Qitchain Network
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Qitchain Network

Infrastructure Investment Research Report: Distributed Storage Track Project Analysis

In the digital age where data is the factor of production, massive data has become an important part of social production. Despite the pivotal role of big data and data analytics in today’s era, there are still certain obstacles to the connection between data and the ownership of data. In the data “island” mode, data cannot be communicated with each other, and it is difficult to establish relationships. In addition, the blurring of data ownership boundaries and the confirmation and ownership of data ownership are also the issues that need to be resolved urgently.

The birth of blockchain technology enabled the digital age. Blockchain technology is a digital technology that can effectively manage and distribute data, and the blockchain has the characteristics of extreme transparency, trust-lessness, complete openness and immutability. It has incomparable advantages over other technologies. Distributed storage is an infrastructure created with blockchain technology as the underlying technology, which can provide transactions and interactions for data in the digital age. It can effectively confirm data rights and protect privacy.

Next, we will focus on the consensus mechanism and market performance of Filecoin and QitChain, two landing applications in the distributed storage and distributed retrieval tracks.

Distributed Storage Leader — Filecoin

Filecoin is a distributed storage project, once known as the absolute leading project of the distributed track. It was created under the background of the original IPFS team, and was favored by most investors at the beginning of its establishment. In addition to the strong background of the project itself, its consensus mechanism, economic model and market performance are also worth mentioning.

Filecoin Consensus Mechanism

Consensus mechanism is a core content of blockchain projects. Only with a strong consensus more people can participate in the entire network and a huge ecosystem can be formed. Common consensus mechanisms include POW (Proof of Work), POS (Proof of Equity), and POA (Proof of Authority). Representative projects include BTC, ETH, Chia, Vechain and other established projects. However, Filecoin uses a hybrid consensus mechanism — Expected Consensus (expected consensus mechanism) + PoRep (replication proof) + PoSt (space-time proof).

PoRep (Proof of Replication): The storage service provider proves to the validator that the corresponding data is stored in a certain device. PoSt (Proof of Time and Space): PoRep (Proof of Replication) plus timestamps and other related technologies prove that the storage service provider stores data within a certain period of time. The consensus mechanism of Filecoin is similar to POS (Proof of Stake), except that the Proof of Stake in POS (Proof of Stake) is replaced by Proof of Storage, but the storage service provider that can generate new blocks needs to lead the storage service provider within a cycle. Selection, which is the Expected Consensus (expected consensus mechanism). The selected leading storage service provider broadcasts the new block created to the network to obtain block rewards. Filecoin’s consensus mechanism shows that each storage service provider needs to keep its storage contribution at the forefront of the entire network in order to obtain the right to block rewards, which also motivates the majority of participants to continuously maintain the network.

Compared with the traditional consensus mechanism, Filecoin’s hybrid consensus mechanism has two advantages: First, the network transaction efficiency is high. Without a lot of calculations, storage service providers only need to use storage space to obtain corresponding rewards, which can effectively prevent the cost waste paid by storage service providers. Second, it can effectively prevent blockchain forks. Filecoin enables storage service providers to select the most effective chain through the pledge mechanism and storage space weight, and imposes corresponding penalties on storage service providers that fork through a penalty mechanism.

Filecoin’s Token is FIL, with a total issuance of 2 billion pieces. It is mainly divided into four parts: 10% for financing, 15% for Protocol Labs, 5% for foundation, and 70% for block rewards. The block reward is rewarded to storage providers and other reward reserves for providing data storage services, maintaining the blockchain, distributing data, and running contracts. The number of block rewards for storage providers is 55% of the total amount of FIL, which is mainly used to reward storage providers for providing storage services and maintenance to nodes.

In the internal ecological environment of Filecoin, users mainly consume FIL to obtain storage and retrieval services, while storage providers and retrieval providers provide valid data for the entire network, maintain nodes, and provide services for users to obtain FIL.

At present, there are very few users who store and retrieve files on Filecoin, and it is difficult for storage providers and retrieval providers to maintain their service momentum. So block rewards are mainly obtained by maintaining nodes and providing valid data. In order to maintain the entire economic ecology into a virtuous circle, Filecoin has set up a pledge mode, that is, a certain number of tokens are required to be pledged to become a storage provider (the pledge period is 540 days).

Filecoin Market Performance

Since the launch of FIL, its secondary market price trend has experienced multiple rounds of bull and bear replacement. Before Filecoin’s mainnet was launched, its distributed storage application blueprint was favored by many investors, which pushed FIL to enter the market explosion stage from March to early May 2021. Filecoin has thus become a popular project in the blockchain industry, attracting many investors. In the process, the market price of FIL raised all the way, from $12 to $191.36, an increase of 1594.66%. At the same time, its 24-hour trading volume, it is also as high as 8.14 billion US dollars.

