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Filecoin (FIL) Token Price Sees Massive Plunge Days after Launch as Miners Go on Strike

Decentralized storage network Filecoin was launched by Protocol Labs on Oct. 15, and just after one day after its mainnet launch, its miners turned off their machines to protest against the protocol.

The Filecoin project aims to provide its users with decentralized data storage and transmission services using its commodity hardware, through its miners. The miners are also required to stake a large amount of FIL tokens to start their mining operations, as part of its “Initial Pledge Collateral.”

The collateral is used as a leverage to ensure that the miners deliver their services as promised in the users’ contracts. However, the issue has been created where the miners did not even have enough FIL tokens, to begin with. To get more tokens, miners could either earn token rewards and use them as collateral, or buy FIL tokens from exchanges.

The former could still be a problem, as token rewards are released over the course of 6 months after a block has been built; therefore miners do not receive many tokens at the beginning.

To buy FIL tokens from exchanges could be tricky and risky, as this process could be influenced by FIL’s price fluctuations and large transaction fees.

Five of Filecoin’s largest miners decided to go on strike to protest against the project’s “unfair” economic model. The economic model consisted of a significant amount of Filecoin (FIL) tokens to start mining operations.

Filecoin had its initial coin offering (ICO) three years ago, and the cryptocurrency was listed on major exchanges including Coinbase. After its listing, the coin rallied 118 percent. Shortly after being listed on FTX, FIL futures contracts swiftly processed $150 million in trading volume. According to FTX CEO Sam Bankman-Fried:

“$FIL has traded about $150m so far. Roughly 60% of the volume has been on FTX! Started around $30, went up to $80 on FTX and $200 on other exchanges, now around $40-$80 on various exchanges.”

FIL token’s price surged to $100 on its first day of trading, then plunging to around $40 as investors argued that it was overpriced. In a thread by Nico Deva, the difficulties of the miners of the Filecoin project was explained:

“Filecoin is very complex and requires high-end hardware, including min 128GB mem. Example of 1 miner, that is 3 servers with 2 computing and 1 storing, from @6block2. Price is a very high retail $40k (includes hosting and maintenance ), regular prices min. $20k, 350TB.”

Deva further added that the miners have supported Filecoin extensively, and that, “the much anticipated Filecoin launch has turned to a shit show and disappointment.”

Filecoin Creator Dismisses Miners Strike and says the Allegations are “Nonsense”

Filecoin creator, Juan Benet recently took it to Twitter to deny the allegations against the protocol’s miners’ strike one day after its launch.

Five of Filecoin’s largest miners decided to go on strike to protest against Filecoin’s “unfair” economic model, which consisted of a significant amount of Filecoin needed to start mining operations.

Filecoin (FIL) miners have faced issues regarding the lack of FIL tokens, to begin with, and to earn more tokens would take time and potential risks. Nico Deva who was familiar with the Filecoin mining situation, said that some of the top miners in China were not happy about the amount of tokens needed for the mining operations.

Filecoin had its initial coin offering (ICO) three years ago, and the cryptocurrency was listed on major exchanges including Coinbase. The Filecoin project aims to provide its users with decentralized data storage and transmission services using its commodity hardware, through its miners. The miners are also required to stake a large amount of FIL tokens to start their mining operations, as part of its “Initial Pledge Collateral.”

According to Deva, mining Filecoin is very complex and requires high-end hardware and costs around $20,000 at least.

However, Filecoin creator Benet denied the event of the miner strike, saying that it was “nonsense.” He added:

“There is no strike. Miners are proving their storage just fine. There’s been no power loss out of the ordinary in the network. Miners are following the protocol, and making a TON of money doing so.”

Benet explained that miners are currently growing slower than before launch, due to the network no longer subsidizing their pledge and fee costs. Benet went further to add that the project recommended miners to slow down their growth rate to match their token flow and that they could also go on pause until they can grow more steadily. He said:

“Advice: in moments like these, You have to pause, slow down, and analyze well. Do the right thing for the long term. Get the mechanisms right, get the long-term ROI right, get the short-term gradients right. Discount noise.”

