Filecoin (FIL) is the native asset of the decentralised file storage and content distribution network, Filecoin. The peer-to-peer network provides economic incentives to ensure files are stored reliably over time using open source software.
The Filecoin protocol was created by Protocol Labs, which was founded by Juan Benet in 2014 and is the same company that is behind technologies like the InterPlanetary File System (IPFS) and Libp2p. On October 14, 2020, the Filecoin mainnet was launched and the FIL tokens were distributed.
Token holders can use FIL as a payments currency to send or receive on the Filecoin blockchain, which records these transactions and proofs from storage miners that they are storing their files correctly. The FIL token can also be used as payment for storing their files in a decentralised market.
The Filecoin network is an additional layer on top of the IPFS network. While IPFS enables the storage and transfer of verificable, content-addressed data in a peer-to-peer network, it cannot incentivise the storage of data for other people, which is what Filecoin aims to solve. The network is also integrated with Ethereum, allowing developers to access data on Ethereum’s blockchain and interact with its smart contracts.
Instead of contributing computational power as with Bitcoin or Ethereum, Filecoin miners contribute storage capacity in the form of disk space to be used for clients that want to store or retrieve data. To achieve this, Filecoin implements two types of proofs: Proof-of-Replication (which proves the miner has stored the number of copies of data it claims to hold) and Proof-of-Spacetime (which proves that a miner stored the data over the agreed time period).
The native FIL token can be earned by storage miners for storing data for clients and computing cryptographic proofs to verify storage across time. If a miner contributes more storage to the Filecoin network, they can increase their probability of earning the block reward and transaction fees. As a permissionless network, anyone can join and put their unused hard disk space to work, where the price of storage is set by the free market.
Another use case for FIL is as collateral by storage miners to provide a minimum level of guarantee of their service. The collateral is slashed in the event a deal with a customer goes bad. As well as storage miners, there also are retrieval miners that earn FIL by winning bids and mining fees for a particular file, which are determined by the market value of the file's size.
As a decentralised file sharing network, Filecoin promises to lower the price of data storage while also guaranteeing censorship resistance, since the network is not controlled by a single entity as in the case of Google Drive or other centralised alternatives.
An advisor pre-sale saw Filecoin raise $52 million from venture capital firms such as Andreessen Horowitz and Union Square Ventures. The advisor pre-sale sold each FIL token at $0.75, with discounts for extended vesting periods. Filecoin also raised $205.8 million in an Initial Coin Offering (ICO) that ended in September 2017, which was the largest ICO up until that point. The ICO was hosted by CoinList, a platform designed to hold SEC-compliant token offerings. The public ICO sale started at $1 per FIL, increasing by $1 for each additional $40 million invested with a cap at $6.
FIL has a fixed supply of 2 billion tokens. As the Filecoin network expands and the ecosystem grows, the demand for FIL will rise to pay miners to store and retrieve data. Of the total supply of FIL, 70% is to be allocated to Filecoin miners over time, rewarding participants for providing data storage services, maintaining the blockchain, distributing data, and running applications. The remaining 30% of FIL's total supply is split between Protocol Labs (15%), investors (10%) and the Filecoin Foundation (5%). The tokens allocated to Protocol Labs and the Foundation are vested linearly over a six-year schedule.