A decentralized storage network revealed by Protocol Labs, Filecoin, is off to a new start after a strike by miners only one day after its highly anticipated mainnet launch earlier on 15th Oct.
Five of its leading miners turned off their machines to protest the project’s “unfair” economic model that needs a big amount of FIL tokens to start out mining operations, consistent with a report by 8btc.com.
Zhihu Cloud, one of top five Filecoin miners, has over 8,000 InterPlanetary file systems [IPFS] mining machines yet only 276 mining machines were running on Saturday, while the other four, including mining firm 1475, generated even less storage mining power, the report added.
The project aims to offer its users with decentralized data storage and transmission services via servers offered by its miners with commodity hardware. However, the miners are required to stake an outsized amount of FIL tokens as “Initial Pledged Collateral” to start out their mining operations.
While Filecoin uses the collateral as leverage to make sure miners fully deliver their services consistent with users’ contracts, it creates a situation where the miners don’t have enough FIL tokens to start with.
There are two ways to urge more tokens but neither of them is desirable. Miners could earn token rewards and put them down as collateral but Filecoin releases the rewards over the course of six months after building a block. As a result, the miners receive only a few tokens at the start.
Miners could also buy FIL tokens from exchanges. However, that would be a really costly and risky move since many believe FIL is currently overvalued and there could be a hefty transaction fee.
FIL token’s price fluctuated wildly on its opening day, soaring to $100 USD prior to settling right down to almost $40 USD with many investors arguing it had been still grossly overpriced.
“All the miners are off since the mainnet went life, this is often not some kind of protest but we’ve to shut them down because we actually don’t have the tokens as collateral to mine,” ST Cloud CEO Chuhang Lai added within the report.
In response to miner’s concerns, Filecoin has decided to release 25% token rewards beforehand once a miner builds a block on the blockchain. “The revision could permit 80% of our mining capacity,” Xiaoming Zhan, CEO at IPSFMain revealed.
Miners are complaining about Filecoin’s mining economic model long before the mainnet launch and suggested & they ought to fork the project.
China has been one of the most well-liked markets for Filecoin partially due to its very unique mining mechanism since the project raised over $200 Mln in its ICO 3-years ago.
China-based cryptocurrency mining firms have purchased tens of many dollars of IPFS mining machines that are designed to supply large data storage and computing power to “seal” and transmit the info.