends more on the evolution of the ecosystem. However, as the ecosystem expands and competes, each enterprise and product has its own unique position and competitiveness. It is not only the ecosystem that helps individuals grow, but individuals also contribute to the entire ecosystem. For example: the most famous third-party service provider based on the WeChat ecosystem is Weimeng. Weimeng's main business is to help companies build their own mobile retail malls. It initially promoted the market with a free mindset, exchanged profits for the market, and partially paid. At the same time, its agents also extended their tentacles to various cities across the country, expanding their scale and forming their strong barriers, while also expanding the WeChat ecosystem. In the future, under the layout of the original ecological strategy, the future challenge will not be the single-handed fight of enterprises, but the ability to coordinate with the entire ecology and coexistence. Full Ecological Battle: Talking about IPFS Ecosystem from GMV and PS Valuation The Internet is the pioneer of the online world, and IPFS is a giant that is developing rapidly on the shoulders of Internet technology. The early development of the Internet required infrastructure construction, product development, demand exploration, ecological aggregation, etc., which required a long and confusing process; IPFS is an iterative upgrade of technology based on mature Internet technology and clear product functions, and it establishes products, applications, platforms, systems, and ecology in one step. Future competition may be achieved overnight and at full speed (Figure 13). (Figure 13) Development trend and market share, source: IPFS Force Zone, 2020-7 After the ecosystem is established, how do we evaluate the IPFS ecosystem? Ecological valuation vs. relative valuation The previous article "Can technological progress reverse the US stock market circuit breaker? IPFS and Filecoin create a new generation of success" mentioned using the storage macro market to estimate the future value of IPFS and Filecoin. This method will focus more on the single storage market and is suitable as an early evaluation plan ; however, from a long-term analysis, because IPFS itself is a protocol attribute, it may focus more on the co-development of the ecosystem in the future and will not be limited to the development of a single storage market. At the same time, the ecological market will independently improve the missing modules in the market and further expand the market scale. The main difference between the two is that the relative valuation method is from effect to cause, which is to extrapolate factors based on the proposed market size results (the price of Filecoin); the ecological valuation method is from cause to effect, which is to extrapolate future development results from the Filecoin ecology. For example, in the field of cryptocurrency, in the payment ecosystem, BTC is a cryptocurrency for peer-to-peer payments, and its transactions are not so private in nature. Some traceability methods can be used to find the owner behind the scenes. Dash was launched in 2014 as a code fork of BTC. Its most notable feature is to hide the source of funds by packaging the mixing protocol. In this comparison, in the competitive payment ecosystem, the two have mutually reinforcing benefits (market segmentation, technology improvement). Once the payment ecosystem develops, the single payment scenario will also develop. At the same time, developers in the free market will derive other ecosystems to improve the diversity of the ecosystem. (Figure 14) BTC and Dash, source: coyep.com, 2020 So overall, the full ecosystem is more in line with the long-term development of the market, more sustainable, and in line with the laws of free market competition. In this regard, we can refer to GMV and PS valuation to evaluate the IPFS ecosystem. 1) Talking about IPFS ecology from the perspective of Taobao ecology GMV GMV refers to the transaction amount when users click "Buy Now" and confirm it is correct or when the auction is successful and confirmed, and is an indicator of the transaction of e-commerce platform enterprises. Taking Taobao as an example, GMV refers to the transaction amount when users click "Buy Now" and confirm it is correct, the purchase is successful and the transaction is finally completed. Jack Ma, Chairman of the Board of Directors of Alibaba Group, said that this indicator is often used by Alibaba and its competitors to evaluate the growth rate of the e-commerce giant . The reason why Alibaba uses the indicator of gross merchandise volume (GMV) to evaluate its performance is because of the precedent of eBay (Figure 15). (Figure 15) Alibaba GMV from 2015 to 2019, Source: Alibaba Financial Report, 2019-05 By comparison, Filecoin is somewhat similar to e-commerce, mainly in two aspects: The ecosystem is complex and diverse. Taobao has different stores, with different business profits, costs, maintenance costs, etc., and different products; in the future, Filecoin will also have demand parties based on storage, retrieval, etc., but its application scenarios are also different. Therefore, Taobao and Filecoin have the same thing in common: the same ecosystem, building a value together.
Taobao ecosystem GMV = total value of goods sold, that is, the total value of goods and services traded on the Taobao ecosystem network; because IPFS network miners output two types of services: storage and retrieval (excluding Gas), then the total price of IPFS ecosystem network services GMV = total value of storage services + total value of retrieval services. IPFS's GVM can be used to evaluate the growth rate of the ecosystem. In this regard, once the Filecion ecosystem develops and it becomes difficult to discern the total value of its complex ecosystem, GMV can be used as a reference to evaluate the growth rate of the Filecoin ecosystem. 2) PS valuation method: Treat IPFS as a listed company We regard the IPFS ecosystem as a listed company, the Filecoin price as the company's stock price, and the total value of storage services and retrieval services as the operating income of IPFS. Then the operating income of IPFS is GMV = total value of storage services + total value of retrieval services. From the data in the figure below, we can see that the current public storage price-to-sales ratio is 11.79 (Figure 16). (Figure 16) Price-to-sales ratio trend, source: Financial Report, 2020-07 We can refer to the stock price calculation method of listed companies, and the calculation formula is: PS (price-to-sales ratio) = total market value/operating income = (stock price * total number of shares) / operating income, so we can get stock price = PS (price-to-sales ratio) * operating income / total number of shares. The above is converted to the IPFS ecosystem, Filecoin price = PS (price-to-sales ratio) * GMV / number of circulating tokens = 11.79 * (total value of storage service + total value of retrieval service) / number of circulating tokens. Then, Filecoin price = 11.79*(total value of storage service + total value of retrieval service)/number of circulating tokens Once the Filecoin mainnet is launched and tokens begin to circulate, the token value will begin to reflect the storage and retrieval services. Then, we can bring in data (total value of storage services, total value of retrieval services, number of tokens in circulation) to find the price of Filecoin in the IPFS ecosystem. However, PS must change dynamically with the changes in the storage industry, and we must change the parameters to find the final Filecoin price. Storage is valuable, but ecology is priceless (Figure 17) Quote from George EP Box, source: lacan.upc.edu, 2018-05 Storage has a fixed sales price, and the ecosystem can refer to the model valuation. However, when the storage market index explodes, the storage price will eventually stabilize, but it is difficult to accurately measure the unlimited growth of the ecosystem, and the value of the ecosystem is difficult to estimate. As British statistician George EP Box said: "All models are proven to be wrong in the end, but they still have meaning" (Figure 17). The same is true after the IPFS ecosystem exploded. 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.
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