However, starting from May 2021, Filecoin has changed from the “high fever” situation and gradually embarked on a stable path. The emotions of many Web3.0 investors and enthusiasts have calmed down from the boom, and FIL has also begun to on its “cool” journey. As of February 15, 2022, the price of FIL is $21.2, has gradually returned to the initial price.

Image Source: https://coinmarketcap.com/zh/currencies/filecoin/

According to Filecoin browser data, the tradable circulation of FIL is about 249 million, accounting for 12.25% of the total issuance; the pledged amount is about 131 million, accounting for 6.55% of the total issuance, and the number of days to pledge FIL is 540 days. The release reward is about 230 million, accounting for 11.5% of the total circulation; the storage provider reward is about 158 million, accounting for 7.9% of the total circulation. The destruction amount is about 29.1799 million, accounting for 1.46% of the total circulation. Overall, the amount of FIL that can be circulated in the market is about 260 million, which is twice the amount pledged in the Filecoin network.

At present, Filecoin’s entire network data is 15.5394EiB, the nearly 24H output is 0.019FIL/T, and the 24H block reward is about 310,000 FIL. In the past 30 days, the average computing power has increased by 20PiB/day. The current sector pledge amount is 4.8908FIL/T, and the average daily pledge is about 100,000 FIL. The amount of pledge required per day is much smaller than the current number of network block rewards.

According to the above data performance, it can be inferred that under the condition that the current sector pledged amount and output rate remain unchanged. The block reward of the whole network will increase, and the less the computing power increases, the less pledge amount is required, which will lead to FIL in the market and supply will exceed demand. The market performance in the past 30 days is shown in the figure below. The market performance is generally in a state of sharp decline, and the future trend of the secondary market is still not optimistic.

The Rising Star of Distributed Retrieval — QitChain

QitChain is a distributed retrieval project that benchmarks against Google in the Internet and aims to form an effective information aggregator in the blockchain industry. QitChain established a core development team in 2015, and the mainnet was officially launched in 2021. Since the independent online launch, QitChain’s network consensus has rapidly increased, and the effective capacity of the entire network has grown rapidly. Its COPC consensus mechanism is an innovative consensus algorithm that integrates the advantages of traditional consensus mechanisms to form a unique and new consensus mechanism track.

Image Source: https://qitchain.net/

Initial issuance; the second type is issued with the generation of blocks after the network is started, which is a deflationary issuance. The initial circulation is 21 million QTC, accounting for 20% of the total number of tokens, including 5% for the foundation and 15% for the search laboratory. The total amount of blocks generated is 84 million QTC, accounting for 80% of the total tokens. The block generation rules are as follows: Initial block: an average of 3 minutes per block; each block generates 75QTC; the first halving time is about 420,000 block heights, and then halved for every 700,000 new blocks.

Image Source: https://qitchain.net/

QitChain adopts a deflationary pledge model. When storage service providers enter the project ecology, they can enter at a low cost. They only need to have a hard disk that meets the requirements for Plot to effectively provide storage space. At the same time, storage service providers can also obtain more block rewards through the staking mechanism. There are two types of pledge mechanisms: the first one, the cycle is 360 days, and a single T needs to pledge 10QTC; the second one, a single T needs to pledge 5QTC for 540 days (the pledge demand is halved with the block synchronization).

QitChain Market Performance

Since the mainnet launch of QitChain in September 2021, it has been followed by many Web 3.0 enthusiasts, and in just 3 months, the effective capacity of the entire network has increased from 15PiB to 300PiB. Up to now, it has only been 5 months since the mainnet was launched, and the effective capacity of the entire network has reached nearly 590PiB. At the same time, it has attracted the participation of many community members. At present, it has spread all over the world in many countries and regions, with a total of more than 1,000 nodes and nearly 300,000 members around the world.

Image Source: https://qitchain.org/

At present, the total circulation of QTC is 7.2888 million. From the perspective of its economic model, participants need to stake a certain amount to obtain more rewards. Judging from the data of the minimum pledge amount of 5QTC/T and the effective capacity of the entire network, the total pledge amount needs to be at least 2.95 million. The current pledge amount is 2,551,500 QTC, most of which remain in the hands of community members, and the secondary market has less circulation.

