Filecoin, a decentralized storage network launched by Protocol Labs, is off to a rocky start after a miners’ strike just a day after its highly anticipated launch mainnet launch October 15.
Five of his biggest miners switch off their machines to protest the project’s “unfair” business model that requires a significant amount of FIL tokens to start mining operations, according to a report by 8btc.com.
Zhihu Cloud, one of the top five Filecoin miners, has more than 8,000 Interplanetary File System (IPFS) mining machines, but only 276 mining machines were running on Saturday, while the other four, including mining company 1475 , generated even less storage power, the report says.
The project aims to provide its users with decentralized data storage and transmission services through servers offered by its miners with commodity hardware. However, miners are required to stake a big number of FIL tokens as “initial pledge collateral” to start their mining operations.
Although Filecoin uses collateral as leverage to ensure that miners fully deliver their services in accordance with user contracts, it creates a situation where miners do not have enough FIL tokens to begin with.
There are two ways to get more tokens, but neither of them is desirable. Miners could earn token rewards and deposit them as collateral, but Filecoin releases the rewards within six months of building a block. As a result, miners receive very few tokens at first.
Miners could also buy FIL tokens from exchanges. However, this could be a very expensive and risky move, as many believe that FIL is currently overvalued and there could be high transaction fees.
The price of the FIL token fluctuated wildly on its opening day, climbing to $100 before stabilizing near $40 with many investors arguing it was still overpriced.
“All the miners are gone since the mainnet went live, it’s not some kind of protest but we have to shut them down because we really don’t have the tokens as collateral for mine,” the CEO said. by ST Cloud, Chuhang Lai. report.
In response to miner concerns, Filecoin decided to release 25% token rewards upfront once a miner builds a block on the blockchain. “The overhaul could activate 80% of our mining capacity,” said Xiaoming Zhan, CEO of IPSFMain.
The miners were to complain on Filecoin’s mining business model long before the mainnet launched and suggested they should fork the project.
China has been one of the hottest markets for Filecoin, in part due to its unique mining mechanism since the project raised over $200 million in its initial coin offering three years ago. .
Chinese crypto mining companies have bought tens of millions of dollars worth of IPFS mining machines designed to provide massive data storage and computing power to “seal” and transmit the data.