FIL token’s price surged to $100 on its first day of trading, then plunging to around $40 as investors argued that it was overpriced. The Filecoin token is currently trading at $33.65, up by 11.4 percent in the past 24 hours.

Four Reasons Why Filecoin Increased by 430% Within a Month

The title of hottest cryptocurrency in the market may be attributed to Filecoin (FIL). Filecoin is an open-source, publicly-opened cryptocurrency and digital payment system. The Filecoin system aims to create a data storage and retrieval method based on the blockchain system.

FIL has risen by 89.74% within 7 days and has increased by over 430% since the beginning of March. After it broke through the $100 mark in one swoop on March 26, Filecoin continued to set a new all-time high, reaching a milestone of $198.

Filecoin’s market capitalization ranks No.15 with a value of $9,796,202,622 and at the time of writing, Filecoin is trading at $189.580.What are the factors behind Filecoin’s skyrocketing surge?

IPFS communication protocol

Filecoin is based on the InterPlanetary File System (IPFS) communication protocol. The InterPlanetary File System is a network transmission protocol designed to establish persistent and distributed storage and sharing of files.

Therefore, Filecoin has blockchain document storage capabilities. This is different from other cryptocurrencies such as Bitcoin.

The system has a built-in block reward mechanism to encourage the expansion of network capabilities so that the entire system has enough storage space to cope with the continuous growth of stored data, so as to ensure the long-term safe storage of files and the stability of the network security.

This is one of the reasons behind the price rally as Filecoin has huge application scenarios and market potential as a distributed storage network serving the global human society.

Backing by major institutions

On March 17, Grayscale officially launched five new crypto investment trusts including Filecoin. The new trusts include Grayscale Livepeer Trust, Grayscale Filecoin Trust, Grayscale Decentraland Trust, Grayscale Chainlink Trust, and Grayscale Basic Attention Token Trust. Among them, Grayscale Investment Company held no more than 500 FILs at an average price of around $50.

According to Bybt data, Grayscale has increased its holdings of 29,554 Filecoins in the past 24 hours, and currently holds a total of 45.55K FILs, worth a total of approximately $8.58M.

On March 23, Hisaishi Capital announced the official launch of Bitcoin, Ethereum, Filecoin, and Decentralized Finance digital asset special funds. The special fund will focus on the global Bitcoin, Ethereum ecology, distributed storage (FIL), and Decentralized Finance (DeFi) tracks.

On March 24, Fenbushi Capital announced the completion of the fundraising of the Filecoin Ecological Special Fund with the final management scale of 300,000 FIL (contracted at $57,600,000 at the current market price).

Mutual cooperation in the cryptocurrency industry

On March 24, the decentralized storage network Filecoin announced its integration with Chainlink. This integration will help Filecoin realize its storage function and automate access to other blockchains while creating a connection with Ethereum.

On March 27, Filecoin officially released a tweet stating that it will cooperate with the live streaming protocol Livepeer to carry out a joint mining pilot. This enables Filecoin miners to also become Livepeer video miners through storing the transcoded video data and mining on the Filecoin network.

Filecoin production cut on April 15

According to official sources, Filecoin will reduce its output on April 15. The reason is that the FIL received by all Filecoin Simple Agreement for Future Tokens (SAFT) holders is subject to linear restrictions lock-in for 6 months, 1 year, 2 years, and 3 years. The first half-year term of SAFT will expire on April 15.

At present, the original output of Filecoin is about 648,000 pieces per day. After the linear release of Semi-year’s SAFT on April 15, the daily circulation of Filecoin will be reduced by 280,000 units, which means a 43.2% reduction in daily production.

The actual circulation of Filecoin will be reduced. This reduced supply will stimulate future price increases.

Crypto Market Cap Soars Above $2 Trillion

Current data from crypto market analytic providers has shown that Bitcoin’s dominance in the digital currency ecosystem is reducing, as the market regains momentum and soars above $2 trillion after a week-long slump.

According to CoinMarketCap, Bitcoin currently dominates the market by 48.7% atop a market capitalization of $1.08 trillion at the time of writing.

