Filecoin Economic Model

Economic Model

Filecoinʼs token distribution is broken down as follows

- A maximum of 2,000,000,000 FIL will ever be created, referred to as FIL_BASE.

- Of the Filecoin genesis block allocation, 10% of FIL_BASE were allocated for fundraising.

- 7.5% were sold in the 2017 token sale.

- 2.5% remaining were allocated for ecosystem development and potential future fundraising.

- 15% of FIL_BASE were allocated to Protocol Labs (including 4.5% for the PL team & contributors).

- 5% of FIL_BASE were allocated to the Filecoin Foundation.

- The other 70% of all tokens were allocated to miners, as mining rewards, “for providing data storage service, maintaining the blockchain, distributing data, running contracts, and more.” There are multiple types of mining that these rewards will support over time; therefore, this allocation has been subdivided to cover different mining activities. A pie chart reflecting the FIL token allocation is shown in the following Figure.

Baseline Minting

Upto 770M FIL tokens, the majority of the Storage Mining Allocation, is minted based on the performance of the network. This creates a strong incentive for the network to collaborate to reach storage capacity targets that would ultimately store a large share of humanity’s most important information. The full release of these tokens would only occur if the Filecoin network reached a Yottabyte of storage capacity in under 20 years.

Simple Minting

330M FIL tokens are released on a 6-year half-life based on time. A 6-year half-life means that 97% of these tokens will be released in approximately 30 years’ time.

Mining Reserve: 300M FIL tokens are held back in reserve to incentivize future types of mining. It will be up to the community to decide how these tokens would be released and which sets of stakeholders should be incentivized.

Figure 1: Maximum and Minimum Minting from Storage Mining.

Figure 2: Network Storage Baseline for Max Baseline Minting on Log Scale.

As such, effective token minting from mining is in the hands of the community and falls anywhere between the two lines in Figure 1. Figure 2 provides a sense of how much the network needs to grow to hit maximum minting.

While the community may come together to update the baseline of the network, hitting the baseline requires competitive collaboration among all stakeholders, researchers, miners, developers, token holders, ecosystem partners, and storage clients.