Filecoin, a decentralized storage network launched by Protocol Labs, got off to a rough start after a miners' strike that started just one day after its long-awaited mainnet launch on October 15.
According to a report by 8btc.com, five of its largest miners shut down their machines in protest against the project's “unfair” economic model, which requires a significant amount of FIL tokens to start mining operations.
Bad economic conditions for Filecoin miners
The project aims to provide its users with decentralized data storage and transmission services through servers offered by its miners with basic hardware. However, miners are required to put a large number of FIL tokens into play as "Initial Pledge Collateral" to start their mining operations.
Although Filecoin uses collateral as leverage to ensure that miners fully provide their services based on user contracts, this creates a situation where miners find themselves not having enough FIL tokens to begin with.
There are two ways to get more tokens, but neither is desirable. Miners could earn symbolic rewards and block them as collateral, but Filecoin releases the rewards within six months of uploading a block.
As a result, miners receive very few tokens at first. Or miners could buy FIL tokens from exchanges. But this could be a very expensive and risky move as many believe FIL is currently overvalued and there may be a hefty transaction fee.
The price of the FIL token rocketed on its opening day, climbing to $ 100 before stabilizing at nearly $ 40 with many Investors who claimed it was still grossly overpriced.
Filecoin's restorative proposal
"All the mining machines have been shut down since the mainnet was released, this is not some kind of protest, but we have to shut them down because we don't really have the tokens for the guarantee," said Chuhang Lai, CEO of ST Cloud. .
In response to the miner's concerns, Filecoin decided to release 25% token rewards early once a miner loads a block onto the blockchain. “The overhaul could allow for 80% of our mining capacity,” said Xiaoming Zhan, CEO of IPSFMain.
Miners complained about Filecoin's mining business model long before the mainnet launch and suggested that the project should have been forked. China has been one of the hottest markets for Filecoin.
Chinese cryptocurrency mining companies have purchased tens of millions of dollars of IPFS mining machines designed to provide large data storage capacities and computing power to "seal" and transmit data.
