We are all used to on-chain storage being ridiculously expensive and requiring much effort to make it work properly. Seems like Filecoin have found a solution to both problems. 🙌
What is Filecoin?
A blockchain platform focused on decentralized data storage with built-in economic user incentives. It is one of the core infrastructure projects in the Web3 direction.
A little history
The Filecoin blockchain foundation was laid in 2014 by the Californian Protocol Labs company, with the publication of the concept of the first version of the platform based on the Proof-of-Work consensus made shortly after. The next big improvement was the introduction of the InterPlanetary File System or IPFS, with OpenBazaar being launched on it in 2016 as the first IPFS based project. Filecoin’s mainnet was not, however, launched before October 2020. 🍂
The most recent update we got was a rumour about the February 2022 Tiger Global Management investment in crypto projects with Filecoin being one of them. 💲
How does this work?
The core difference between Filecoin and say Amazon Web Services or Alibaba Cloud is that Filecoin does not own any servers. On the contrary, they borrow other people’s storage, providing their users with it.
The operation order is pretty simple:
- The user who needs to place the data pays a fee for uploading it to the Filecoin storage base. 💾
- A storage provider (can also be called miner) writes a guarantee for storing a data array inside Filecoin blockchain based on the principle of a service level agreement. ✅
- The blockchain protocol constantly verifies the integrity and parameters of stored data. 🧐
- A dedicated data provider fulfills data requests for a fee that is set on the open market. 🧾
Hence, everyone profits. The provider gets paid for providing their storage, while the user gets the storage they need. Miners are also rewarded for creating blocks. There are currently about 4000 miners with an average block price of 20 FIL.
Is it quick enough though?
The answer is yes. A block is generated every 30 seconds, meaning there are a possible 120 blocks generated hourly. The time taken for reaching a user-storage holder agreement is approximated at 2 with the speed of fully loading a 32GB file being 90 minutes. According to a Filfox research the overall capacity of storage available to Filecoin is 20.75 mln terabytes. 🤯
A crucial feature of Filecoin that differs it from other blockchains is the two algorithms being used at once. Each of those is responsible for reaching consensus in different network processes.
The task of PoRep (Proof-of-Replication) is inspecting that the data stores have successfully received and properly encoded the files submitted for storage. This part of the proof has to be provided at the beginning and at the end of a file storage transaction.
The Proof of Spacetime (PoSt) consensus algorithm is responsible for proving that the information custodian is still storing the information securely without interfering with it. 🔐
The native FIL token resembles Ethereum blockchain, with all transactions transmitted and all messages paid in GAS. Moreover, inspired by the EIP-1559 coin burning mechanism in Ethereum, the team implemented a similar network resource compensation option. When the network experiences significant overload and throttling, the users world expect an increase in gas limit for faster operations, and vice versa - level of activity decreasing would lead to lower operational gas limits. 📉
Filecoin has also released a wrapped version of their tokens that focuses on the ecosystem’s expansion to other blockchain platforms. Such tokens were issued in the Ethereum, BNB Chain, Fantom, Polygon, Avalanche, Solana, Arbitrum and Celo networks. 🤟
The biggest success
One of our first articles mentioned a major NFT connected problem - the lack of decentralised storage. Time passed by and projects like Filecoin have introduced highly demanded solutions like the NFT storage subplatform. 🖼️
The service was launched in 2021 and offers users a database for storing their NFT metadata, with accessing that data using a regular browser afterwards. Official statistics show that there are 92 mln NFTs currently stored inside the chain with 258GB taken solely by non fungible tokens. The service is used by giants like OpenSea, Flow, Hedera, Polygon and Near Protocol. 🤝
Filecoin might be one of the most important crypto projects of today, because, unlike many others, they are offering a unique service that can provide the very needed functionality to the whole ecosystem, making interaction with NFTs and blockchain overall significantly easier. Definitely approved! 🤩
Stay tuned 📻