QTC was officially launched on December 29, 2021, with a maximum of $55 on the day of launch, an increase of 458%. Up to now, although the market price is relatively stable, the trading range is still above 1.41 times the first-day price. In terms of attributes, QitChain’s overall economic model is a multi-deflation model, which can not only effectively deal with inflation, but also reduce supply. And with the continuous enhancement of QitChain network consensus, the market demand will gradually increase.

At present, the QitChain network consensus is strong. It is expected that with the increase in the effective capacity of the entire network in the future, the increase in the market demand of QTC will promote the increase in the price of the secondary market of QTC. The multiple deflationary models effectively support its market price.

Discussion on the Future Ecological Development Direction of Filecoin and QitChain

Filecoin is based on the IPFS network and is positioned as a blockchain distributed storage. At present, there are already multiple application cases, such as the NFT storage project launched in April 2021, which can provide free storage services and store NFT metadata off-chain. Web3 storage, launched in August 2021, provides developers with a simple interface for storing data and also supports simple data retrieval. Textile makes it faster and easier for developers to build distributed applications on IPFS and Filecoin.

The use case of Filecoin shows that Filecoin is still the main storage market. From basic Internet data storage to on-chain file storage on the blockchain, Filecoin’s service scope is all. In the process of its ecological development, storage service providers can not only use the corresponding storage space to obtain block rewards, but also get users’ storage file rewards. For storage service providers, Filecoin’s economic incentives are more friendly. Users store relevant data according to their needs, and Filecoin’s ecology also cooperates with various projects to store blockchain data.

Image Source: https://largedata.filecoin.io/

Currently, Filecoin is still the leading project in the distributed storage arena. It has built 3,790 nodes around the world, and the capacity of the entire network has reached 15.5EiB. In the future, Filecoin’s ecological development cycle will be based on data storage, and for the retrieval market, Filecoin is also building different retrieval market solutions, but at present, developers and users are mainly based on their own storage data.

From the perspective of the long-term ecological economic cycle, Filecoin requires storage users to spend a certain amount of FIL to store data information. Storage service providers will have the motivation to maintain the network in the future. However, at present, storage service providers are the main active players. Except for block rewards, there are very few storage rewards. Therefore, in the future ecological development, it will take time to accumulate users. But at the same time, Filecoin is an economic model of inflation, so the value of FIL will be unstable for a long time.

QitChain is an independent public chain, mainly positioned as an effective information aggregator. With IPFS as the underlying technology, the original consensus mechanism is upgraded and innovated, and the network consensus is continuously strengthened. In the ecological planning of QitChain, the “three cores and two belts” with the entire blockchain as the underlying infrastructure are proposed for the first time — QitChain Network (core support), Qit Search (core service), Qit Mateverse (core world) and technical services belt, service radiation belt.

With search engines as the main service, QitChain focused on the authenticity and perfection of the underlying data in the early stage. In order to allow more members to participate in the network, its consensus mechanism has set up a model with almost no threshold. Combined with the incentive mechanism, it can effectively obtain the continuous participation and maintenance of the network by global members. At present, global nodes have been established, the network consensus is continuously strengthening on a global scale, and the computing power of the entire network is also growing rapidly. The first step to realize the rapid growth of effective data and network security has been accelerating the layout, focusing on the construction of the underlying facilities, and its ecology will be more stable in the future.

In addition, QitChain does not set a fixed user retrieval fee in the network, but storage service providers price their own services, forming a healthy competitive environment among storage service providers, so as to better serve users. For users, “search as a service” can meet the greater demand for data information in the future. At the same time, QitChain will form a huge ecological aggregator, which can provide all users with any services they are interested in.

From the perspective of long-term ecological development, as the bottom-level infrastructure of blockchain, QitChain may become an effective information aggregator that is difficult to replace in the future. With the continuous updates and breakthroughs in technology, various types of DApps will be built on the QitChain public chain to gradually improve ecological services. The economic model of multiple deflation will also more strongly support the network ecological cycle. The services of global storage service providers will be closer to the needs of users, storage service providers and users can obtain the most valuable service system.

Conclusion

In the current digital age, data will grow in massive volumes. The distributed storage and distributed retrieval track will follow the trend of the times and become an indispensable infrastructure in the blockchain field. Whether it is Filecoin or QitChain, as long as there is enough innovative technological development, focusing on the infrastructure construction track, and enriching the ecology, the blockchain industry will eventually be empowered.

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Qitchain Network

Qitchain Network

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The Qitcoin-QTC (Qitchain Search Engine) is a distributed search engine based on IPFS to help users quickly search on the blockchain distributed network.