A brief history
The Filecoin mainnet launched in October 2020 and is being run by Protocol Labs, spearheaded by Juan Benet, a computer scientist and engineer. Filecoin is a peer-to-peer storage network which provides users in need of storage with a low-cost solution and users with unutilized storage with a means of monetization. The service aims to act as the “storage protocol” of the decentralized web, where developers can create applications similar to Dropbox and iCloud without centralization.
FIL in practice
Web3 users pay miners in FIL to store, distribute, and retrieve their data from the miners’ storage. First, after a deal has been reached, clients pay miners FIL in exchange for storing their data. These fees are automatically deposited into a miner’s associated wallet as they continue to perform their duties over time. FIL is also used for retrieval fees, which are paid to miners when users wish to retrieve their data from the storage. Additionally, FIL is distributed to miners for creating a new block. All active miners on the network have a chance to receive a block reward. This chance is directly proportional to the amount of storage space that the user is currently contributing to the network. Due to the bandwidth and disk lookup, this process discourages spam transactions. Lastly, every transaction includes FIL “gas” fees, similar to those found on Ethereum. In Filecoin’s current setup, a portion of the gas is burned, while the rest is awarded to the miner that successfully mined the block with the corresponding transactions.