An Analysis Of Filecoin Storage Providers' Storage Power And Wealth Distribution
Many emerging economies witness development inequality among their participants, especially in capital and wealth distribution. To measure Filecoin’s success as a decentralized cloud service economy, this article will dive deeper into the storage power and wealth distribution of its core participants––storage providers (SPs)––who are the backbone of the network’s growth.
In order to quantitatively describe the distribution of SPs’ storage power and wealth, we use an economic metric named the Gini coefficient to measure the dispersion. This metric measures the inequality among the population, with values ranging from 0 to 1. The closer the value is to 0, the closer the community is to perfect equality. Conversely, the closer the value is to 1, the further away it is from perfect equality.
The Gini coefficient is calculated by plotting the cumulative percent of SPs over the cumulative percent of their RB capacities or token balances. The graph is also known as the Lorenz Curve where the Gin coefficient is calculated by the area between the Line of Equality and the Lorenz Curve divided by the area under the Line of Equality (i.e. A/(A+B) as shown in figure 1).
Figure 1: An Example of the Lorenz Curve
The current state of SPs’ Storage Power Distribution (RB Capacity)
RB Capacity refers to the raw-byte capacity, and is the amount of storage resource a SP has committed to the Filecoin network. As of 21 Aug 2022, there are 4069 SPs actively providing data storage services, and they can be categorized into four types based on their RB Capacity.
The small (<1 PiB) and medium-sized (1~20PiB) SPs account for the majority, with more than 75% of SPs having less than 4 PiB RB Capacity. However, only 1% of SPs have more than 50 PiB RB Capacity; and 4% of them have 20~50 PiB, showing the small and medium-sized SPs are the major participants in the Filecoin economy.
Figure 2: Storage Provider Types by RB Capacity
Figure 3: Percent/Number of Storage Providers Who Have at Least ‘X’ PiB RB Capacity
The current state of SPs’ Storage Power Distribution (QA Capacity)
QA Capacity is another key metric to measure SPs’ storage power. It refers to quality-adjusted capacity, which adds a Sector Quality Multiplier to storage providers’ RB Capacity, to incentivize them to onboard more useful storage. More specifically, storage providers will have a VerifiedDealWeightMultiplier to increase their QA Capacity if they store verified deals through the Filecoin Plus (Fil+) Program, which aims to incentivize the onboarding of real and useful data. With greater QA Capacity, SPs are more likely to be selected as Filecoin’s block producers and thereby receive block rewards from the network.
The percentage of small (<1PiB), medium (1~20PiB), large (20~50PiB), and super-sized (>50PiB) SPs (by QA Capacity) is quite similar to that of their RB Capacity; showing SPs in different storage powers are all actively participating in the Fil+ program and taking storage deals.
Figure 4: Storage Provider Types by QA Capacity
Figure 5: Percent/Number of Storage Providers Who Have at Least ‘X’ PiB QA Capacity
The Current State of Storage Sroviders’ Wealth Distribution
Storage providers receive block rewards by committing storage resources and storing deals on Filecoin. The number of tokens remaining in their accounts represents their likelihood to accrue the storage rewards received. At present, most storage providers have 1,000~100,000 FIL tokens in their balances, with the majority holding 10,000~40,000 FIL in their wallets. Since a storage provider receives ~71 FIL on average per day, it shows most storage providers are accumulating their rewards over time to reach the aforementioned range.
Figure 6: Storage Provider Types by Token Balances
Figure 7: Percent/Number of Storage Providers Who Have at Least ‘X’ Amount of Tokens
The Equality Status of Storage Providers’ Storage Power and Wealth Distribution
The medium-sized (1~20 PiB) storage providers have become the main contributors to the network capacity in terms of their populations (as shown in figure 2) and the contributed RB Capacity (as seen in figure 8). It is worth noticing that the power of the top 10 storage providers (in terms of the percentage of their contributions to overall network RB Capacity) has decreased since Nov 2020. This shows SPs on Filecoin are becoming more decentralized in power distribution.
Figure 8: Percent of Different SPs’ contribution to the Network RB Capacity
Figure 9: Percent of Top 10 Storage Providers’ RB Capacity to the Overall Network RB Capacity
As of 21 Aug 2021, and before the increasing adoption of Filecoin Plus (Fil+), the disparity in SPs’ RB Capacity and QA Capacity was noted to be insignificant, resulting in their Lorenz Curves overlapping (as shown in figure 10). This has made the Gini coefficient of SPs’ RB Capacity and QA Capacity in Aug 2021 close to ~0.75.
However, the Gini coefficient has further improved over time, with the launch of the Fil+ Program. As of 21 Aug 2022, the Gini coefficient of SPs’ RB Capacity is at ~0.72, and ~0.70 for QA Capacity. A reduction in the Gini coefficient corresponds to a step closer to equality—showing Filecoin is moving towards a better SP structure in encouraging the onboarding of more valuable data.
Figure 10: Lorenz Curve of SPs’ Storage Power Distribution
The wealth distribution of storage providers has also improved along with the development of Filecoin, with the Gini coefficient decreasing from 0.81 in Aug 2021 to 0.74 as of Aug 2022. Both storage power and wealth distributions are gradually becoming more decentralized to encourage more dynamic participation in the Filecoin economy.
Figure 11: Lorenz Curve of SPs’ Wealth Distribution
Filecoin has experienced rapid expansion in its storage capacity, thanks to all the storage providers. In addition to its quick growth, the network has continually shown efforts to form a healthy and decentralized storage supply structure through various crypto-economic incentives and policies. The Fil+ program, which adds a layer of social trust on top of the network to incentivize the onboarding of real, useful data, is one example.
As Filecoin’s decentralized storage economy matures, SPs will adjust their storage capacities according to market conditions. We expect SPs on Filecoin to move from simply adding storage power to the network to focusing on quality of service and adoption of deals, such as improving existing service quality; or participating in data retrieval and computation services (which are expected to be deployed on Filecoin soon.) In this way, SPs will diversify their revenues so as to further improve their economic conditions. Since storage providers are the backbone of the Filecoin network’s growth, healthier distribution of storage powers and wealth among storage providers will foster Filecoin’s long-term trajectory of becoming a decentralized Web3 data economy!