After discussing how the Filecoin protocol and its economic model make storage commoditized and manageable, it is important to further clarify the role of storage users. Storage users play an important role in the ecosystem, not only using storage services, but also influencing the form of storage products: since storage users bring demand into the export-driven economy, anyone who owns filecoin tokens and uses them for storage can drive the network to continue to grow to meet consumer demand.
1 User life cycle
With data in hand and filecoin tokens that can be purchased from exchanges, storage users are ready to store data on the Filecoin network. Before working with miners, storage users may choose to get verified first, which is detailed later in this section. Users begin participating in the storage market by separating data, finding miners, and proposing deals to miners. After agreeing on terms such as price and term, the miner and user have a deal, and the user can then choose to pay the miner to read the file. Figure 1 outlines the user lifecycle.
Figure 1: User lifecycle: obtain tokens, selectively become a verified user, select a miner and make a specific request to the miner, trade with the miner after reaching an agreement, the chain verifies storage for the user and pays the miner, and obtains files from the miner.
2 Transaction Proposals
Transaction information is communicated through the gossipsub network, where users and miners propose transactions. The distributed storage market is represented by the free exchange of prices. Many third-party entities on this platform can speed up the process of matching transaction proposals, including the participation of exchanges or matchmakers of bids and offers. However, the exchange of this information is not limited to a certain protocol or platform. For example, storage proposals can also be made on digital media such as Twitter or email (especially when large amounts of data are to be stored).
3 Trading Orders
When storage demand and supply on Filecoin match, a trade order is reached. In addition to stating storage capacity, price, and term, trades can also specify the amount of storage miners and users pledged during the trade creation process. Storage miners will differentiate trades that pledge more than the minimum amount for storage users, allowing them to indicate the level of service they can commit to. In addition, miners can choose trades where users also provide pledges. This mechanism exists and provides market participants with multiple options.
However, since the state of the chain and bandwidth are limited resources, and providers should guarantee to provide users with at least a certain level of service, the protocol needs to set a minimum provider transaction pledge. The minimum transaction pledge requirement per unit of weighted byte computing power is set to 5% of the circulating supply of filecoin if the total amount of network transaction orders reaches the network baseline.
In addition to the pledge commitments of both parties, there is also a transaction payment between the user and the miner. This payment is locked when the transaction order is on-chain; therefore, the user's risk of filecoin price fluctuations is eliminated when they reach a storage transaction. Payments are issued to miners in batches during each payment cycle. Transaction order payments are paid immediately, which provides miners with greater motivation to seek users willing to pay. If a miner terminates an order before it expires, the miner will pay the sector termination fee and the provider's transaction pledge will be punished and destroyed. In addition, the remaining transaction payment will be returned to the user.
Developing additional features like the following will improve the utility of the network. To this end, the following improvements are prioritized for future releases:
- Transaction order renewal: Users and miners can easily agree to renew transactions.
- Transaction order migration: The maximum term of a transaction order should not be limited by the maximum term of the sector life cycle, but it should be allowed to be migrated to a new sector when the sector containing the transaction order expires.
- Trade order replacement: user is able to replace a trade order in the sector with another file of the same size.
- Transaction order transfer: Miners can transfer transaction orders to other miners with user consent.
4 verified users
As described in Section 3, having verified users as part of the economy makes Filecoin’s economy stronger and more valuable. While storage miners may choose to forgo transaction payments and conduct self-transactions to fill their storage space and receive block rewards, this is of low value to the economy and should not be heavily subsidized. However, it is impossible to separate useful data from encrypted data in practice. Introducing verified users can pragmatically solve this problem through social trust and verification. Users need to go through a simple and open verification process to become verified users, which will attract users who truly bring storage needs to the Filecoin economy.
Validators are drawn from a decentralized, globally distributed network of entities to confirm the real and useful storage needs of verified users. If the validator evaluates and confirms the user's need to store real data, the user will be able to add a certain amount of data to the network as a verified user transaction; this process is called DataCap quota. Verified users can request an increase in DataCap after using up all quotas, and validators should perform due diligence to ensure that users do not maliciously exploit verification. The verification process will continue to evolve over time to be more efficient, decentralized, and better.
The storage demand on the network will impact the storage offerings miners provide. Verified users are able to store data at higher sector quality multiples, playing a more important role in providing quality of service, geographic distribution, decentralization, and consensus security of the network. Validators and verified users must be aware of the value and responsibility that comes with their roles. In addition, it is conceivable that miners could also have a business development team to find valuable and useful datasets around the world, thereby increasing the demand for the storage they provide. In addition to providing users with a strong SLA, this will also incentivize individual teams to help users complete the verification process and start storing data on the Filecoin network.
