With the public beta approaching, why does the Filecoin team want to change the mining model?

On November 27, the Filecoin development team announced a piece of news that made the IPFS community explode. Filecoin official community administrator Why said on social media that "in the next development network, Filecoin mining has basically confirmed that graphics cards (GPUs) will be required."

The Filecoin team said it will adopt the GPU mining solution. Source: Star Idea

In addition, Why also stated that the development team is currently testing with an Nvidia 2080ti graphics card, and the CPU or GPU performance required for Filecoin mining is still under testing.

The originally beautiful idea of ​​using idle computing resources (PC) for mining was instantly raised to a higher level. Many community users expressed that they could not accept it and felt they were cheated.

According to e-commerce data, the price of nvidia 2080ti is generally above 6,000 RMB. The additional mining costs have made netizens dissatisfied. Some people directly left a message under this message, "I do not have $ for 2080ti", while domestic media used the expression "Filecoin CPU mining machines will suffer a devastating disaster" to describe this news.

01. Filecoin, the darling of the blockchain community

It can be said that the Filecoin project has been surrounded by glory since its birth and has received high attention from the blockchain community.

In August 2017, once Filecoin was launched, it easily raised US$257 million (including private and public funds), setting an 1CO record at the time.

Juan Benet, the founder of Filecoin and its distributed storage ecosystem IPFS, can be said to be a veteran among the initiators of distributed protocols, with a very high status. It is said that IPFS was open sourced at almost the same time as Ethereum, and was a pioneer.

In addition, the development prospects of IPFS and its incentive layer, the blockchain project Filecoin, have always been favored by the industry.

IPFS is recognized by the industry as the future replacement for the http network transmission protocol. Xu Mingxing once said that "IPFS will be the infrastructure of the entire society." The market demand for this infrastructure, as well as the ambition of IPFS, are very large.

Market research firm Gartner predicted in a report that the global public cloud market will reach US$411.4 billion in 2020; Huawei's "Top Ten Trends for 2025" report stated that the global annual storage data volume will reach 180ZB in 2025, which is nearly 24 times the total amount of data generated by Chinese netizens last year.

IPFS aims to be a distributed network that allows users to store, transfer, and retrieve data. As a media outlet said, "One day, when people visit the Internet, they no longer type in http, but ipfs, then the vision that IPFS wants to achieve will be realized."

In addition to the well-known IPFS, the blockchain project Filecoin is also highly popular. Many blockchain participants regard Filecoin as another opportunity after Bitcoin and Ethereum.

So far, there is no good solution to the market demand for decentralized storage, and the position of the "Big Mac" is still vacant. Everyone is looking forward to the disruptive market effect brought by Filecoin. Therefore, although the Filecoin mainnet has been delayed, the market's positive response to Filecoin has long been ahead of the project's development progress.

Filecoin mining machines were sold like crazy on the Internet. Although Filecoin officials repeatedly emphasized that no physical mining machines should be purchased before the mining hardware specifications were announced, driven by FOMO sentiment, investors flocked in (yes, investors always flood the market before users), and the IPFS mining machine market was once flourishing.

From the crowdfunding in August 2017 to the popularity of Filecoin in 2018, dozens of mining machine service providers labeled "IPFS mining" appeared on the market. These mining machine service providers used "mineable FIL (Filecoin token)" as a promotional point and competed to launch mining machines of brands such as Maya and Hummingbird.

It is understood that as of June this year, the number of Filecoin mining machines sold on the market has reached one million, and most miners have made hundreds of millions of profits from this.

It is worth noting that the Filecoin mainnet has not been launched yet, and the official mining hardware parameters have not been announced. In other words, Filecoin miners were eager to buy mining machines when they could not mine coins yet and were not sure whether the mining machines could mine coins after the mainnet was launched. This shows how popular Filecoin was at that time.

Furthermore, the popularity of Filecoin has also brought about similar projects. Projects such as Sia, Genaro, Storj, and Lambda have been put into use, and some mining pools and miners have already obtained considerable mining income. For example, the founder of the Lambda project once said in an interview that "our top ten mining pools and nodes have annual revenues of hundreds of millions and profits of tens of millions."

Filecoin and similar projects, information source: Hashpie

In addition, according to online information, exchanges including LBank, Gate, and Top.one have already launched FIL (Filecoin token) futures; star projects such as EOS use IPFS as the underlying storage system; teams including BCH developers are already using or building IPFS applications...

IPFS and Filecoin are generally accepted as highly attractive projects in terms of technical architecture and market ecology. It can be foreseen that once the Filecoin mainnet is launched, related currencies and communities will quickly become popular.

