The economic model adopted by the Filecoin network has prompted the miners to go on strike a day after the mainnet launch of the blockchain
Miners on the Filecoin network are on strike after what they described as an unfair economic model adopted by the developers. According to 8btc.com, five of the largest miners on the Filecoin network have turned off their machines to protest the economic model put in place by the developers.
The new economic model requires the miners to have a significant amount of FIL coins (native tokens of the Filecoin network) before they can start mining operations. The report revealed that Zhihu Cloud, one of the top five Filecoin miners, also joined the strike. It operates over 8,000 InterPlanetary File System (IPFS) mining machines. However, due to the protests, the miner only kept 276 mining machines operational on Saturday. The other four large miners also generated less power on the network, the report added.
The strike by miners started a day after the mainnet launch of the network. According to the developers, “Filecoin network represents a completely new way to store and retrieve data peer-to-peer – secured by cryptographic proofs to verify data is uniquely stored and replicated over time”. With the network’s help, anyone can take part as a storage provider, to monetise their open hard drive space and store valuable information.
Filecoin requires miners to stake a substantial amount of FIL coins as “Initial Pledge Collateral” before they can start mining on the network. Filecoin uses the staked coins as leverage to ensure that the miners deliver the required services. However, it also creates a situation where the miners don’t have enough FIL tokens to begin mining.
Miners could obtain the FIL tokens as rewards and stake them or buy them from cryptocurrency exchanges. However, the developers release the rewards within six months after building a block. Also, buying from crypto exchanges might be expensive for miners, defeating the purpose of mining on the network.
Filecoin releases reward early
Following the leading miners’ strike, the price of Filecoin dropped after soaring by 120% to trade at $60 following its mainnet launch. FIL is down by more than 50% and is now trading at $30 per coin.
The strike by miners led to the developers releasing 25% of the token rewards in advance. The miner will get this reward once they build a block on the blockchain. Miners were happy with this latest development as Xiaoming Zhan, CEO at IPSFMain, stated that the revision could see them reach 80% of their mining capacity.
Filecoin’s economic model has been criticised even before its mainnet launch, with some miners suggesting that they should fork the network.