This article explores the Filecoin minting mechanism and its impact on circulating supply

Original source: Filecoin Network

Key Points

• If the historical highest load and update rates are maintained (an aggressive raw byte load growth scenario), the total supply of Filecoin entering circulation by 2040 is expected to be 1.27 BFIL.

• If the loading rate drops below the historical daily peak, the total supply will decrease, which is likely to happen, after all, it is difficult to maintain this level for the next 16 years. For example, if the current loading rate remains unchanged, the total supply of Filecoin entering circulation by 2040 is expected to be 1.05 BFIL.

• To summarize, by 2040, the amount of Filecoin entering circulation will be far less than the theoretical maximum token supply of 2B.

preface

Filecoin adopts a hybrid casting model to encourage continuous and long-term storage supply. The hybrid casting model combines simple casting and baseline casting to align block reward emissions with storage targets. This allows the Filecoin network to incentivize storage providers in proportion to the utility (i.e. storage capacity) they provide to the network.

In the hybrid minting model, part of the minting reward comes from exponential decay (simple minting) and the rest comes from the network baseline minting. When the raw value calculation rate (RBP) is above the baseline, the baseline minting will decay exponentially, but when it is below the baseline, it will slow to polynomial decay. This mechanism allows the network to issue the maximum possible reward when RBP reaches or exceeds the baseline storage target. The goal of the baseline storage capacity is to double the network storage capacity every year.

Visual Adaptive Casting

Since minting is adaptive, it is helpful to have an intuitive understanding of the amount of Filecoin that has been minted and how it compares to the upper and lower bounds that can be minted. The upper bound is reached if RBP meets or exceeds the baseline function, and the lower bound is reached if only simple minting is performed. Figure 1 shows these bounds intuitively:

Minting trajectories for different loading configurations. The pink line indicates the amount of FIL that will be mined if only simple minting is activated (lower limit); the dark blue line indicates the total amount of FIL that will be mined if RBP matches the future baseline (theoretical upper limit); the light blue line indicates the amount of FIL that will be mined if the network RBP loading rate and update rate remain at historical highs (about 62 PiB/day and 100% update rate) (high growth rate); the hashed red line indicates the amount of FIL that will be mined if the current loading rate and update rate remain unchanged (4 PiB/day and about 50% update rate, respectively).

Note that since minting is adaptive, the total amount mined in the future depends on some assumed loading behavior (see Note 1 below for details). This network calculator can be used to explore different scenarios of future loading and updates, and how this will affect the total amount of FIL that the Filecoin network is expected to mint. You can try exploring interactively to understand different scenarios for Filecoin minting.

Impact on FDV

What does this mean? We can see that ofthe allocated 1.1 BFIL tokens available for mining , the maximum number of tokens that can actually be mined by 2040 is 0.953 BFIL tokens. The exact amount will depend on future loading behavior, but will be capped at 0.953 B. Currently RBP is loading about 4 PiB/day, with SP updating about 50% of sectors. If this trajectory is maintained, only 62% of the 0.953 B mineable tokens will be mined by 2040. Alternatively, if loading grows to an all-time high of 62 PiB/day, and SP updates 100% of its sectors, 85% of the mineable tokens will be mined by 2040 (see Note 2 below for details). This effect is even more pronounced if this is compared to the total 1.1 BFIL tokens available for mining. In this case, if the current loading trajectory is maintained, only 54.3% of the total tokens allocated for mining will be mined by 2040. If the number of loaders grows and remains at historical highs, 73.9% of the total 1.1 B tokens will be mined by 2040.

We can also look at this from the perspective of total supply. The following table shows the total supply forecast by date for three scenarios, where all future minting is: ① simple minting, ② based on the continuity of current loading and updating, and ③ based on the continuity of historical highest loading and updating. Here, we define total supply as: Total Supply = Minting + Continuation - Consumption. Please note the comparison with the circulating supply, which is defined as: Circulating Supply = Total Supply - Locked Amount.

Projected total supply of Filecoin (in billions of FIL) under various minting scenarios (as of April 10, 2024).

What does this mean for Filecoin's circulating supply? Filecoin can mint up to 2B FIL, but the actual amount of FIL in circulation will be much lower than this. If the current loading trajectory remains unchanged, a maximum of 1.05 B tokens will enter circulation by 2040. If RBP loading and updates grow to the historical maximum and maintain this level, a maximum of 1.27 BFil tokens will enter circulation by 2040 (see Note 3 below for details).

in conclusion

In summary, we explored the Filecoin minting mechanism and its impact on the circulating supply. By using some bounds as comparison points, we found that by 2040, the actual upper limit of the total amount of FIL tokens in circulation may be between 1.05 B and 1.27 BFIL, which is lower than the 2B FIL specified in the specification. This means that by 2040, the total token supply is 47.5% to 36.5% less than the theoretical upper limit in the "maintain the status quo" and "maintain aggressive" raw byte growth scenarios, respectively.

Related Notes

1. Regardless of whether the network hashrate is above or below the baseline, the total amount mined will asymptotically reach 1.1 B in the infinitely distant future. However, when below the baseline, the asymptotic value is reached much more slowly. Therefore, it is more useful to choose a finite time in the future as the target, such as 2040 in our example, where the two forecasts differ greatly. For more details on the importance of focusing on a finite future time, see this note .

2. The number of tokens that can be mined by 2040 is likely to be around 0.953 B tokens. This is lower than the 1.1 B tokens specified in the specification because the baseline minting mechanism has been in effect for a period of time when the network RBP is less than the baseline.

3. These predictions take gas consumption into account and are extrapolated linearly over the simulation window. Potential changes in gas consumption trends or protocol changes in the future will change these predictions.