More than just Storage: Business Opportunities on Filecoin
The following is a summary of a talk given by ZX Zhang at the Web3 Summit in May 2021 - see the full talk here.
The Airbnb of Cloud Services
There are more similarities than you might think between Filecoin and Airbnb. Just as Airbnb hosts offer up their homes to travelers, Filecoin miners offer up their storage capacity to data clients. In both models, resources are spent to provide a useful service to ecosystem participants in exchange for compensation.
Airbnb’s economic model, however, directs the value generated mostly to shareholders rather than the hosts who are actually providing the day-to-day value (their homes). Within a Web3 economy like Filecoin, different business models emerge for both Web2 and Web3 that make clear the path towards mainstream adoption.
A Useful Network
Filecoin mining requires miners to offer up storage in sectors — which can be thought of like shipping containers. Within each sector, different data can be stored for swift retrieval when requested by someone in the network. The Filecoin network periodically ‘checks’ these miners, ensuring they are indeed storing in their ‘shipping containers’ what they say they are.
The launch of Filecoin in October to support this economy has redefined cryptocurrency mining. Filecoin is a useful network in which resources are spent to provide a critical service for both the Web2 and Web3 ecosystem at large.
Today, redundancy, encryption, indexing, and fast retrieval are all possible on Filecoin. What’s more, these services are competitive. Storage on Filecoin costs just 0.3% of AWS, with a competitive edge that is compounded by the overall potential of an open Web3 network compared to a closed Web2 SaaS.
Filecoin Business Opportunities
Client-Miner Matching Opportunities
On both sides of the Filecoin marketplace, those who are seeking storage (clients) need a simple and effective way to find those who are providing storage (miners). The network is already experiencing the growth of storage providers and notaries who are bringing more clients to Filecoin by providing confident services for secure data storage.
With the growth of clients and miners on Filecoin, more applications to improve the UX of client-miner matching will emerge. Deal matching platforms (think of Airbnb) will be built on Filecoin that make it easy for those who have storage to find those who need it. Miner reputations will grow critical in the selection process among clients for whom to trust to store their information; applications to gather and index reputations will become commonplace.
The Intersection of Storage and Compute
On the Filecoin network, there are a lot of compute resources available alongside storage services. At the intersection of storage and compute (the co-location of the two), the Filecoin community has begun building business opportunities. Leveraging their compute resources, miners are already offering SNARKs and GPUs as a service. Analytics is another natural business use case, allowing the compute resources of Filecoin to collect and process the activity happening on the storage side of Filecoin.
Financial and Data Services
Across the history of finance, managing risk, providing liquidity, and reducing uncertainty has always been in demand for financial products. The Filecoin ecosystem will benefit from financial services that aim to hedge token volatility risk for miners and clients, both of whom need FIL (miners for collateral, clients for payments). The services that emerge around these Filecoin participants to reduce risk and ensure liquidity will also have access to robust datasets about FIL and Filecoin’s tokenomics, enabling a secondary business opportunity for data services.
Looking Ahead at More Web3 Opportunities
Welcome to the Dataverse
The core elements of Web3 include: privacy and ownership, transparency, standards, composability, governance, and new business models. We’ve seen these fundamentals at work with the emergence of DeFi (years of composability leading to the 2020 DeFi summer) and NFTs (ownership and strong standards leading to the 2020 boom).
A missing building block of Web3 is a strong data supply chain - now made possible by Filecoin. The Dataverse describes a Web3 ecosystem in which each stage of a piece of data’s lifecycle is permissionlessly, securely, and verifiably stored.
Data Bounties: smart contracts can pool together funds to store a particular CID (content identifier). Funds would only payout after proof is provided that the data has successfully been stored on Filecoin.
DataDAOs: DAOs formed around data that a community, business, or organization cares about. Members can join the DAO, for example, by proving they have stored a piece of the dataset or have contributed to a pool.
Content-first NFTs: a DealID is a unique identifier that describes a storage deal (an agreement between client and miner to store a piece of content). Every single DealID on Filecoin can be considered an NFT — a unique identifier of the underlying content. A marketplace could emerge around those distinct DealIDs, with people buying and selling VR content, games, 3D printing models, and more.
Verifiable Compute: CIDs are not just pieces of information; they can be algorithms too that are stored on Filecoin. Compute and data together generate more data, powering use cases like machine learning and verifiable compute.
Layer 2 Protocols: Layer 2 applications open up the doors for near-infinite possibilities. Developers can leverage the building blocks of Filecoin to fill in the gaps and provide new experiences to miners, clients, and network participants. Some ideas include: perpetual storage solutions, content delivery protocols, and alternative incentives for clients to use Filecoin.
In less than a year after mainnet launch, the Filecoin network is booming with uses cases, partnerships, and builders.
When thinking about the business applications of the Filecoin network beyond storage, keep in mind:
- Filecoin is uniquely positioned to support both Web2 and Web3 opportunities and make blockchain more useful.
- Immense opportunities exist in building layer 2 protocols, platforms, and products on top of Filecoin.
- Business models are key, and there are many areas that the community can (and should!) explore.