Token economics of Filecoin

Issuance & Emission, Utility, and Metrics of FIL, the native token of Filecoin.

Feb 10, 2023

Token economics (tokenomics) studies the design and implementation of blockchain-based tokens. Understanding token economics is crucial for anyone considering investing in or using a particular token.

This post covers the token economics of FIL, the native token of the Filecoin Ecosystem.

1. Project Overview

Filecoin is the Airbnb for data.

It is a decentralized data storage network where excess storage can be bought and sold. It is also the incentive & security layer for InterPlanetary File System (IPFS). In simple words, it is a marketplace for unused storage - in consumer hardware and data centers.

In the conventional world, cloud service providers like Amazon Web Services (AWS) and Microsoft Azure provide centralized servers and IP addresses for user data. In the blockchain world, Filecoin uses hash-addressed content structures to reduce redundancy and increase efficiency.

Filecoin is integrated with Ethereum. This enables developers to access Ethereum blockchain data and interact with Ethereum smart contracts.

Filecoin (FIL) is the native crypto of the Filecoin network. It can be used to pay miners to store / distribute data and retrieve information. Storage providers guarantee a minimum service level by providing FIL as collateral.

Filecoin’s consensus mechanism is Proof-of-replication (PoRep) and Proof-of-spacetime (PoSt).

PoRep enables storage miners to prove that they are physically storing a unique copy of client data. PoSt proves that storage miners are continuing to dedicate storage space to client data over time.

2. Token Issuance & Emission

Token issuance is the creation and distribution of tokens as part of a specific event or offering e.g. airdrop, ICO, reverse ICO, IEO, IDO, DAICO, ETO, STO, and SAFT. Token emission is the ongoing process of creating and releasing new tokens into circulation e.g. through mining or staking.

Funding rounds:

$52 million in an Advisor Pre-Sale Simple Agreement for Future Tokens (SAFT) in July 2017
$154 million in an Initial Coin Offering (ICO) in Sep 2017

Initial Supply Breakdown:

10%: Investors
20%: Founders & Project
70%: Premined Rewards & Airdrops

3. Token Utility

Tokens derive value from the utility of the network that they are used in. In other words, the value of a token is determined by how useful it is within the specific ecosystem in which it is used. This can be based on a variety of factors, such as:

the size and activity of the network,
the demand for the goods & services that can be purchased with the token, and
the perceived value of the network to its users.

As the utility of the network increases, the value of its associated tokens is likely to increase as well.

Use cases

Users pay miners in FIL to store / distribute data and retrieve information.
Storage providers post FIL as collateral to provide a minimum level of guarantee of their service.

4. Token Metrics

Price metrics

Price: $5.2
ATH: $237.24 (Apr 01, 2021)
ATL: $1.83 (Aug 29, 2019)
Cycle Low: $1.90 (Jan 07, 2023)
% Down From ATH: -97.80%

MCap & Volume metrics

Market Cap: $2 billion
24h Volume: $310 million
Market Dominance: 0.19%

Ratios

P/F ratio: 562x
P/S ratio: 577x
Volume / MCap: 0.16

Supply metrics

Circulating Supply: 381 million FIL
Total Supply: 381 million FIL
Maximum Supply: Unlimited

Terms used

All-time-high (ATH) is the highest price a crypto asset has ever reached.
All-time-low (ATL) is the lowest price a crypto asset has ever reached.
Cycle Low is the lowest trading price of the crypto since its ATH.
Percentage down from ATH measures how far down the crypto is currently trading from its ATH.
Market cap = Current Price x Circulating Supply
24h Volume is the fiat value of this crypto traded over the last 24 hours.
Market Dominance measures a crypto's total market capitalization relative to the total market cap of all cryptos.
P/F ratio (Price to Fees) ratio (P/F ratio) is the market capitalization (fully diluted or circulating) divided by annualized fees.
P/S ratio (Price-to-Sales) is the fully diluted market cap divided by annualized total revenue.
Volume / Mcap ratio = 24h Volume / Marketcap
Circulating Supply is the number of coins / tokens in public hands.
Total Supply is the number of coins/tokens created minus the number burned.
Maximum Supply is the maximum amount of this crypto that can ever exist.

Note: Figures are as on 9 Feb 2023 and have been rounded off for convenience.
Sources: Messari, DefiLlama, Tokenterminal, Coinmarketcap