Photo by David Kovalenko on Unsplash
Decentralized file-sharing project Filecoin launched last week after years of development and a jawdropping $200 million ICO. But critics and miners are calling it a failed launch.
Its fees are turning out a pain point—data shows miner prices to use Filecoin network cost over $40,000 (with hosting and maintenance), in contrast to centralized alternatives like Amazon Web Services which charge a fraction of the amount.
Miners using Filecoin’s “space race” testnet, essentially a bounty-like offering for miners to provide hashpower to the network (using their own expensive hardware) for testing also turned out a disappointing affair at launch, as some pointed out:
For the uninitiated, Filecoin was announced and founded by Protocol Labs in 2017 as a file-sharing and content distribution service. The product allows any individual to rent out unused storage on their computers or hard drives, creating a (theoretically) cheaper and faster means of storing data.
Its FIL token launched last week (under a vested schedule) and zoomed to a valuation of over $900 million within hours, making it the fastest such project to do so. FIL saw an initial pump, but traders soon took to shorting the token en masse, driving prices down as much as 40% on the first day of trading.
Price falls were not all for FIL holders. Despite the project’s fully working product, the anonymous Twitter profile “Nico Deva” pointed out Filecoin miners were no longer participating in the network due to high upfront costs and the requirement for them to purchase even more tokens.
They further raised the issue of some of Filecoin’s supposedly vested tokens finding their way to crypto exchanges—a sentiment which Tron founder Justin Sun shared:
“Breaking the vesting rules has serious legal and compliance consequences. Do you really think dumping like this is ok?,” said Sun, even as Tron’s own token ecosystem has attracted widespread criticism from crypto industry observers.
Meanwhile, Mechanism Capital partner Andrew Kang stated the Filecoin team either needed better token advisors for its distribution plan or was a “Ponzi at 1000x scale.”
At press time, FIL has fallen another 18% and trades at $35 at press time.