Aug 1st

What is FilFi?

FilFi is a DeFi protocol that promotes the liquidity of Filecoin assets, providing basic services such as joint nodes, liquidity staking , and hashrate transactions.The goal ofFilFiis to create a permissionless liquidity market for the Filecoin community, realize 100% decentralized DeFi, reduce trust costs, promote liquidity, and accelerate the construction of the Filecoin network. Fully based on the Pledge Protocol of FVM,FilFiprovides comprehensive services such as pledges, lending, co-mining, and C-power transactions.

Deposit system :

FilFi’s deposit system can fully ensure the interests of investors in risk control.Although it is a margin, it actually reverses a problem that has the voice over. In the past, the investor invested in SP to mining, then he lost the control of his FIL asset, let alone has the voice over. He even does not know the situation when occurs some emergency.But in our defi platform,FilFi, has separated this role, namely, we added a deposit system, this is why called reverse the voice right.FilFi instead let the iniriator and the technical service provider to pay the deposit to serve as a credibility guarantee.ForFilFi, the initiator needs to pay a 5% deposit, the deposit is used to bear the gas fee, and any other expense during fundraising and sealing period. The cost of some funds generated is equivalent to the entire node, it is also uncertain, so it is actually an unknown latent risk, but the initiator bear this part of the risk, and then pay the deposit. The deposit system for technical service providers can also urge them to be responsible. The innovative “inferior pledge “ system ensures that the interests of technical service providers are bound to the full cycle of storage nodes.

Key point 1 :

The introduction of the deposit system aims to reverse the voice right to protect the interests of investors. In the traditional investment model, investors lose control and the voice right after handing over their assets to service providers (SP), resulting in information asymmetry and risk.But in 

FilFi, the reversal of has the voice over is achieved by separating the roles of initiators and technical service providers and asking them to pay a deposit. This makes it necessary for initiators and technical service providers to perform their contracts honestly and provide more guarantee for investors.

Key point 2 :

The initiator is required to pay a 5% deposit to deal with uncertainty and potential risks. The purpose of the deposit includes paying gas fees and dealing with failures and capital costs that may occur during the fundraising and sealing period. By letting the initiator bear this part of the risk and pay the deposit, the risk is effectively dispersed, providing stability and guarantee for the operation of the entire platform.

Subordinate Pledge :

We first divide the interests on this storage node into two layers, one is the right to profit, and the other is the ownership of the pledged currency, so if a node can operate stably for a long time, we believe that this technical service provider must have certain guarantees on the rights and interests of both levels, so that it has a strong correlation and can maintain the long-term healthy operation of this node.So at the level of the pledge currency, there must be at least 5% of such an investment, we call it the subordinate pledge, its role is to enter the node, when the network penalty is generated, this part of the pledge currency will bear the loss.

Some peoply may wonder that this deposit is sealed, how does it bear this loss? It involves a three-layer structure. The pledge coin has a 5% guarantee, so in the income layer, we think that for technical service providers, there should also be a 5% guarantee, he needs to have 5% of this interest at the income level, so that 5% at the pledge level and at least 5% at the income level of the interest. In this two-tier structure arrangement, we believe that the correlation between the technical service provider and this node will be enhanced. The income of the technical service provider on the node is divided into several parts, one part is his technical service fee, such as 5% of the income of the equity, there will be a working capital coming in, then this part of the capital, we will have a month’s account period, and we can withdraw it once a month, which is also the first layer of protection, that is, when there is a punishment, the liquid income will be used. The first layer supports this fine;Then the second pen is just mentioned that after the pledged currency goes in as an inferior, this part also generates income. But this income is not allowed to withdraw, it has the same life cycle of the pledged coin, and it must continue until the node computing power expires before it can be taken away, so the 5% of the income generated by the pledged coin cannot be used as this penalty. In the case that its low-level liquidity cannot be supported, the liquidity generated by the pledged coin will do the second layer of protection to provide this support. If these two layers are broken down, it is that its computing power is too powerful. In fact, in this situation, first of all, we have to consider whether the operator should be removed from our KYC of 

FilFi, it is really too unreliable. In such an extreme and tricky situation, is it necessary to shave it off and limit its subsequent participation?

If this situation does occur, it will firstly be listed, and then the output is used to directly balance the account. Of course, leveling the account consumes his income. Partly of investors is protected until the account is cleared. According to the current operation of the entire network is good, the service provider and the node situation, we do such a design, basically to ensure the security of this node. So there is a three-tier structure design, which regards its investment as inferior, that is, when there is a loss, he will bear it first. When the pledged currency is returned, for example, if there is a returned pledged currency at expiration, let the investor takes all the pledged coins and his remaining earnings first, so this ensures a so-called inferior concept.

