Filecoin Collaborative Resource and Risk Management

Last week on December 11, ETH Global and Filecon hosted the Storage Market Summit (SMS). A portion of the day was dedicated to Collaborative Resource and Risk Management in the Filecoin ecosystem. Below are recaps, themes, and conclusions from different talks during this portion of the day.

You can browse the agenda and check out the full Collaborative Resource and Risk Management section here.

From Quality Metrics to Reputation

The following is a summary of a talk given by Michael Zargham, CEO and Co-founder of BlockScience, at SMS. Watch the full recording here.

The Filecoin network stores a lot of data, but it also produces a lot of data. Of all the distributed, heterogeneous data that is available, we need to look at how we can put that data to work to make a richer and healthier ecosystem. We are solving the problem of how to arrive at quality metrics and reputation within the Filecoin network.

When we go to put data from any network to work in order to make decisions, there are a lot of processes that happen. You take the raw, low-level data and you bring it up to a level where participants in the network can interpret and take actions from it.

What’s tricky about Filecoin is that in traditional Web2 or corporate settings, there are highly specialized teams that develop and maintain the data infrastructure. This is especially true when you’re talking about companies that are producing the amount of data that the Filecoin network is. The question we are asking ourselves, then, is: how can we realize that same performance and quality for public data on an open network? We need network participants to be able to interpret and act with confidence based on the data they get from the network. We already know a few scenarios where this is crucial:

Lenders deciding how much FIL to lend based on deal verification status.
Underwriters deciding which loans to underwrite according to fault distributions.
Storage clients deciding which miners to make deals with conditional on uptime.
Miners making strategies to improve ROI through deal capacity growth.
Insurers deciding which miners to insure based on the volatility of storage capacity.

All of these decisions should be made in data-driven ways. No one party owns the data at the storage or interpretation level, so we hope to see a growing provider base for these types of analytics. One example is reputation score.

We want to ensure reputation isn’t a “God’s eye” scenario like credit score, where if you do poorly you’re doomed. That feels too deterministic. Reputation is going to drive the end use of the network by average people. Consumers want to use the data on the network but don’t need (or want) to know about the low level information on the Filecoin network. They can trust it to provide them services and for them to make decisions from it.

Codefi Storage & DeFi Bridge

The following is a summary of a talk given by Corbin Page and Mike Alonso of ConsenSys Codefi, at SMS. Watch the full recording here.

Codefi Networks: Storage

ConsenSys Codefi builds the financial applications within the ConsenSys product suite. One of our product modules, Codefi Networks, is focused on helping decentralized networks get off the ground in the months after mainnet launch. In its infancy, any new market is struggling to figure out the best pricing and market segments. In the Filecoin ecosystem, some of those segments are Filecoin, Filecoin Plus, reputation, miner history, and more. We built the Filecoin Storage application to provide the ecosystem with a product to accelerate that process of price discovery.

Reputation in the storage market is made up of: storage size (capacity), the number of faults you have, general pricing on storage, and the number of successful deals. We approach reputation as an evolution. We are seeing comments from miners and network participants, and we are iterating based on what the storage providers want. Reputation will continue to evolve and we’ll see what works best for everyone.

Codefi Storage for Filecoin is launching with the following features:

Storage price discovery
Storage provider reputation
Storage provider deal history
Top network metrics
Accessible via API.

Check out Codefi Storage at storage.codefi.network

Codefi DeFi Bridge

DeFi Bridge helps bridge FIL to the DeFi ecosystem and its full capacity on the Ethereum blockchain. DeFi Bridge allows users to convert FIL into wrapped FIL. Recently, we launched renFIL with RenVM. Users send FIL to a deposit address, wait for a confirmation, and receive renFIL in your wallet. Users can also do that in the opposite direction. They can borrow renFIL on decentralized marketplaces and convert it into FIL for use on the Filecoin network.

Our goal is to connect FIL to the spot markets, lending markets, derivatives markets, and others to give more optionality to FIL holders. In particular, we wanted to get FIL into the decentralized lending markets happening on Ethereum to provide greater access to FIL for network participants like miners who need more funds.

Codefi DeFi Bridge for Filecoin is launching with the following features:

Convert Filecoin → wrapped Filecoin (renFIL)
Convert renFIL → Filecoin
Lend renFIL
Borrow renfIL
renFIL DeFi marketplace APIs
Open to any DeFi user

Check out DeFi Bridge at bridge.codefi.network

Asset Swaps for Miners

The following is a summary of a talk given by James Slazas, Co-founder of DARMA Capital, at SMS. Watch the full recording here.

DARMA Capital (Digital Asset Risk Management Advisors) is a Commodity Pool Operator and Commodity Trading Advisor and swap firm. DARMA is registered with the CFTC and a member of the NFA. What we (DARMA) really want to get across is awareness that DARMA has created a Filecoin FIL asset swap. Our goal is to enable miners - both large and small - to gain access to the FIL token and avoid some of the very high lending rates present in the borrowing market.

An asset swap is basically a derivatives contract that two counterparties enter into. The two parties exchange either cash flows or assets, and the swap agreement is balancing at all times.

Today, the lending market ranges from being able to borrow FIL at 1% a day or even 100% annualized. To help the ecosystem grow, we worked with Protocol Labs and the Foundation to be able to provide this offering. We basically consider this a ‘below-market’ offering just to encourage more growth and more capacity of the Filecoin network.

We’re forging this relationship with miners to better understand their business models and continue to provide a service that is beneficial to them and to the Filecoin network. Our two goals with our Filecoin asset swap offering is to:

Reduce or eliminate the expensive borrowing issue that miners face when trying to acquire FIL. We hope that reducing the volatility of that cost helps them run their business.
Work with different groups to encourage both small miners and large miners to build a robust and sustainable business.

If you are a miner interested in learning more about FIL swaps, reach out to DARMA at [email protected] for more information.

Storage Market Summit wrapped up on December 11, 2020. Watch the full recording on YouTube.

Disclaimers:

Nothing in these presentations is investment advice.
Any models shown in presentations are based on many assumptions, and should not be relied upon as the source of truth. Any estimates should not be relied upon and are for illustrative purposes only. You should build your own models based on the code and the Filecoin spec.