Filecoin’s network baseline has crossed the baseline target! This is an important milestone, marking the transition of the network on the road of sustainable development. According to the official announcement time, this happened at 05:00 UTC on April 2, 2021. At the end of the paper, the effective computing power of the whole network has reached 5.400 EIB.
The practical effect of this leap is that at present, the filecoin network is allocating the issued block rewards at full speed, because the baseline Mint is now saturated! And this event marks the periodic change of the network.
Moreover, this event also marks a phase change in the encryption economics of the system, because the filecoin network has transformed from the goal of capacity-building to a chain that can be expanded in many aspects.
What is the filecoin network baseline and how does it change?
Filecoin has a unique blockchain economic model. It mints money through a mixture of simple minting, a standard index widely used in cryptocurrency ecosystem, and innovative baseline minting. The latter uses a goal of mobility and growth, and allocates rewards according to the existing network capacity.
One is independent of network capacity, the other is constantly adapting to the current reality, which makes the incentive mechanism of filecoin consistent in different situations, whether good or bad. In a good case, when the network runs as expected, with the baseline coinage, more opportunities for coining can be released more quickly, so that growth will be further rewarded. In contrast, when the system was subjected to unexpected shocks, such as sudden capacity constraints, simple coins began to operate. Provide reliable Mint support, enable participants to “withstand the storm”, resist and mitigate the impact of short-term fluctuations, and allow the system to rebound smoothly and effectively after the new storage goes online.
Filecoin block reward is divided into simple supply of 30% and baseline supply of 70%. When the whole network computing power reaches the network baseline, the block reward obtained by storage miners will be released to the maximum extent.
According to the network baseline of filecoin’s official initial value of 2.5eib, on the one hand, this parameter will increase by 100% every year; on the other hand, the network baseline will also increase dynamically with the increase of block height. Let’s make a simple analogy. Just like the story of “tortoise and rabbit race”, the tortoise (network baseline) was originally in the position of 2.5eib, Rabbit (computing power of the whole network) is catching up faster than tortoise. With the increase of block height (as time goes on), in the process of shortening the distance between the two sides, blockchain rewards are also increasing. When the computing power of the whole network reaches the network baseline, blockchain rewards will be released to the maximum extent.
However, it is important to note that this absolute share of reward changes over time. In fact, due to the unique dynamics of the baseline coinage, the share allocated by simple coinage will always be higher than that allocated by the baseline coinage.
Another point worth noting is that the current allocation figures themselves may also change, because there is a reserve of 300 million fils that can be used in the future, depending on the decisions made by the community through filecoin improvement proposals (FIPS).
In the chart below, we can observe the cumulative rewards of filecoin, in daily units, and observe the two Mint functions.
Why is baseline crossing significant
In the first “capacity building” stage (see the figure below), the focus of filecoin ecology is to establish a sound ecosystem, which requires the application of scientific “first principle” of filecoin encryption economy, so as to ensure that the problem of “capacity demand only when capacity is provided” can be effectively solved by stimulating the rapid provision of storage. When filecoin is provided to get enough storage, storage providers and customers participate in the whole ecosystem and gain value from the ecosystem.
In the second stage, the incentive measures of encryption economy begin to shift to more medium-term view, and adopt more forward-looking and efficiency maximization view. The “turning point” of storage supply is when the storage power of filecoin exceeds the network base. At present, this has achieved a phased change.
This new stage operates in a completely different dynamic from the previous one. However, from the baseline crossing, network rules began to focus on more effective certification and retrieval actions of operators. This means that the incentive measures have shifted from extensive capacity construction to comprehensive, sustainable capacity that meets the requirements of both supply and demand.
The final transition from the second phase in Figure 2 above to the third phase requires the participation of all filecoin participants to make the network more and more useful. At this stage, filecoin will become a diversified and useful network of goods and services, allowing huge community participants to consolidate the productivity and effectiveness of the network in the long run.
Why introduce baseline mechanism
The official introduction of baseline mechanism by filecoin is to encourage the consistency of storage landing and long-term storage investment, instead of the token output mode based on time-lapse; At the same time, when the growth rate of effective computing power in the network exceeds the growth rate of the baseline, the reward of each block will also increase.
In this way, the structure of the original exponential decay model can be retained, and it can be improved at the initial time of network start-up. Once the network reaches the baseline, it will issue the same cumulative block reward as the simple exponential decay model, but if the network does not reach the pre established threshold, it will delay part of the block reward.
The essence of obtaining the filecoin pass is the lease of storage services. If the amount of money produced in the early stage of the project is too much and the interest proportion of early node participants is too high, it will inevitably lead to excessive network garbage data and waste of network storage space. Based on this assumption, when the demand side of effective data storage swarms in, if the income of Tongzheng is not as good as the era of junk data, the storage space is full of junk data, and the real storage demand can not be solved, it is obviously not conducive to the sustainable development of filecoin network, and it is contrary to the original intention of the project.
Therefore, a baseline mechanism is set up in the filecoin network to adjust the network coin curve, so as to link the coin rate of the project with the total power of the whole network storage. In this way, we can not only control the coinage speed in the period of less demand for effective data storage (early project), but also significantly improve the enthusiasm of nodes in the period of network prosperity.
At present, filecoin has gone through a phased transformation, and has crossed its network baseline. Now, the block rewards that can be used for construction capacity are being allocated at full speed! This marks the continuous improvement in the efficiency of providing storage, while increasing the incentive to participate in the trading market.
And as time goes on, with the participation of miners and the continuous development of IPFs / filecoin technology and ecology, it can be predicted that the effective computing power of the whole network will be higher and higher, and when the effective computing power of the whole network is greater than the baseline, the output of filecoin network will be higher than the release of the total supply curve, and the miners of the whole network will get more rewards.