The ongoing crypto market boom has been reflective of the growing strides of thousands of altcoins. Institutional investors’ interests are rising, as evidenced by the increasing number of digital tokens now featured on platforms catering to high-profile investors. Back in March, Grayscale Investments LLC added five new trusts including Grayscale Livepeer Trust, Grayscale Filecoin Trust, Grayscale Decentraland Trust, Grayscale Chainlink Trust, and Grayscale Basic Attention Token Trust.

By implication, both retail and institutional investors are showing a great deal of interest in the crypto market, following initial actions by the likes of MicroStrategy and Tesla in stacking up Bitcoin, making its price largely unaffordable for the average investor. Many today are picking out the novel crypto projects and pumping in liquidity, boosting the market capitalization of these digital assets.

Price Implication of Reducing Bitcoin Dominance

One of the core elements that will help determine the level of maturity of altcoins is if break free from the massive price effect of Bitcoin. The market has come a long way, with BTC exerting a dominance of over 95% back in 2013. As more innovative blockchain systems and cryptocurrencies entered the space, the dominance usurped by Bitcoin plunged to 65% for the most part of 2020.

For a market with over 9,000 digital currencies, the burgeoning dominance effect implies that if the price of Bitcoin falls due to any fundamental factor, several altcoins will sway in the same direction.

Ethereum Climbs to a New All-Time High

As the second-largest digital currency by market capitalization, Ethereum’s growth over the past years and months has been heavily dependent on Bitcoin. However, that appears to be changing already.

While the market strives to recover from the flash crash caused by the Xinjiang power blackout, a situation that reduced Bitcoin mining hashrate, Ethereum’s recovery has been swift, and marked by new price discoveries, ahead of Bitcoin.

While Bitcoin is yet to reclaim the $60,000 price levels, Ethereum has soared to a new ATH of $3,000.

Filecoin Miner RRMine Global Shuts Down Market in China, Moves HQ to Singapore

Decentralized storage network Filecoin miner RRMine Global announced that it will withdraw from the Chinese mainland market and close its business in mainland China, moving its headquarters to Singapore.

In the press release, the company said that due to the policy of strict restrictions on cryptocurrencies in mainland China and the divergence of its Web3.0 strategy, it decided to completely shut down mining operations in mainland China and move its headquarters to the world’s most cryptocurrency-friendly place, Singapore which is one of the open economies.

Reportedly, several executives of Renren Mine were taken away by the police from their offices in Chengdu, China for investigation last December.

Steve Tsou, Global CEO, RRMine Global

“Very much like other entrepreneurs, we want the best for our company, employees and community. The decision has been made after a profound examination and multiple discussions, and it has not been easy to come back from a downfall, especially when RRMine Global has Continuously provided services to all its users globally without fail despite all the events that happened. From today onwards, we would like to move forward and recreate the prosperous scene from China in Singapore.”

RRMine Global has been committed to solving the problem of lack of liquidity in Web3.0 and has become the world’s leading one-stop service platform for providing Filecoin.

Decentralized storage network Filecoin aims to provide users with decentralized data storage and transmission services through its miners, using its commodity hardware. Miners are also required to stake large amounts of FIL tokens to start their mining operations as part of their “initial staking collateral.”

Filecoin had an initial coin offering (ICO) in 2017 and was listed on major exchanges, including Coinbase. Shortly after FTX went public, the FIL futures contract quickly processed a volume of $150 million.

RRMine Global also announced the launch of “R-Datacap Storage” this time, which will significantly reduce operating costs, improve revenue efficiency, and promote the Filecoin incentive plan.

Aussie Regulator Halts 3 Crypto Funds Belonging to Holon Investments

The Australian Securities and Investment Commission (ASIC) has issued a stop order on three crypto funds belonging to Sydney-based Holon Investments Australia Limited.

According to a Press Release shared by the regulator on Monday, the three Holon crypto funds include those linked to Bitcoin (BTC), Ethereum (ETH), and Filecoin (FIL) respectively.

According to the regulator, the reason for the halt in the offering of these crypto funds is that the firm did not meet the non-compliant target market determinations. ASIC fears that Holon is offering the product to retail investors whose investment goals and capabilities may not necessarily fit into the risks associated with the three products.

