When Filecoin fees are high, emerging projects like Filecash with higher short-term mining revenue may become a safe haven for miners.
Written by: Luff
With the vigorous development of DeFi, the urgency of Ethereum’s expansion has become increasingly prominent. Coincidentally, two months after the launch of the leading distributed storage track Filecoin, it also fell into a performance dilemma, and network handling fees continued to rise. While developers and researchers are focusing on scalability, miners are facing a more severe dilemma-it is difficult to bear the processing fees of increased computing power. At this time, some miners who are more concerned about short-term gains have set their sights on emerging mining projects such as Filecash.
The new dilemma of Filecoin miners
When Filecoin was launched, the miners did not wait for the win-win situation that everyone was happy with, but instead got stuck in the mining process.
First of all, in the initial stage of the network startup, miners are extremely short of collateral coins needed to encapsulate computing power.
Filecoin wants to build a continuous and stable storage market. In order to prevent miners from leaving midway and affecting users’ experience, Filecoin has designed a strict mortgage and penalty mechanism to restrict miners to provide stable storage services. The focus of the debate lies in the low circulation of tokens in the early days of the network. Miners buy or borrow collateral from the market to increase their computing power, and face high capital costs and market risks. Therefore, in the early days of Filecoin’s launch, there was a slow growth in computing power. Fortunately, the circulation of tokens gradually increased, and the pressure of miners from mortgage coins was eased.
However, one wave has not settled, another wave has risen. The accelerated growth of computing power means that the network needs to process more transaction messages. Recently, the Filecoin network processes more than one million messages per day. Affected by this, the gas price has soared, and the basic rate has risen from 100attoFIL at the initial launch to 5 nanoFIL today.
Filecoin basic fee trend in the past 30 days, data source: filfox
With soaring fees, the miners who send the most messages on the network are the first to bear the brunt. May wish to take the data from the 22:30 time node on December 16 to estimate how much the Filecoin miners will bear.
The following data comes from filfox :
- BaseFee: 4.225nanoFIL
- ProveCommitSector message payment fee 0.2159FIL
- PreCommitSector message payment fee is about 0.0785 FIL
- SubmitWindowedPoSt message handling fee consumes 1.5260 FIL / Partition
Assume that the miner has an effective power of 1 P, and the daily increase in computing power is 100T. The number of PreCommitSector and ProveCommitSector messages that need to be sent for new computing power is (Note: PreCommitSector and ProveCommitSector messages need to be sent once for each sector encapsulated. The sector size is 32G.)
100*1024/32 = 3200
Then the fee to be paid is approximately:
3200 * (0.2159+0.0785) = 942.08FIL
In addition, if you want to maintain an effective computing power of 10 P, the number of SubmitWindowedPoSt messages that need to be sent within one day is
10 * 1024 * 1024/32 / 2349 ～= 139
Approximately need to pay a handling fee:
13.9 * 1.526 ～= 213 FIL
Adding the two together, it is not difficult to conclude that miners need to consume about 1155 FIL per day, or about 33,000 US dollars. Among them, the handling fee for new computing power accounts for the vast majority, and the economic benefits generated in the short term are relatively low. Therefore, some miners have temporarily suspended computing power packaging.
From the 24-hour increase in computing power of the top miners in computing power, it can be seen that some miners have suspended computing power packaging. Source: filfox
Suspending the growth of computing power means compressing the long-term earnings of miners. Is there any solution?
Expansion is the most effective way, but it is obviously not realistic in the short term. The current countermeasure for miners in practice is to “shift the peak”, encapsulate the computing power when the gas fee drops to an acceptable range, and suspend it when the gas fee rises. In addition, the new FIP8 proposal proposes a way to merge PreCommitSector messages to reduce gas consumption.
In addition, some miners began to pay attention to the Filecoin same track project in order to obtain higher returns. One of these is Filecash, Filecoin’s first fork project.
What are the advantages of Filecash mining?
As a rising star on the distributed storage track, how to get a place in the Filecoin market is an important challenge that Filecash must face.
Lower barriers to participation
Filecash’s approach is to lower the barriers to participation of miners in terms of technical and economic model design. Specifically in:
Technical aspects
- Compatible with idle capacity: upgrade the SHA256 algorithm to SHA512 and reduce the sector size to be compatible with home computer equipment with Inter processors.
- Saving calculation cost: The 11-layer pc1 partial hash calculation in the Filecoin copy proof is adjusted to 5 layers, which greatly reduces the calculation cost while ensuring security.
- Proof of equity mechanism: Proof of equity has better network performance than Filecoin’s expected consensus, which means that Filecash does not have to worry about the high cost of handling fees due to network performance bottlenecks.
Economic model
- Reduce staking and punishment: Due to the low price of Filecash tokens, the mortgage cost of miners is also lower; in terms of the penalty mechanism, Filecash leaves miners with a longer repair cycle.
- Token distribution: Teams and investment institutions account for 15%, and the other 85% is allocated to miners and communities. The distribution mechanism is more community-based.
Filecash pays more attention to the interests of miners from the mechanism design. In actual mining, miners can also obtain more substantial profits.
Higher mining revenue
Here are some calculations to compare the mining revenue of Filecoin and Filecash.
Data sources: Filcash, filfox, gate.io, Binance
Actual revenue per T in 24 hours = token revenue * token price
Separate calculations show that Filecoin’s actual income per T is 4.3 US dollars, while Filecash’s income is 34.4 US dollars. Therefore, the current mining income of Filecash with the same computing power is 8 times that of Filecoin.
From the perspective of cost, the miners’ expenditures are mainly the pledge cost and handling fee cost of the new computing power.
- Fees: Due to the congestion of the Filecoin network, Filcash’s cheap fees are currently an important advantage.
- Pledge: Filecoin requires 8FIL (US$230) to encapsulate each T of computing power, and Filecash requires 32FIC (US$8).
Regardless of the cost of handling fees or the cost of pledge, Filecash is even better. Combining the above two income comparisons, it is not difficult to see that Filecash has more advantages than Filecoin mining. In an efficient market, we know that arbitrage will quickly wipe out the spread. But in fact, although the gap between Filecoin and Filecash mining revenue is narrowing, it still persists. What is the reason for this?
On the one hand, because Filecoin miners cannot freely enter and exit the network, they will face severe penalties if they exit halfway. On the other hand, because Filecoin is the leader of the distributed storage track, the risk of failure of the project itself is low, and distributed storage mining has an exit threshold, so miners participate in a long-term mining project, and short-term returns are high for miners. Generally speaking, higher risks are hidden.
But for new miners, there is no penalty mechanism. Short-term high-yield mining like Filecash may be a better choice.
