The Impact of V1 Sector Expirations on Filecoin Storage and Cryptoeconomics

tags: Articles

Up to date by March 2021

Authors: Danilo Lessa Bernardineli (BlockScience)

Background context

Shortly after Filecoin liftoff, a security issue was reported with the v1 proofs. The issue was fixed in v1.1 proofs, which were introduced in the Filecoin network version 7 upgrade, on November 25th, 2020. As a result of this upgrade:

  • All new sectors had to use v1.1 proofs
  • v1 sectors were allowed to remain on the network, but were NOT allowed to be extended

Since the security of these sectors is not critically compromised, we can consider allowing their extension, which was proposed in FIP-0014. This report details the storage and cryptoeconomic impacts of allowing vs. rejecting FIP-0014.

Executive Summary

  • The current size of the network is large enough to dillute the expiring sectors in April and May.
  • The network as measured in raw-bytes capacity is expected to continue growing during the V1 expiration wave.
  • It remains to the community to decide about the fairness and incentivization aspects of FIP-0014.

The code and the visualizations for this writing can be seen on the following link: https://blockscience.github.io/filecoin-metrics/notebooks/fip_0014.html

The first wave of expiring sectors

Right now, Filecoin has about 92.3M active sectors, on which 26.2M (28% of the total) uses the V1 proof.

An immediate concern about them is about the sectors with 6 months lifetimes, as they're starting to expire on March 26, 2021, although the majority is going to expire between 22 April, 2021 and 28 May, 2021, peaking on 10 May, 2021.

That first wave makes up 6.3% of all Filecoin active sectors, or 22.3% of all V1 sectors. In absolute terms, they're 5.8M sectors, or about 177PiB over three months.

The big picture is contained in the following chart, where waves related to the 6 months, 12 months and 18 months sectors for both V1 and V2+ sectors are identified:

Expiring sector count, monthly

A more granular view is obtained by getting the count on a daily window before 15 June. Note that the vertical axis is on logarithm scale.

Expiring sector count, daily, before 15 june

Through the above figures, we can define key dates in regards to daily sector expiration rate:

  • 26 Mar, 2021: First sectors are expired
  • 14 Apr, 2021: Daily sector expiration rate is above 10k per day, or 312TiB per day.
  • 22 Apr, 2021: Daily sector expiration rate is above 100k per day, or 3.05PiB per day.
  • 10 May, 2021: Peak of the sector expiration rate, at about 201k per day, or 6.13PiB per day.
  • 28 May, 2021: Daily sector expiration rate gets below 10k per day, or 312TiB per day.

The current forecast points towards having 3.8 EiB of raw-byte storage power by the end of May. This is fuelled by the continued sealing of new sectors.

Forecasted Raw Bytes Storage Power

We project that the daily new sectors growth will be between 450k per day and 900k per day, generating a daily SP growth between 13.7 PiB per day to 27.5 PiB per day.

Forecasted Daily Sector growth

The expiration of approximately 5.8M sectors between 22 April and 28 May will subtract 180k per day from the above numbers, which is equivalent to a reduction of 40% on the pessimistic side and 20% on the optimistic side. Note that with more 64GiB sectors being added to the network, the actual impact tends towards the more optimistic case.

Impact on Collateral

Right now, Filecoin has 27.8 Million FIL locked as sector collateral, 5.8M (21%) of which are on the V1 sectors. Notice this is relatively lower than the sector share, as the collateral for each new sector tends to increase with time.

The 6 months V1 sectors have 1.2M FIL locked with them (4.3% of the network total), and the event of their droppage should not be an issue for network security.

Conclusions

From a Cryptoeconomics point of view, the network will continue to be safe and healthy on any decision regarding allowing all V1 sectors to be extended to a maxium 540 days in epoch lifetime from their activation epoch.

The decision of letting the V1 sectors expiring or not is to be put before the community, as there are multiple angles to FIP-0014 approval, which include considerations regarding fairness and behaviour incentivation, as well as other ones like environmental and waste minimization.

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