The regulator reiterated that the embargo is temporary and will remain so for the next 21 days. The selection of Bitcoin, Ethereum, and Filing is essentially based on their extreme volatility and by a subtle extension, their popularity among retail investors.

“The interim orders stop Holon from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investments in the Funds. The order is valid for 21 days unless revoked earlier,” the announcement reads, adding that “ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.”

The regulator noted that Holon Investments has the right to meet its requirements to offer the products, otherwise, it will place a final stop order on the products.

The Australian ecosystem is one that is very vibrant, however, with a lot of fraudulent practices hitting users in the country, regulators are very cautious in their attempts to protect the average consumer. The same sentiment is shared by regulators in other top economies like the United States and the United Kingdom.

In all, this offering of protection accounts for why many nations are still relatively slow with their embrace of regulation when compared to major crypto hubs like the UAE and Singapore.

Crypto Firms Make Job Cuts Amidst Ongoing Crypto Winter

This week, many cryptocurrency companies have eliminated jobs in response to the current crypto winter. However, these companies have chosen to keep “impactful” people on staff as they prepare for a “longer slump.”

At least 216 jobs were cut across three different cryptocurrency companies. These companies are open-source software laboratory Protocol Labs, blockchain data firm Chainalysis, and cryptocurrency exchange Bittrex. Each of these companies reduced their workforce by 89, 83, and 44 employees, respectively.

In a blog post dated February 3, Juan Benet, CEO of Protocol Labs, the firm that introduced Filecoin (FIL), said that the company will be cutting jobs because it needed to concentrate its workforce “against the most impactful and business-critical projects.”

He claimed that the firm had come to the conclusion that it was in the best position to “weather this protracted winter” by eliminating “89 jobs,” which is equivalent to around 21% of its staff.

Given that the cryptocurrency business is now experiencing “very tough” conditions, Benet said that the firm should “plan for a lengthier slump.”

Meanwhile, on February 1, Bittrex CEO Richie Lai emailed the firm’s workers to notify them that the company would be reducing its employment in order to “maintain the long-term health” of the business.

On February 2, the email was shared inappropriately on Twitter. Lai claimed that despite the fact that the leadership team has been “working vigorously” over the last several months to decrease expenditures and boost efficiency, the efforts have not achieved the “results required.” Lai added that the efforts have not delivered the “results necessary.”

Lai went on to say that the current state of the market necessitated a reevaluation of the company’s approach and a readjustment of its “investments with the new economic climate.”

On February 2, 2018, records pertaining to employment in the state of Washington indicated that Bittrex had eliminated 83 positions.

According to statements made by Maddie Kennedy, director of communications at Chainalysis, to Forbes on February 1, the firm let off 44 of its 900 workers, which represents around 4.8% of the workforce. Kennedy said that those who were let go were “mainly in sales” at the company.

The announcement of these layoffs follows reports that in January, at least 2,900 employees were let go across 14 different cryptocurrency organisations.

Among those companies, Coinbase saw the most personnel reductions, with 950 employees losing their jobs on January 10th.

During this time, rival cryptocurrency exchanges Crypto.com, Luno, and Huobi each laid off about 500 employees, 330 employees, and 320 employees, respectively.

SEC Considers Filecoin a Security, Grayscale Disagrees

In a recent press release, Grayscale Investments, the world’s largest digital currency asset manager, announced it has received a comment letter from the U.S. Securities and Exchange Commission (SEC). According to the SEC, Grayscale’s Filecoin Trust’s underlying asset, Filecoin (FIL), should be classified as a security under federal securities laws. The regulatory body’s viewpoint has sparked a dispute, as Grayscale holds a differing opinion on the matter.

The SEC’s contention is that if Filecoin is considered a security, Grayscale’s Filecoin Trust would correspondingly qualify as an investment company under the Investment Company Act of 1940. Consequently, the SEC has requested that Grayscale promptly withdraws the registration statement it filed on April 14, 2023, for the Grayscale Filecoin Trust under Section 12(g) of the Securities Exchange Act of 1934.

Contrarily, Grayscale Investments believes that Filecoin does not meet the definition of security under federal securities laws. The company plans to respond expeditiously to the SEC, defending its position with a detailed legal explanation.

