Filecoin’s design is relatively complex, and its negative feedback design is reflected in many aspects.
Original title: “Filecoin’s control loop and feedback mechanism”
Written by: Hu Feitong
Any stable operating system has some control loops, and some feedback mechanisms are used to ensure the effective operation of the system. The decentralized nature of blockchain projects requires more consideration of feedback mechanisms in the design, which is cashed out in the design of every blockchain. Filecoin’s economic model is relatively complex, and its feedback mechanism design is also reflected in many aspects, especially in the design of its economic model.
Feedback mechanisms are everywhere
From solar street lights to social economic operation, feedback and control are everywhere. Some are specially designed, while others are naturally adjusted. These feedback mechanisms can play a role in correcting deviations in the control system and keep the system running effectively in the set direction.
Once a blockchain project is released, it is like a rocket lifted off, and it is difficult to adjust it frequently. Its feedback mechanism must be built in it, including its consensus mechanism, economic model, network protocol and many other aspects, all need to design automatic perception and adjustment loops. These designs are everywhere.
For a simple example, the difficulty adjustment of Bitcoin is a feedback mechanism that links the block generation time to the difficulty, so as to ensure that no matter the network computing power increases or decreases, the block generation time is about 10 minutes. At the same time, according to the adjustment of difficulty, the income of each miner can also be adjusted, thereby providing an incentive for miners to participate in maintaining the network. The artificial setting of Ethereum’s Gas rate is also an adjustment mechanism, and this adjustment mechanism takes into account the factors of the participants. Network congestion leads to an increase in Gas fees, which leads to a decrease in the number of messages and ultimately to alleviation of congestion.
All these feedbacks, according to control theory, are negative feedbacks that keep the system stable. Negative feedback, also known as balancing feedback, is very important in blockchain.
Filecoin’s design is relatively complex, and its negative feedback design is also reflected in many aspects.
Feedback design in Filecoin’s baseline release
In Filecoin’s original white paper, its Token release model is simply described as halving in 6 years, decaying release. This seems to solve the mutational deflation model of Bitcoin and other 6-year halvings. However, there is a major problem that most people think of, that is, the dividend of early entrants is much greater than that of late entrants, resulting in higher entrants threshold. Filecoin uses a baseline release model to adjust to a certain extent according to the size of participants. Many feedback ideas are reflected in the design, such as:
The released quota is related to the computing power of the entire network. In the early stage of network operation, as time goes by, the number of participants and the release also increase, so as to ensure that the profits of the participants are basically balanced. The current operation of the Filecoin network is basically the same. Due to the setting and adjustment of the baseline reward, the single-T revenue will be basically balanced for a long time.
The baseline release itself has been improved many times during the design process. The current baseline release uses the alpha-beta-filter smoothing algorithm, and the calculated network time only increases. This can play a role in ensuring the basic rights and interests of network maintainers (miners). When large miners withdraw, miners who continue to maintain the network can be rewarded, thereby increasing the enthusiasm for continuing to maintain the network
Another aspect of the baseline release is that it has an expectation of the network computing power. When the computing power exceeds the expectation, the baseline reward will no longer increase, so as to ensure that the reward will not be excessive. When the network computing power exceeds the designed baseline, the rewards for miners may mainly come from the increase in currency prices.
The design of the baseline currently seems to have played a very good role in the initial operation of the network, and it takes time to verify whether the baseline (that is, the computing power target) of its design is reasonable. In addition to a good feedback system, there are two points to mention here:
- According to the current baseline design: the initial value is 2.5EiB, which will increase by 100% every year, and the network needs a relatively long time to reach the limit. Therefore, the cycle of FIL token release and halving must be greater than 6 years. Depends on catching up with the baseline;
- The setting of the baseline has a taste of planned economy. The setting of this value cannot be suitable for the long-term operation of the system. Therefore, the community should propose adjustment opinions based on the network operation and the growth of computing power, which can be reflected in the FIP.
Feedback mechanism in the Filecoin mortgage mechanism
Filecoin is the first blockchain project linked to practical applications and is the storage infrastructure of Web3.0. Its stable operation is crucial, and the guarantee for this stable operation comes from mortgages. The design of its mortgage model is also an important part of its economic model. The feedback mechanism mainly includes:
Mortgage is directly linked to income: the higher the income, the greater the mortgage. This is a feedback system, which is in line with the principle that the more input, the more benefit. To put it simply, the 20-day expected income is directly used for mortgage, which is the basic part of mortgage.
Mortgage is linked to liquidity: This is a negative feedback system that inhibits liquidity. When liquidity increases, mortgages increase accordingly. In this way, liquidity can be suppressed, thereby protecting market stability. This part is mortgage Additional part of
Of course, the most important thing is that punishment is linked to service quality. Service quality becomes worse and punishment becomes larger, thereby promoting miners to improve service quality. This is also closely related to mortgages.
For miners, with this design of mortgage mechanism and lock-up mechanism, the cost paid by miners is no longer just equipment costs and maintenance costs, but also a large amount of capital costs. The cost may be higher than expected, which may raise the threshold for participants, but at the same time, as the cost becomes higher, the support for the value of the network will also become greater. This is done by the feedback system under the chain.
Feedback mechanism in Filecoin message processing
For the blockchain, processing power is an issue that has to be considered. After all, it is a decentralized system, and all nodes need to be synchronized and verified. Too many messages will cause backlogs and congestion. Filecoin borrowed from Ethereum’s Gas mechanism, but at the same time went a step further and was the first to realize the design of EIP1559, that is, the combination of automatic adjustment and manual adjustment of the gas rate.
This feedback system will automatically and quickly increase the Gas rate when messages are congested, which will cause a large number of messages to be unable to be uploaded or delayed, which may further cause miners to reduce message sending to protect the loss of computing power, thereby alleviating congestion and giving negative feedback The role of.
The off-chain negative feedback loop brought by Filecoin mortgage
In fact, not only in Filecoin’s code, but Filecoin’s design is also reflected in the feedback loop system of off-chain participants.
Those who are interested may find that Filecoin has been online for less than a month, and its circulation is not large and attractive, but the currency price is relatively stable, which meets the needs of Filecoin and also meets the design goals. This is also the benefit of PoS. This kind of stability is strongly related to Filecoin’s mortgage mechanism. This is because the growth of computing power has a strong correlation with the price of the currency, which can form a feedback loop.
Simply put, many miners have requirements for increasing computing power, but to mortgage, this mortgage currency may need to be purchased. Then, we have the following loop generation:
Decrease in currency price –> Low cost of computing power growth –> Buy more to increase computing power –> Increase in currency price
The price of the currency rises –> the increase in computing power is costly –> Zengzheng’s computing power is extended and the demand decreases –> the price of the currency falls
If you look carefully, Filecoin has also designed negative feedback in many places, such as block packaging fines, Filecoin Plus’s off-chain governance methods, and so on. The design of Filecoin is more complicated, and there may be many points worthy of discussion and discussion. For these parts, everyone is welcome to make suggestions through FIP, and reach consensus through community discussions, so that future versions can be improved.
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