FILLiquid is a Sleeper on the Filecoin Network That You Need to Know About
The launch of the Filecoin Virtual Machine (FVM) has brought about unprecedented ecosystem growth for the Filecoin Network, with numerous applications emerging that help to expand the use cases of Filecoin.
In particular, our decentralized borrowing and lending solution is an absolute sleeper on the Filecoin Network you need to know about.
Our solution encourages Filecoin storage expansion by allowing Storage Providers (SPs) to have access to $FIL liquidity without needing to deposit crypto or fiat collateral.
FILLiquid intends to deepen $FIL liquidity and help the storage capacity of Filecoin continue its expansion.
FVM Blends Filecoin and DeFi — Bringing in a Slew of Applications
The FVM launched in March 2023 and has brought a slew of applications to the decentralized storage network. It allows Ethereum-style smart contracts that enable new use cases for Filecoin, including DeFi, perpetual storage, and decentralized computation, to name a few.
Since its introduction, more than 2,300 unique smart contracts have been deployed on the Filecoin Layer-1 blockchain, helping generate over 1.6 million transactions.
Filecoin is a storage network built on the IPFS protocol that allows users to rent storage capacity to earn rewards. Both storage users and storage providers generate revenues for the protocol, as well as smart contract interactions through transaction fees.
Its goal is to create a decentralized cloud storage ecosystem that reduces the cost of storage significantly for users by pricing storage based on supply and demand dynamics instead of fixed pricing.
To keep data safe, Filecoin requires SPs to pledge collateral to the protocol to provide safeguards for the security and quality of storage services.
Although this helps provide a secure and consistent service, it also presents potential roadblocks in the future for Filecoin.
Let’s take a look at the problems it presents.
Is Storage Growth Limited on the Filecoin Network?
The storage capacity on Filecoin has been consistently growing since 2020. According to our partner Filofox.io, the Network Storage Power for Filecoin sits at 24.5 exabytes. That’s 24,500 petabytes or 24.5 million terabytes.
Although the growth is consistently rising, using pledged collateral might cause a bottleneck in future expansion.
Pledged collateral and delayed reward distributions help to ensure the accountability of SPs, incentivizing them to remain honest and reliable with consistent uptime.
However, it’s becoming apparent that acquiring enough $FIL to continue storage expansion might become rather costly for Storage Providers and could potentially exceed the cost of the hardware used to provide storage.
This is because SPs require more $FIL whenever they want to upgrade their services and provide more storage.
Currently, there are three options for SPs to acquire $FIL — all of which increase their financial burden.
The first option is to use rewards from current storage deals. However, with delayed reward distributions, the $FIL rewards aren’t readily available to be used.
The second option is to borrow $FIL from centralized lending markets. However, these services require over 150% collateral to be deposited and charge extortionate borrowing rates.
The final option is to buy $FIL from the open market, which requires SPs to take on financial risk and sit through market volatility.
All three options present added stress and financial pressure for SPs, potentially presenting a limited upside growth potential for the overall network.
With AI requiring big data, more storage will undoubtedly be needed on the network, so a solution is necessary to secure consistent growth.
This is where FILLiquid steps in.
Want $FIL Loans With Zero Upfront Collateral? Say Hello to FILLiquid
Filliquid is a decentralized algorithm-based liquidity pool and lending platform implemented on the FVM.
Our project facilitates a market that enables FIL token holders to stake $FIL tokens and earn a passive income while letting SPs borrow $FIL for storage growth.
Essentially, FILLiquid acts as a bridge between lenders (token holders) and borrowers (SPs).
The best part about FILLiquid is that it doesn’t require SPs to collateralize fiat currencies or crypto to obtain a loan. Instead, it utilizes the SP’s existing account balance and future income from storage mining as collateral — allowing them to acquire $FIL with zero up-front collateral.
To achieve this, the SP provides control of the Beneficiary Address to the audited smart contract on FILLiquid while the loan is outstanding. Then, the potential income from storage mining is pledged to the protocol during the loan term.
The SP’s Beneficiary address holds sufficient pledged tokens in the node that serve as collateral, making it a reasonable collateral asset.
It consists of both pledges and rewards, which are worth more than the borrowed $FIL tokens from the liquidity pool.
Furthermore, as the loaned $FIL is only used for storage growth, the borrowed funds can be collateral as they’re locked into the Beneficiary address.
As a result, FILLiquid has an intuitive ecosystem that safeguards its liquidity pool sufficiently, allowing SPs to borrow up to 100% of their pledgeable balance.
We believe FILLiquid will help to provide deeper liquidity to the Filecoin market, helping consistent storage capacity. Our ecosystem is perfectly suited to Filecoin and aligns with its overarching goals in helping to reduce the cost of storage power growth.
Our ecosystem is being unveiled, with our first testnet scheduled for the end of November.
Be sure to follow us on Discord and Telegram to be updated with the latest developments and find out when you can participate in our incentivized testnet.
