Filecoin, which was threatened with forking by miners in the past days, is now facing another crisis. The top 5 miners of the project shut down their machines due to the unfairness of the economic model that required significant FIL tokens to start operations.
Filecoin, a decentralized storage network created by Protocol Labs, was hit hard by miners’ protests just one day after the highly anticipated mainnet launch on October 15th.
According to CoinDesk, it is stated that the top 5 miners of the project have shut down their machines due to the unfairness of the economic model that requires significant FIL tokens to start operations.
Only 276 out of 8 thousand devices work
Of the top 5 Filecoin miners, Zhihu Cloud has more than 8,000 InterPlanetary File System (IPFS) mining machines, and only 276 of these devices were running on Saturday. It was stated that other 4 companies, including the well-known mining company named 1475, produced less storage mining power than this figure.
The project provides decentralized data storage and transition services to its users through the commodity hardware servers provided by the miners. However, miners need to stake large amounts of FIL tokens as “first collateral”, that is, lock them into the system to start their operations.
Filecoin uses this system as a collateral for miners to fully fulfill the commitments in user contracts, but it also creates a situation where miners do not have enough FIL tokens to start the operation.
Here, there are two ways that may not be preferred for miners. Miners can deposit their earned FIL token rewards as collateral, but initially they will get very little rewards as Filecoin distributes the rewards 6 months after a block is created.
FIL tokens cannot be purchased due to high cost
Another way that miners may prefer is to purchase FIL tokens from exchanges. However, this is both an expensive and a risky way for miners who think that the FIL token is already worth more than it should be. The cost of transaction fees will also be a separate expense.
On the inception day, the price of the FIL token increased to $ 100, but soon dropped to $ 40. The token is currently traded for around $ 30.
Chuhang Lai, CEO of ST Cloud, said:
“After the main network was launched, the miners’ machines were shut down. This is not actually a protest. However, as we do not have sufficient FIL coverage for mining, we have to shut down the machines ”
Due to miners’ concerns, Filecoin decided to give up 25 percent of the token rewards in advance whenever a block is generated in the blockchain. “Such a change would run 80 percent of our mining capacity,” said Xiaoming Zhan, CEO of IPSFMain.
They wanted Filecoin to fork
Some time before the launch of the mainnet, miners had reacted harshly about Filecoin’s economic model and suggested that the project be forked.
The Chinese market has become one of the hottest markets for Filecoin due to the project’s unique mining economy. Filecoin raised more than $ 200 million in the ICO craze 3 years ago.
Chinese cryptocurrency mining companies are also known to purchase tens of millions of dollars of IPFS mining machines designed to provide computing power to receive and transmit data.