Filecoin Economics Update: Baseline Initial Value, Block Reward Vesting, Sector fault detection fee, Termination fee and More

On September 7 EST, Filecoin officially released an update of its economics. The updated economics generally reduces the requirement for miners' block reward pledge, so lowers the operation and maintenance risks, and is encouraging the long-term development of the network. The following is our introduction to this update:

01"Increase baseline initial value but decrease growth rate to stimulate the economy more sustainably." [1]

In order to avoid the short-term behavior of miners when the Filecoin mainnet is launched (leave the network after obtaining early block rewards) and encourage miners to invest in storage and stay on the network for a long time, Filecoin introduced the concept of network benchmarks to delay the release of block rewards. The basic idea is to increase the block reward size as the total storage power on the network increases. The way to achieve this is to divide the block reward into “Simple Minting” (30% of the block reward) part and “Baseline Minting” (70% of the block reward). The “Simple Minting” rewards will start at the mainnet launch, while the “Baseline Minting” will be adjusted according to the development of the network scale, playing a role in delaying the release of rewards. [2]

As such, the network baseline will start from 1EiB (which is less than 0.01% of the worldʼs storage today) and grow at an annual rate of 200% (higher than the usual world storage annual growth rate at 40%). The community can come together to slow down the rate of growth when the network is providing 1–10% of the worldʼs storage. [2]

And this update increases the baseline initial value, which means that it takes longer for the network scale to reach the baseline; and decreased growth rate means that the interval between network baselines decreases. In general, this adjustment of economics has reduced the block rewards of miners as a whole, and the block rewards of the Filecoin network tend to be more dispersed over time, which provides longer-lasting incentives for the development of the network.

02. “Block reward vesting delay of 20 days is removed, rewards start vesting once they are mined.” [1]

In order to further avoid miners giving up storage at will, resulting in serious data loss and degradation of service quality, Filecoin requires miners to increase block reward pledges in addition to the initial pledge collateral, so as to fully punish miners who fail to complete the promised period of storage.

The block reward is a linear release with a short-term delay + a fixed period, and the initial parameter is set to be “20+180 days”.

This update removes the 20-day delay period, which means that miners can obtain the corresponding FIL according to the "180-day linear release" after mining the block reward.

03. “Decrease sector fault detection fee and termination fee to reduce operational risk impact for miners.” [2]

The Filecoin network requires storage miners to actively detect, report, and repair sector failures. For failures detected by the network without actively reporting, the system will charge a one-time sector fault detection fee as a penalty. The detection fee is initially set as a 5-day block reward of a specific sector.

Terminating the sector before the expiration either due to automatic fault detection (passive) or miner’s own decision (active), the miner shall be charged a sector termination fee. When the miner decides to breach the contract and stop mining, he has to pay the termination fee and leave. In the case of failure termination, if a sector is in a failure state for too long (over 14 days), the chain will terminate the storage order and refund the user’s remaining order fee and punish the miner to pay the sector termination fee. The upper limit of the termination fee for each sector is initially set as the 90-day block reward that the sector will receive.

04 “Decrease minimum provider deal collateral to make paying deals more attractive.” [2]

In addition to the pledge collateral and the block reward collateral, the Filecoin network requires storage miners to provide deal collateral as the minimum storage guarantee. If the deal is terminated early, the corresponding deal collateral will be slashed by the network. And miners can voluntarily increase the amount of deal collateral to show users their confidence in providing a higher level of more reliable storage services.

This update lowers the minimum deal collateral size, which means that miners' collateral requirements are reduced and paid orders are more attractive.

05 "Sector fault fee is actually a bit too low, but given that the network is in its early state, this fee is not increased at the moment."[2]

When a sector is in a fault state, the Filecoin network requires miners to pay a fault fee per sector every day. If the sector is still faulty for more than two consecutive weeks, the sector will be terminated (miners need to pay termination fees). The initial value of the sector failure fee is a block reward of 2.14 days.

In this update, the official believes that the initial failure fee is low and that the fee is not enough to incentivize miners to detect and repair sector failures in a timely manner and provide high-level and reliable storage services. However, considering the early days of the network, the fee will not be increased temporarily.

That’s all about the update.

As we are approaching the end of the 3–week Space Race and hundreds of miners around the world have participated in this race. At present, 6Block has 21 clusters, contributing 20.64 PiB of total storage, accounting for approximately 14.2% of the total network computing power, and is in a leading position in core indicators. You can follow us at https://twitter.com/6block2. And also don’t forget to check Filfox.info, the best Filecoin chain explorer for the latest update about the Space Race. You can also follow Filfxo.info’s twitter account at https://twitter.com/Filfox_info.

We will also continue to pay attention to network development, continuously optimize mining solutions, and share our research results with community partners.

Happy Mining!

[1] https://filecoinproject.slack.com/archives/CR98WERRN/p1599494533034900

[2] https://filecoin.io/2020-engineering-filecoins-economy-en.pdf Page 27