02. At this critical moment, why did the Filecoin team change the mining model?

However, the market trends are always unexpected.

Filecoin was originally expected by the public, but its development process has been dragging down the reputation of the project. The mainnet plan originally scheduled to be launched in June 2018 was postponed many times, and market confidence was severely depleted. A Filecoin miner once described the progress of the Filecoin project as follows: "The IPFS team is like a scumbag when developing and operating Filecoin, perfectly presenting 'no initiative, no rejection, no commitment, and no responsibility'."

On September 25, the Filecoin development team finally released new project progress: the test network will be launched on December 11 this year, and the main network will be launched in March next year. But more than two months later, the team dropped another bombshell: the mining mode will be changed from CPU mining to GPU mining.

Miners were watching the mainnet launch, and the mining machines they had stored for a year or two could finally be put to use. However, the official announcement of a "mining model change" instantly made the mining machines in the hands of some miners useless. Although the official said that this modification proposal had been discussed in the community for several months, the market was still shocked by dissatisfaction.

What happened when the mining mode was changed from CPU mining to GPU mining?

According to official statements, the reason for adopting the GPU mining mode is that the development team has modified the PoST algorithm and added a selection post process. After obtaining the right to produce blocks, miners need to complete the PoST calculation within a block cycle.

Through communication with Xie Dapao, the first person to mine IPFS, BBNEWS learned that the reason why the Filecoin development team added election proof to the algorithm was to increase the randomness of the block nodes. "(Filecoin) has been attacked by side chains before, and the development team has made many compromise solutions." Xie Dapao said.

Attackers use "weight attacks" to increase their share of computing power in the network, thereby obtaining a higher probability of block generation and revenue from storage, retrieval, and mining activities. Proof of election can alleviate this problem by increasing the randomness of block-generating nodes.

Information provided by Xie Dapao

PoST stands for Proof of Spacetime, which is an operation to prove that the storage node has stored the corresponding file within a certain period of time. The generation of PoST proof involves a large amount of calculation. The GPU's PoST calculation speed is faster than the CPU. Therefore, the introduction of GPU mining can ensure that the PoST proof is completed within the specified time. The reason why miners are required to complete the PoST calculation within a block cycle is to increase the attack cost of attackers, because PoST has a large amount of calculation.

This is what the official statement "GPU is just a supplement to CPU" means. Development team member Why once explained: "If you can find other ways to achieve fast calculations, you don't need a GPU."

In addition, the mining revenue of Filecoin cannot be improved simply by improving the CPU or GPU performance. There is no direct connection between the two.

The probability of a miner obtaining the right to generate a block, as well as the income obtained through storage, mining, and retrieval activities depend on effective storage, which is affected by factors such as storage quotation, network conditions, CPU (GPU) performance, memory performance, hard disk capacity, and algorithm optimization.

Factors affecting “effective storage”, information source: Crypto Valley Live

Just like Didi Taxi, the income of the driver depends on the comprehensive influence of factors such as charging standards, driving distance, time period, etc., and has little to do with the speed at which the driver accepts orders. The income of Filecoin miners depends on the comprehensive influence of factors such as storage quotation and storage volume, and has little to do with the CPU (GPU) computing speed.

Even Filecoin officials said that more GPUs cannot increase miners’ profits. “If one GPU can be used for multiple mining machines at the same time, it can reduce mining costs to a certain extent.”

GPU mining is only a supplement to CPU mining, and has little impact on miners' mining income, but the introduction of GPU mining mode has a significant impact on miners' input costs. In fact, many miners' initial investment in mining machines may be "wasted", and some CPU mining machines are indeed unusable.

According to Guanliange, there are at least more than one billion worth of mining machines in the market waiting for Filecoin to go online for mining. However, in order to save costs, most businesses do not configure GPU slots for Filecoin mining machines, which means that such mining machines cannot be converted into GPU mining machines, and all these costs will be submerged.

Secondly, even if there is a GPU slot on the mining machine, most miners are non-professionals and do not have the ability to modify the mining machine. The purchase of GPU graphics cards and mining machine modification is a significant additional expense for miners. As mentioned at the beginning of the article, the price of nvidia 2080ti is basically above 6000 RMB.

Third, as Xie Dapao said, "the development team made a lot of compromises." In order to maintain the fairness of mining, Filecoin's once beautiful vision of "everyone can use idle computing resources to mine" has changed, and the threshold for mining in this field has been raised.

The early development of the market is often blind, and the resulting waste of resources often backfires on every market participant, just as the blindness, hype, and scams in the market had to be paid for by miners before the launch of the Filecoin mainnet. Now everything is still in the trial and error stage, and Filecoin's variables and risks are still difficult to estimate.