The outcome of this disagreement is uncertain, and much depends on whether Grayscale’s arguments can persuade the SEC. If the SEC stands firm in its belief that Filecoin is a security, Grayscale may be forced to seek alternative accommodations allowing the Trust to register under the Investment Company Act of 1940. Another potential, albeit drastic, alternative could involve dissolving the Trust altogether.

The stakes are high for both Grayscale and the broader cryptocurrency market. The SEC’s final decision may significantly impact the regulatory framework governing digital assets.

Sushi Launches on Filecoin, Expanding Decentralized Exchange Services

Filecoin, the world’s largest decentralized storage network, now welcomes Sushi, a prominent decentralized exchange (DEX), marking a pivotal development in decentralized storage and exchange services. Filecoin’s unique approach to cloud storage, functioning as an open-source marketplace, protocol, and incentive layer, revolutionizes how data is stored, requested, and transferred. This technology, designed for securing valuable datasets, positions Filecoin as a formidable alternative to conventional cloud storage, offering an efficient, cost-effective, and decentralized solution.

Sushi’s integration into Filecoin is a milestone, establishing it as the first DEX to operate on this network. This expansion includes the introduction of Sushi’s version 2 and version 3 automated market makers (AMMs) with concentrated liquidity pools on the Filecoin network, facilitating direct trading and liquidity provision. Additionally, SushiXSwap, Sushi’s cross-chain swap feature, extends to Filecoin, enabling seamless token swapping across Filecoin and over 30 other networks, including Ethereum, Arbitrum, Polygon, Optimism, BNB Chain, and Avalanche. This integration eliminates the need for bridging or using native Filecoin tokens, simplifying user experience.

The Sushi-Filecoin partnership not only reinforces Sushi’s leadership in the multi-chain and cross-chain arena but also invites users and developers to explore Filecoin’s decentralized storage capabilities. This collaboration was made possible with the support of Laconic.com, providing crucial subgraph index hosting services.

The integration offers a variety of functionalities for users, including asset bridging from Ethereum to Filecoin using Axelar Bridge and Celer Bridge, token swapping via Sushi on Filecoin, and liquidity provision to existing or new pools on the Filecoin network.

In celebration of this integration, the “Filecoin x Sushi Bomb Diggity NFT” is being launched as part of the “Sushi Multi-Chain Feast” Campaign. This limited edition NFT, minted on the Arbitrum network due to Filecoin’s current non-integration with Galxe, commemorates the collaboration and is available to participants who complete designated tasks.

Participants in the campaign are required to follow Sushi and Filecoin Network on Twitter, like and retweet the announcement tweet, and engage in token swapping and liquidity provision of at least $10 on Filecoin via Sushi. The campaign is facilitated through Galxe.

Chinese Police Investigate STFIL Team Members in Filecoin (FIL) Liquid Staking Protocol

Chinese police have launched an investigation into the core technical team members of STFIL, a prominent Filecoin (FIL) liquid staking protocol. The reasons for the investigation have not been disclosed, but STFIL has confirmed the situation and has engaged legal representation to manage the case and provide support to the individuals implicated.

During the investigation and detention of the core technical team members, an unexpected protocol update occurred, resulting in the relocation of 2.5 million FIL tokens, equivalent to approximately $22 million, to an external address. The STFIL team has described this transfer as “abnormal” and is actively seeking assistance from the community to track down the unknown address and safeguard the interests of stakeholders.

STFIL’s liquid staking platform, introduced in 2023, has gained significant popularity within the Filecoin ecosystem. As the second-largest protocol in terms of total value locked, with nearly $40 million in cryptocurrency allocation, STFIL allows FIL token holders to earn additional income through liquid staking.

The STFIL team has expressed its commitment to understanding the current situation and providing legal assistance to the detained individuals. However, the relocation of a substantial amount of FIL tokens has raised concerns within the community, prompting calls for transparency and swift action to protect stakeholders’ interests.

This investigation comes at a time when the cryptocurrency industry is facing increased scrutiny from regulatory authorities worldwide. It highlights the importance of compliance and transparency within the sector to maintain trust and protect the interests of investors and stakeholders.