Do you already know the platform that allows users who own a computer to be able to store files and get paid for it? If you have already read the post about what is Filecoin, you will know what I am talking about. If you haven’t yet, I’ll briefly summarize what Filecoin is, how its platform works and how to mine its FIL tokens.
Created by Protocol Labs, Filecoin is a decentralized storage network that aims to turn cloud storage into an algorithmic marketplace. It is a very novel and useful platform, as it allows its users to store files, turning their own computer into a kind of database and making them earn tokens as a reward.
The FIlecoin network is inspired by Web3, an advanced software development architecture that eliminates centralization. Filecoin can also provide file storage services to other decentralized platforms and enables transaction interaction with other blockchain platforms promoting interoperability.
Filecoin is complemented by IPFS, a protocol for storing and sharing data on the distributed web. That is, all Filecoin nodes are IPFS nodes and can connect to and obtain IPLD-formatted data from other IPFS nodes, using libp2p.
Both systems are free, open source and share many components.
The Filecoin ecosystem is composed of 3 types of entities:
The Filecoin network operates on agreements made between a customer and a miner for a storage ‘contract’.
When a client chooses a particular miner to store its files, basing the choice on its capacity, duration and price, it blocks sufficient funds in an associated wallet to cover the total cost of the contract. Once the miner has accepted the deal, the storage agreement is published.
The client then prepares the data for storage and transfers it to the miner. The miner, in turn, packs the data into a sector, seals it and starts sending proofs to the chain. Once the first confirmation has been received, the client is assured that the data has been stored correctly and the deal has officially begun. During the life of the deal, the miner sends continuous proofs to the chain. If a proof is missing or delayed, the miner is penalized.
FIL, is the native token of the Filecoin network, which is currently ranked #18 in market capitalization.
How we have advanced FIL is the incentive that Filecoin network users pay for their data to be stored by the miners. The more they pay, the more levels of security their files will have.
As a result, FIL is the reward miners earn for services rendered to the community.
The project raised $205 million in an initial coin offering (ICO) in 2017, although Filecoin’s mainnet launch date was delayed to block 148,888 and occurred in mid-October 2020.
Il Filecoin token has a maximum supply of 2,000,000,000,000 FIL and at the time of writing there are 67,352,494 FIL tokens in circulation.
Filecoin platform mining works differently from the classic mining that characterizes Bitcoin and other cryptocurrencies.
First of all, the Filecoin network has two consensus mechanisms: Proof-of-Replication (PoRep) and Proof-of-Spacetime (PoSt).
In Filecoin, miners instead of contributing computational power, contribute storage capacity to meet the needs of users/customers who want to store data. In other words, in the Filecoin ecosystem, miners work as “databases”.
In Filecoin they exist:
– Storage miners: earn FIL token rewards by storing data for clients and computing cryptographic proofs to verify storage over time. Unlike Bitcoin miners, the probability of earning the per-block reward and transaction fees depends on the amount of storage these miners contribute to the Filecoin network, not hashing power.
– Retrieval miners: earn FIL tokens and mining fees for a particular file, depending on the market value and size of that file. Their bandwidth and initial bid/ask time for deals determine the total number of deals they can make.
– Repair miners: will be implemented in the future.
Each Filecoin miner has an associated power value on the network that is proportional to the amount of space contributed and determines the chances of earning the right to mine a block each epoch.
In the Filecoin network miners get different types of rewards for contributing to the network.
The two main types of rewards are:
Storage fees are the fees regularly paid by customers after an agreement is reached, in exchange for data storage and for miners sending regular storage proofs to the chain. These fees are automatically deposited into a miner’s associated wallet as they perform their duties and are briefly blocked upon receipt.
PoSt (Proof-of-Spacetime) window checks are performed at 24-hour intervals across the network to ensure that miners continue to host their required sectors as normal. Each day that a miner is not idle, they will receive a fee for the failure committed.
By mining blocks, miners earn rewards and charge fees proportional to the amount of storage space contributed to the network.
The mechanism for obtaining the right to mine a new block is called WinningPoSt.
Unlike storage fees, these rewards do not come from an associated customer and it is the network that “prints” new FIL tokens as an inflationary measure and as an incentive for miners moving up the chain.
In addition to the block reward, each miner can collect the fees associated with each message included in the block.
To incentivize data storage, storage miners also have the opportunity to compete for special offers provided by verified customers who need the miner to guarantee significant data storage.
Recovery fees are paid incrementally through the payment channels as recovery agreements are fulfilled.
These are penalties that miners must pay if they do not provide reliability to the sector or decide to voluntarily leave the network. These include:
Consensus failure reduction: is a penalty incurred by miners when they commit consensus failures and when they have acted maliciously against the consensus of the network.
To mine Filecoin there are no minimum requirements although, following the guidelines on its official website, it is currently recommended that your computer has the following features:
Once you have a computer with these features, you will need to install the Filecoin network client, called Lotus, and you are ready to start storing data from other users and earn your FIL tokens.
If you already have your FIL tokens and need a wallet to store them in, I recommend a couple of FIL-compatible wallets:
Lotus: If you want to use the Lotus wallet you will only need to have a Lotus node installed and running on your computer.
Ledger Nano: Another good option is to store your FIL in a hardware wallet such as Ledger Nano. This will give you the security that an online wallet cannot give you when storing your cryptocurrencies.
Well, we have reached the end and I hope you are now ready to prepare your equipment and start mining your FIL tokens. Good luck!