The direct risk of loss faced by builders is mainly related to the Filecoin network penalty during the operation and maintenance period. The role of the 

FilFiprotocol guarantor pledges a certain proportion of FIL, which is sealed on the sector as a “subordinate pledge” to form a guarantee pledge structure (subordinate pledge guarantee priority pledge). Subordinate pledge mainly plays two roles: subordinate pledge can also share network revenue and encourage technical service providers to take responsibility. Subordinate pledge takes priority to bear network fines to provide guarantees for investors. Both the priority pledge and the inferior post-pledge will generate benefits and will share the benefits. The guarantor receives the same returns as other builders, the difference is that the returns generated by the priority pledge can be withdrawn at any time, and the returns generated by the inferior post-pledge will continue to be locked until the sector expires. When the sector expires, the priority pledge is returned to the investor first, and the inferior post-pledge is returned to the guarantor last. When a network penalty is incurred, the inferior post-pledge is the first to bear the loss.

Node construction: node construction and quota:

Joint nodes is to do such a requirement of a node co-construction, which also comes from the understanding of the entire ecology, because at present in the entire node construction process, relative to the ecology of BTC or ETH, there is still a certain complexity, because the current consensus of the entire ecology is POW plus POS , so in addition to the network construction of this node, in addition to involving a hardware, including IDC , such professional technical services. For example, since last year, the ecology began to promote encouragement, and then this file plus the data of DC, and then how to obtain some effective data, then in fact, the entire node construction needs more and more pledged fil. To sum up, the construction of a storage node in the entire network is actually a relatively complex process. It is a process that requires multiple roles, and then come and go to participate together, but before Fil, it was in the construction of this node for a long time, because it was built by multiple roles. But in fact, there was a lack of a comparison in the middle, which was a transparent platform to achieve a fair and relatively fair distribution of the interests of all parties, it will lead to some bad intermediate roles in the previous ones, and then it will lead to the loss of some funds for investors, or some other problems, so it actually affects the construction and development of the entire network.

Node construction and trust problems: the first problem to solve is the trust problem. How can it be achieved to make the bottom of the network construction process, so that all the participants can trust, can build together, is a most important cornerstone. Then based on this, or lending, or other transactions of these needs, I think it can be better to meet, because in the process of building trust, it is possible to build a better liquidity of the bottom, then based on this above some other services, I think it can be better and healthier faster development, so this is in fact we are thinking behind such a product.

The whole process of the construction process is transparent and open: For example: Everyone may be used to saying in the offline process before, I put this and then handed it over to a centralized service provider, or an SP, and then you may just care about the income, but in fact, what you are behind this investment is how to enter this node, and it is explained that this process is not very much for this investor before. So I think that after FVM, in fact, we have opened it through decentralized contracts. In fact, I think it is also the first time that ordinary investors have opened it, and the whole process of this node is open and transparent. From the entire collection of nodes, including sealing, the production of its nodes, to the last one, which is a recovery of the last pledged coin, the whole process, every step, every link, investors can see very clearly. Respect the value of time: the first second of investment interest, eliminate the window of funds waiting, regardless of the success of the fundraising plan, not a second is idle.

Flexibility: Joint node, first build this node, and then after construction, everyone has two kinds of assets in their hands, either the right to profit, or the pledge currency, then these two layers, we will put it in the future NFT , in fact, it is an idea of this asset Securitization in traditional finance. We hope to move the resources in our hands, so your GRB can become a kind of NFT, and then this computing power The equity income can be turned into NFT, and then we will open a trading market, and then further we will open the external market, and you can take this NFT to the NFT trading market outside this ecosystem to complete the transaction. For example, platforms such as opensea.

Eliminate risks: In the specific environment of China, the introduction of smart contracts provides a unique solution to solve the risk problems in multi-party business processes and transactions. Traditional business models may have a series of problems in some cases, such as too large an institution will have more attraction, and the environment is in a gray area. The emergence of smart contracts has brought new hope to these problems. In traditional business models, specific roles play an important intermediary role, but this centralized model also brings corresponding risks. First, there may be risks of manipulation and unfair competition in specific roles. Second, due to the existence of specific roles, institutions are often too large, resulting in inefficient decision-making and improper quotas. In addition, the existence of gray environments also increases the uncertainty of business activities, further amplifying risks. This is what Fil did in the first phase. In a specific environment like China, due to the complexity of regulations and policies, these issues are more prominent and the overall risk increases dramatically. The introduction of smart contracts provides a new way to solve the above problems. Smart contracts remove centralized roles, no specific roles, and decentralize everything to relevant roles to eliminate risks.

Free choice of SP : Compared with the first stage of Fil, we 

FilFican choose the global SP. We basically chose domestic SP before, or many of our friends want to choose foreign SP, one is that the cost is higher, the communication efficiency is also very low, and some security issues are not guaranteed. But ourFilFiSP is subject to very strict KYC certification. This can very well guarantee the quality of SP.