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FIL is rising: Filecoin's upcoming production reduction has changed the status quo of the token economic model



Filecoin's sudden ascent to the top 10 cryptocurrencies by market capitalization, albeit in a short time, points to its potential as it is driven by a community in China.

Filecoin (FIL) is one of the most prominent coins in the storage space among cryptocurrencies. In the past month, the price and market value of FIL have skyrocketed to new highs. On April 1, the coin reached $233.68 while breaking into the top ten cryptocurrencies by market capitalization.

Filecoin is a decentralized cloud data storage network that allows its users to sell their excess storage space for rewards on an open source platform. Filecoin was created by Protocol Labs.

Although FIL's stay in the top ten list is very short, it should be noted that Filecoin's fully diluted market value has reached a high of $450 billion. This is almost half of the sacred $1 trillion mark that Bitcoin has held for 10 consecutive days recently.

In the past 30 days, Filecoin has seen an unprecedented increase of around 440% from a trading price of around $42 to a trading price of $184. Although the price has fallen about 20% from its all-time high on April 1, its settlement price is 3 times higher than before the explosion, an incredible feat in itself.  

DefiLlama's NFT lending project llamalend completed smart contract deployment: On October 26, according to official news, the NFT lending project llamalend has completed smart contract deployment.

According to previous reports, on October 9, 0xngmi, the anonymous founder of the DeFi data website DeFiLlama, announced that the NFT lending project llamalend will be launched soon. At present, the smart contract has been completed and open sourced on Github. [2022/10/26 16:39:40]

On March 17, the FIL token got another boost from the market. In a sign of institutional interest in cryptocurrencies, Grayscale Investments has announced a new fund that will invest in five cryptocurrencies. These tokens are Chainlink’s LINK, Filecoin, Livepeer (LPT), Basic Attention Token (BAT) and Decentraland (MANA). As a result of this announcement, the price of FIL increased by 40% within 48 hours, showing that the community and the market as a whole reacted positively to this development.

FIL fell below the $35 mark with an intraday drop of 6.92%: Ouyi OKEx data shows that FIL fell short-term and fell below the $35 mark, and is now at $34.99, with an intraday drop of 6.92%. The market fluctuates greatly, so please do a good job in risk control. [2021/3/1 18:01:59]

Marie Tatibouet, chief marketing officer at cryptocurrency exchange, said when it comes to why Filecoin is attracting institutional interest. "Data is the most valuable commodity today, and there is a race to find cheaper and more efficient ways to store it. "Martin Gaspar, a research analyst at CrossTower - a digital asset exchange, told Cointelegraph just how much impact this announcement has on the market."

"According to Grayscale data, as of April 5, 2021, the Filecoin Trust has only $8.1 million in assets. That’s a very small amount relative to the more than $1 billion in trade volume that CoinGecko shows in the last 24 hours, suggesting that there are other key drivers behind the price rise. "

Filecoin’s current test network’s effective computing power has exceeded 100 PiB: According to, filfox browser data shows that the current test network block height is 29869, the entire network’s effective computing power is 100.35 PiB, and the total pledge amount is about 3.07 million FIL, the number of active-zce miners is 432, the reward per block is 8.8783 FIL, the output in the past 24 hours is 19966 FIL, and the average mining income in 24 hours is 0.93 FIL/TiB;

Currently, the top three effective computing power are: t01248 (Zhiheyun) temporarily ranks first with 7.02 PiB, t09037 (SeedPlan-Saturn) ranks second with 5.21 PiB, and t01475 (1475) ranks third with 4.66 PiB .

It is reported that the Filecoin Space Race started at 6:00 am on August 25th and has been running for 10 days and 9 hours. [2020/9/4]

Cameron Winklevoss, co-founder of the Gemini exchange, pointed out that he was not surprised by the "rocket" price increase of FIL. He believes that core propositions such as "the number of network storage capabilities" brought about by the Filecoin project are the main reasons for the rise. Tatibouet took this a step further, he said. “Bitwise’s 10 Encryption Index Fund and Grayscale have both added FIL, while Ninth City and New Universal have both invested millions of dollars in Filecoin mining. "

FileCoin-HKDT contract launched on Caitex exchange: Caitex, a digital contract trading platform jointly with Bluehelix by Bluehelix, launched FileCoin-HKDT contract. Users can use HKDT to participate in the contract transaction of IPFS token FileCoin, and the FIL contract index is weighted to ensure the fairness of the transaction. William, senior vice president of HKDT, said that the Hong Kong dollar stable currency HKDT will provide margin support for more financial derivatives.

Caitex was established in 2019, and has received millions of early investment from the Bluehelix Ecological Foundation since its establishment.

Bluehelix, a leading blockchain financial information technology service provider, is committed to providing customers with professional technical support and services. At this stage, it has provided blockchain financial technology to more than 260 institutions around the world. [2020/7/13]

However, there are many different factors at play here.

