Filecoin (FIL) is an OG project that took the crypto industry by storm in 2017. Since then, it’s been building out a decentralized, dynamic market for shared cloud storage.
While you may not hear about $FIL coins trending very often (until recently that is) and you’ll likely not find a FIL army, a look behind the scenes provides a very different picture. It may remind you of the shovel sellers during the gold rush, whose long-term success far outweighed those digging for gold.
What is Filecoin (FIL)?
Filecoin is a decentralized data storage platform that allows users to monetize spare storage on their hard drive. Those wanting to store data on the decentralized cloud can do so at a fraction of the cost of centralized providers like AWS, Microsoft Azure, and Google Cloud.
By using a distributed, blockchain-based system built using the InterPlanetary File System (IPFS), Filecoin is able to solve several of the major challenges of using centralized cloud services:
- The risks of having one central point of failure (think website outages and censorship) is removed with a decentralized cloud service like Filecoin.
- The high costs of cloud storage are mitigated through an incentives structure that rewards data storage providers and FIL miners.
Filecoin is a decentralized alternative to Amazon Web Services (AWS), which makes up 33% of the cloud (followed by Microsoft Azure at 22% and Google Cloud at 9%).
Their vision is to “Democratize open knowledge to preserve humanity’s most important information.”
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- Juan Benet is the Founder of Filecoin and has been the Founder/CEO/Engineer at Protocol Labs since 2014. He holds a B.S. and M.S. in Computer Science from Stanford.
- Protocol Labs, which is building Filecoin (and other projects including IPFS), does not list team members. However, a recent video was uploaded to the Filecoin YouTube account featuring the lead developer of the Filecoin Virtual Machine (FVM), Raùl Kripalani.
- Sept. 7, 2017: Filecoin ICO Breaks Tezos’ Record
- Oct. 20, 2020: Filecoin Launches Decentralized AWS
- May 23, 2022: Lockheed Martin and Filecoin to Explore Hosting Nodes in Space
- Aug. 1, 2022: Filecoin Trends with Big Gains
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Does it have staying power?
Generally regarded as the #1 decentralized storage solution, Filecoin’s market cap of $2+ billion far outweighs the second biggest project, Airweave, which has a market cap of under $500 million.
A Messari report outlined Filecoin's recent growth:
- There are 7000+ developers working on Filecoin.
- Projects building on Filecoin grew 32% in Q2 2022
- Deals between cloud providers and clients grew by 128%
166 positions are listed through Protocol Labs, the builders of Filecoin. 47 are engineering roles.
Interestingly, Filecoin’s overall social following totals about 215,000, much lower than other major cryptocurrency platforms. This hints at 100% organic engagement and/or a stronger focus on building product over building engagement.
Ever been hacked?
In 2021, a double spend of FIL worth millions was reported to have happened on Binance. The double spend (which was more of a “double deposit” and was off-chain) was able to occur on an exchange due to Filecoin’s faulty remote procedure call (RPC) code. As a result, Filecoin deposits were halted on several exchanges, including Binance (confirmed) and a few others (unconfirmed) until a patch was deployed.
The Filecoin ICO that began on October 15th of 2017 was one to remember. After already raising $52 million from presale investors like Sequoia and Andreesen Horowitz, the public ICO raked in ~$200 million from 2100 accredited investors, creating a new ICO record by beating Tezos’ total fund raise of $232 million from a few months prior.
During the ICO, Filecoin experienced a few glitches, including a problem with the ticker that tracked the sale. It ultimately had to be reset several times. After only 30 minutes, the sale was halted, with users also having issues accessing the platform. Eventually, the issues were resolved and the ICO ran for 4 weeks.
What is Filecoin’s FIL Coin?
The FIL cryptocurrency is the native token of the Filecoin Network and the monetary tool for paying for storage, data retrieval, transaction fees, and provider and miner rewards.
Filecoin (FIL) has a fixed max supply of 2 billion tokens, which releases over decades.
Token distribution & Vesting
70% - Filecoin Miners/Block Rewards: Asymptotic vesting (like Bitcoin)
15% - Protocol Labs: Linear vesting, 6 years*
10% - Filecoin Foundation: Linear vesting, 6 years*
5% - Investors: Linear vesting, 6-month minimum for presale, 1-year minimum for public sale, issued per block*
*All of these tokens were issued at the Genesis block with hard-coded vesting. Investors had a choice of vesting schedules. The longer the term, the bigger the discount, up to 20% for 3 years.
FIL Token utility
Because of the dynamics of users sharing their computing power and clients paying for data storage, Filecoin has set an interesting example of decentralized supply and demand forces.
Filecoin’s main utilities include:
- Enables users to access the network.
- Rewards data storage providers, miners, data distributors, and users that run contracts.
- Allows users to purchase data storage
Filecoin raised a total of $258.2 million over 6 rounds, including:
- ICO private sale ($52 million, 16 investors including Andreesen Horowitz)
- ICO sale to accredited investors ($205.8 million, 2100 investors)
A huge part of the ethos around Filecoin is being as decentralized as possible. While their public token offering may not have been a highly distributed event (open only to accredited investors), the entire premise of the project is to build a decentralized data storage cloud that rewards its ecosystem and provides an alternative to centralized cloud providers like AWS.
According to a Filecoin block explorer, there are about 4000 active FIL miners.
Filecoin introduced EIP-1559 (which is an Ethereum standard) to remove FIL from the supply through burning. Overall, the more transactions on the network, the more tokens will be burned.
You've heard of EIP-1559 on Ethereum. But did you know it's live on Filecoin?https://t.co/1GsutzAX5u— Filecoin (@Filecoin) January 16, 2021
Multiple audits have been conducted. You can find the reports here.
Other than CEO/Founder Juan Benet, the teams at Filecoin and Protocol Labs are somewhat non-transparant. Neither entities mention their team members on their website. LinkedIn shows 64 profiles of people who list their employment at Filecoin, and 284 for Protocol Labs.
Next up for Filecoin
There are three main areas of development for Filecoin in 2022, as stated in a roadmap video:
- Capacity + data onboarding
- Data retrievability
- Programmability and computation
Extra extra, read all about it!🗞️— Filecoin (@Filecoin) August 3, 2022
Filecoin News 48 is here, want a peek of what's inside? 👇
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🗣️ Filecoin docs now available in Spanish
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Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.