Filecoin is a decentralized storage network based on blockchain technology, and its token is called FIL. As the demand for data storage grows, the emergence of Filecoin provides us with a new storage solution. This article will delve into the characteristics, supply mechanism, and future development potential of the FIL token.
Basic concepts of Filecoin
The operation of the Filecoin network relies on the participation of storage providers who can choose to provide storage capacity to the network. By regularly generating cryptographic proofs, these storage providers can prove the storage capacity they provide and are rewarded with FIL tokens for doing so. FIL tokens are not only used to obtain storage services, but can also be used as collateral and for other transactions.
Supply and Distribution of FIL Tokens: Filecoin’s maximum supply is 2 billion tokens, of which 70% (or 1.4 billion) will be allocated to storage providers. While these numbers appear to be quite large, the actual supply in circulation is much lower due to the presence of multiple control mechanisms.
performance based casting
Although the storage provider has a maximum supply of 1.4 billion tokens, the actual amount minted depends on the growth rate of storage on the network. This means that the growth rate of the Filecoin network will directly affect the issuance of tokens. If the network grows slowly, only a small portion of the tokens will be minted. To reach maximum minting, the Filecoin network would need to reach 1YB (YByte) of storage capacity within 20 years, a goal that no human-made storage device has yet achieved.
Reserve Tokens: As the network grows, Filecoin also reserves 300 million tokens as incentives for future useful activities, such as retrieval mining. This mechanism allows users to quickly obtain data stored on Filecoin, further improving the utility of the network.
Burning Tokens: On the Filecoin network, as transactions proceed, a large number of FIL tokens will be burned. About 46,000 FIL are burned every day as transaction fees. This mechanism helps control the circulating supply of tokens and further enhances their value.
Lock tokens
Certain tokens are locked as collateral to ensure the security of the consensus, the reliability of the storage, and the contractual guarantees of the storage provider. These collaterals can be slashed for bad behavior, further contributing to the health of the network.
Filecoin’s circulating supply: The circulating supply of Filecoin can sometimes be found to vary on sites like CoinMarketCap. This is because these sites use a different definition of circulating supply than the protocol itself, which typically excludes tokens held by the likes of foundations and Protocol Labs.
Simulation of circulation supply
Simulation tools allow you to make assumptions and predictions about the Filecoin network’s growth, verified transactions, and network fees. These simulations should not be viewed as predictions, but rather as a possible view of the future. Here are some parameters that will affect circulation:
Estimated Monthly Network Growth (%): Estimated growth in raw byte storage capacity of the network.
Estimated Verified Storage % (%): The estimated average percentage of total storage capacity to store verified transactions during the forecast period.
Estimated Monthly Consumption (M-FIL): The estimated amount of FIL destroyed each month during the forecast period.
The current default parameters are as follows:
Projected monthly network growth (%) = 3
Estimated verification storage percentage (%) = 60
Estimated monthly consumption (M-FIL) = 1
Based on these parameters, the net FIL circulating supply is expected to reach only about 450 million in 10 years. And in 20 years, the circulating supply curve for FIL is likely to trend as shown.
in conclusion
As an innovative decentralized storage solution, Filecoin has good market potential and development prospects. Through an in-depth analysis of the FIL token, we can see the complexity of its supply mechanism and its impact on the market. As the Filecoin ecosystem further develops, more applications and opportunities will emerge in the future.