Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
Inside Blockstack, we are considering the system design of the "encrypted economy", especially when we are about to release our own mining system, and when we are about to sell Blockstack network tokens.
The networks we have studied most extensively include Bitcoin, Ethereum, Zcash, and Tezos because they are truly independent systems with differentiated factors, strong teams, and promising market opportunities.
In addition to these four (interstellar community: the original text is "three", should be a clerical error) projects, Filecoin is also particularly interesting to us, because we see that it also has the above characteristics. With the sale of Filecoin, I think this is a good opportunity for us to share some analysis on system economics and its comparison with Bitcoin, Ethereum, Zcash and Tezos.
supply
The supply of Filecoin consists of four components: supply of miners (interstellar community: here refers to the proceeds of mining), supply of protocol laboratory, supply of Filecoin Foundation and supply of sales.
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
The supply of miners follows an exponential decay curve with a half-life of 6 years.
We will discuss it further later.
The protocol laboratory supply and the Filecoin Foundation supply will be linearly released within a 6-year period.
At the same time, sales and supply have different supply cycles (interstellar community: here refers to the lock-in period). Most of the supply cycle is 6 months, while the permitted supply cycle for consultant status is one, two or three years. As far as this graph is concerned, I averaged the supply period of this part to one year.
The total number of Filecoin will be 2 billion.
Proportion of supply after N years
As mentioned earlier, the supply plan of Filecoin miners follows an exponential decay curve with a half-life of 6 years. This is similar to the Bitcoin supply plan, but there are two important differences.
First, Filecoin has a half-life of 6 years, while Bitcoin has a half-life of 4 years. Second, although Bitcoin's exponential decay is sampled every 4 years, Filecoin is sampled every month, so that the rate of mining Bitcoin in each block decreases smoothly.
As you can see from the chart below, Filecoin is a smoother variant of Bitcoin's exponential decay curve. Please note that the annual sampling is used in this chart, so some of the smoothness of the Filecoin curve cannot be fully obtained.
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
Please note that although Filecoin, Bitcoin, and Zcash all define a finite number of tokens that exist forever, Ethereum does not set a clear upper limit on the total number of tokens. This means that we can't measure the ratio of a token to Ethereum through the "percentage of final supply" indicator. For this reason, we decided to use the "proportion of supply after N years".
Annual supply growth
The growth of Filecoin's annual supply is roughly similar to that of Bitcoin, with two exceptions. First, the curve is smoother because it is sampled monthly instead of every 4 years. Second, the increase in Filecoin supply includes the amount sold during the previous sale (interstellar community: here refers to the release of futures), as well as the part distributed to Protocol Labs and the Filecoin Foundation, which means that the actual release amount in the first year will be higher. .
You can see the annual supply growth in the chart below:
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
Please note that the supply of Ethereum after 3 years is forecast. In fact, the miner supply increased by approximately 11 million tokens in the first year and 7 million tokens in the second year. Due to the fork, this number has been declining and is rapidly approaching zero. When Ethereum changed to POS, Vitalik once stated that the annual inflation rate would be between 0.5% and 2.0%. I chose 2.0% here.
Founding team ownership
The ownership of the founding team of Filecoin (considering the amount of the Protocol Lab and the Filecoin Foundation here) is better than our known ownership of the founding team of Ethereum and Zcash, and the estimated founding team of Bitcoin (Satoshi Nakamoto’s holding) Ownership is slightly higher.
Whether this is a good thing or a bad thing depends on the judgment of the entire community. Someone might say that it is not good for the creation team and its associated entities to hold a large portion of the protocol tokens. On the other hand, if most of the protocol lab’s tokens are reserved for future financing rounds, this may be a very good thing for the entire system, because it will further capitalize the business and provide them with AWS Competition provides additional resources.
Over time, you can see the ownership of the founding team as shown below:
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
We can further subdivide the founding team's supply and see that 25% of this amount goes to the Filecoin Foundation and 75% goes to the Protocol Lab. This means that the Protocol Lab will supply 15% of the final total, and the Filecoin Foundation will supply 5% of the final total.
Token price
As a reward, based on the data of Bitcoin, Ethereum, and Zcash, the following is an analysis of Filecoin's price and its implications for network ownership.
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash and Tezos
Assuming that the price of Filecoin is US$2, of all Filecoin tokens generated in the next 20 years, purchasing 1/100 million of them will cost US$37.22.
At the same time, buying the same proportion of Zcash will cost $42.43. Similarly, to buy the same proportions of Bitcoin, Ethereum and Tezos, it would cost 684.92 US dollars, 345.31 US dollars and 3.18 US dollars, respectively.
This is a diagram that further illustrates the difference:
Filecoin Economics-How does it compare to Bitcoin, Ethereum, Zcash, and Tezos
in conclusion
The protocol laboratory team has learned a lot of experience from its predecessors and integrated it into the new protocol design.
The Chinese Protocol Lab adopted the exponential decay curve of Bitcoin and improved it. They created some interesting dynamics in the token sale. They are setting a new precedent with CoinList.
Connection: I participated in the Filecoin consultant sales, and I am a big fan of Juan and the Protocol Lab team. The above article only contains my personal analysis and does not contain investment advice. Information about Filecoin and Protocol Labs may be inaccurate and should not be the basis for any investment decision.
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