Domestic encryption reporter Wu Said Blockchain pointed out on Twitter that on the day when FIL reached its all-time high, its bulk trading volume came from Huobi Exchange, China's largest exchange, with a 24-hour trading volume of $24.2 billion. This volume is almost three times the volume of Ethereum (ETH) and Bitcoin (BTC) on the same day. Gaspar further mentioned.

ASX Global Launch XFIL/USDT: ASX global news, based on the actual mining output of the IPFS cloud computing power leasing service, XFIL will be traded globally on the ASX on July 7.

The InterPlanetary File System IPFS (InterPlanetary File System) is a global, point-to-point distributed version file system, the goal is to supplement (or even replace) the Hypertext Transfer Protocol (HTTP) that currently rules the Internet, and integrate all files with the same file system. connected computing devices. The principle is to use a content-based address instead of a domain-name-based address, that is, what the user is looking for is not an address but a content-zce stored in a certain place. There is no need to verify the identity of the sender, but only the hash of the content. Through this It can make web pages faster, safer, more robust, and more durable.

Filecoin is an incentive layer on top of IPFS, and builds a decentralized storage market on IPFS through the token incentive model. [2020/6/27]

"Filecoin is very popular in China, and Chinese miners have a strong interest in it, and they need to pledge FIL tokens as collateral, resulting in demand for the token. Additionally, due to the shortage of BTC and ETH miners, Filecoin mining seems to be an attractive option for these miners. "

According to data from CoinGecko, as of April 9, the Huobi exchange accounted for nearly 40% of Filecoin’s 24-hour trading volume. This data supports the view that interest in Filecoin is primarily driven by retail investors and miners located in China. There is so much hype surrounding the coin in China that there are reportedly even posters in the subway promoting Filecoin.

This is similar to the phenomenon of Bitcoin posters in London's Soho district, except that Filecoin's is clearly an advertisement to push retail investors to buy the token.

Robbie Liu, a market analyst at OKEx Insights, the research team of cryptocurrency exchange OKEx, told Cointelegraph. "Filecoin's market development in China is very strong, and Chinese miners account for more than 95% of Filecoin nodes. " China is the global cryptocurrency mining center, and it is natural for the market to be highly sensitive to the mining economy. Tatibouet further stated that the reason for the strong demand is that FIL mining is "more affordable than BTC and ETH mining."

In August 2020, the Chinese government announced new internet infrastructure plans that will focus on scaling up innovations in 5G, artificial intelligence, and the Internet of Things. This initiative could have implications for the Filecoin ecosystem, as decentralized cloud storage fits the agenda.

There are also unconfirmed reports that Chinese government officials are quasi-officially encouraging Filecoin mining, as the decentralized cloud storage solution fits perfectly with the vision of China’s homegrown internet infrastructure.

Another reason for the increased demand for Filecoin is the planned production cut on April 15. Regarding the changes in supply and demand economics of FIL, Liu believes: "The surge in the price of FIL is mainly caused by the hype before the production cut on April 15. The current agreement releases 648,000 FILs per day, but after April 15, the output will be reduced to 365,000 FILs/day. "

Therefore, the daily output of FIL will be reduced by 43.2% after the release of the simple agreement for future tokens in the middle of the year on April 15. As of press time, the circulating supply of FIL is 65.33 million tokens, with a maximum supply capped at 2 billion coins. Such a large reduction in daily production could lead to perceptions of the token's scarcity, which in turn would cause retail investors and miners to buy more coins to fend off the upcoming planned reduction in the daily influx of FIL.

Another interesting feature of FIL's token economic rules is that it has a built-in mechanism where miners must buy more FIL tokens in order to mine more cryptocurrencies, and it is also the utility and governance token of the Filecoin ecosystem. This mechanism incentivizes token holders by providing them with more mining power and prevents FIL from being dumped in the open market.

The nature of Filecoin's offering puts it in direct competition with tech giants such as Google, Amazon Web Services, and offerings from Alibaba. Since Filecoin is an open network based on blockchain, data storage cannot be tampered with, and the amount of storage it can access is theoretically unlimited.

It’s important to note, however, that Amazon, Google, and other tech giants have matured their offerings and have been catering to retail and institutional needs since cloud storage and computing were offered as a service. According to Liu, it is too early to say whether Filecoin can compete with the giants, adding:

"While the outlook remains positive, institutional-grade solutions depend on more than storage space. Requires operational management and technical support, hosting its services entirely in the cloud. "

Gaspar also explained the factors that the team at Filecoin needed to consider before actually starting to compete with the industry leaders in the space. “Filecoin will need to ensure that its network remains online, that files are stored and accessed securely, and that storing data on it is less risky and costly than centralized storage solutions. "

While it remains to be seen how the demand for FIL tokens will continue after the planned cut, it is clear that due to Filecoin's real-world application cases, the increase in price and market cap corresponds to the growth period of the project and its products, and its products compete in the market , dominated by corporations with virtually unlimited resources.


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The article is contributed by the blockchain analysis of Niu Qi.