filecoin

Less than a week after the mainnet launch, the Filecoin team saw massive unrest among the community members. Juan Benet, the creator of the blockchain-based data storage platform, finally broke his silence as he announced the Filecoin Liftoff Week. He denied allegations of a miner strike and said,

(7.0) I was asked about a supposed “Miner Strike” — This is nonsense. There is no strike. Miners are proving their storage just fine. There’s been no power loss out of the ordinary in the network. Miners are following the protocol, and making a TON of money doing so. pic.twitter.com/3U9MN0JGm9

— Juan Benet (@juanbenet) October 19, 2020

Further addressing the supposed network problems faced by unhappy miners, Benet revealed that the miners were simply producing blocks at a slower rate due to the fact that the network was no longer subsidizing their pledge and fee costs. He also explained that fees cost real money now, and miners need to match growth rate to token flow.

His tweet read,

“The Mining Community is amazing. There’s thousands of people around the world mining Filecoin. There are some bad groups, who try to cause problems for their gain. And there’s definitely groups who try to take advantage of or abuse mechanisms. — but overall these are a minority. Hopefully this will stay that way.”

The Filecoin team also published a report wherein they clarified about the platform’s workings with an undisclosed partner to offer small loans to miners that needed support.

The entrepreneur also went on to show data claiming that blocks were still being produced on the network with the top miner bringing in $352,000 over the last 24 hours. The top 50 miners reportedly earned $3.7 million in rewards.

TWJ had previously reported that the alleged conflicting economic model led to a dispute over the miners in the Filecoin ecosystem. Julien Bouteloup, the Founder of the DeFi investment firm Stake Capital, also said that it is impossible for the Filecoin miners to economically participate in the ecosystem at the current valuation.

FIL Token’s Price Stablize

Filecoin ‘s governance token, FIL, was making headlines shortly after its meteoric rise following the announcement of various crypto exchanges such as Binance, Kraken, Gemini, among others. But what attracted the initial bad press was a sharp price slump.

However, FIL appears to have stabilized at the current level as the decline halted and the token noted a mild uptick. According to CoinMarketCap, FIL was being traded at $31.98 at the time of writing.

Miners complained about Filecoin’s mining economic model even before the mainnet was launched. Despite the fact that the normal functioning of the network hasn’t affected, the existing economic model for the miners have triggered a dispute in the Filecoin community.

According to the latest reports, five prominent miners have switched off their machines to protest the project’s economic model which they claim to be “unfair” since it requires a massive amount of FIL tokens to start mining operations.

Conflicting Economic Model

Filecoin network was essentially built to be a next-generation marketplace for the purpose of data storage and retrieval, a space that has been mostly dominated by industry behemoths such as Amazon, Microsoft, and Google. An edge that Filecoin has, in this case, is that it provides its users with data storage and transmission services in a decentralized mechanism through various servers offered by its miners with commodity hardware.

Here’s the catch. Filecoin miners need to stake a large amount of its native FIL tokens as ‘Initial Pledge Collateral to initiate their mining operations. Despite the fact that the platform utilizes the collateral as leverage, as it turns out the miners do not have the required tokens in the first place.

And none of the other ways to get more FIL tokens are viable. On a similar note, Julien Bouteloup, the Founder of the DeFi investment firm Stake Capital, said it appears impossible for the Filecoin miners to economically participate in the ecosystem at the current valuation.

Nico Deva, a Twitter user, claimed,

“Miners provided huge support to the Filecoin team during the dev years, and now are rekt. The much anticipated Filecoin launch has turned to a shit show and disappointment. Mood is gloomy around here.”

FIL’s Price Fluctuation

FIL token had a tough rise as well. The coin jumped to saw an increase if over 250% even before the mainnet went live. This could be attributed to the leading cryptocurrency exchanges such as Binance, Kraken, Gemini among others flocking in to list the token of the popular platform.

However, shortly after the launch, FIL fell from more than $110 to the press time price of $32.27 slashing over 70% in a span of just three days.