FilFi: FilFi is a DeFi protocol that promotes the liquidity of Filecoin assets, providing basic services such as joint nodes, liquidity pledges, and compute power transactions. The goal of FilFi is to create a permissionless liquidity market for the Filecoin community, realize fully decentralized DeFi, reduce trust costs, promote liquidity, and accelerate the construction of the Filecoin network. Completely based on the FIL Liquidity Pledge Protocol of FVM, FilFi provides comprehensive services such as pledging, lending, co-mining, and C-power transactions.

Stage 1: In the past, storage service providers sold distributed storage computing power. They received money and promised that customers would get some computing power. But, in the era of centralization, they did not fully achieve this. Because customers do not know whether it is true or not. All the information about the computing power comes from the APP provided by the service provider, and the data in it is provided by the APP itself. So we can imagine what will happen. There was also a problem at that time. The owner of the storage computing power, which is usually a part of the computing power of the big node, did not know the node number. All the distribution data comes from the APP of the service provider. The data of the APP does not come from the data publicly available on the chain, but undergoes secondary processing to guarantee the profit of the service provider. This is also called “Black box allocation”.

FVM Smart Contract: When it comes to the integration of financial innovation and blockchain technology, the DeFi (financial decentralization) of smart contracts is undoubtedly a major initiative in the financial industry. Smart contracts are an automated computing program executed on the blockchain, while DeFi is an ecosystem of Financial Services and tools built on blockchain technology, including various financial activities such as lending, trading, liquidity provision, and stablecoin release. Let’s take a closer look at why DeFi based on smart contracts is chosen and the unique advantages it brings. First, its unlimited innovation, security and reliability: DeFi based on smart contracts breaks the shackles of the traditional financial system, allowing individuals and enterprises to conduct financial transactions directly in a decentralized environment. The code of smart contracts is open and transparent on the blockchain, and users can view and verify the execution logic of contracts, thereby establishing trust. Although there may be vulnerabilities in contracts, problems can be quickly discovered and solved due to its transparency, ensuring the safety of assets. Second, giving users the right of control, thus winning trust from the third parties. DeFi based on smart contracts gives users greater control power. Users can interact directly with smart contracts through private keys and win trust from third-party institutions. This means that users can maintain complete autonomy in financial activities such as transactions and lending, and are not subject to the decisions and restrictions of centralized institutions.Third, it is global Unbounded and easy to Participate. DeFi of smart contracts is global and anyone can participate. This creates equal opportunities for financial participation for those who do not have access to traditional Financial Services. No matter where you are, as long as you have an internet connection, anyone can participate in the DeFi ecosystem, network, trade and invest. Forth, creating liquidity and promoting innovation: The DeFi ecosystem of smart contracts encourages the creation and sharing of liquidity, such as through liquidity pools. This provides the market with greater flexibility and depth, while also providing soil for innovation in new financial instruments and services. Developers can build smart contract-based DeFi applications to bring users more financial options. Fifth, the Wallet. Compared with the traditional financial system, DeFi based on smart contracts requires a large number of wallets. Anyone can easily access DeFi applications through digital wallets, participate in various financial activities, without spending time in cumbersome identity verification and approval procedures. In short, DeFi based on smart contracts has injected new vitality and innovation into the financial system. Its decentralization, security, autonomous control, global nature and low debt characteristics form an important development direction in the future financial field. DeFi for smart contracts means that you will have greater financial freedom and control and actively participate in the future of finance in an open, transparent and innovative environment.

FilFi — FVM smart contract -based: FilFi is based entirely on FVM smart contract , and further to make research and develop online DeFi products. Therefore, the code of all products, including the implementation of the product, and the process of the product, can be found online. For FilFi, we will reveal the whole process. First, we will list all the participant roles of the joint node. In our first version of FilFi, there are three roles in total. The first is called the sponsor, and it is also the initiator of the node. The second is the node builder, which is our Fil holder and they can participate in this node by investing Fil. The third is the node operator, which is the technical service provider. On FilFi, the three parties’ information is open and transparent. You can see who proposed this node, which SP is running, and what is the running status of this node. Secondly, the construction process of a node is completely transparent throughout the node. Collecting collateral coins, sealing progress, and distributing profit, all of which is taken over by the smart contract. All the parties firmly perform the contract which cannot be changed, and there is no human factor.

FilFi Node Planning Process: The core logic of FilFi Joint Node Service revolves around the node plan. The behavior of all parties involved will drive the change of the state of the node plan, and the change will be recorded on the chain. The life cycle of the node plan can be divided into five stages: 1. Preparatory period which is the process of reaching consensus between the sponsor and the technical service provider. 2. Pledge period which is the process of builders choosing and participating in the node plan. 3. Sealing period which is the process of technical service providers sealing storage computing power. 4. Operation and maintenance period. Technical service providers provide operation and maintenance services. Builders and guarantors get incentives. 5. Payback Period. Builders and guarantors take back the pledge and get incentives in linear release. Then we can think again. The joint node plan involves multi-role joint node construction. Co-construction is that everyone in the industry builds a node. In the entire node construction, its division of work is relatively clear. If it can be divided into more clearly, you can see more clearly the rights and responsibilities, everyone’s contributions, and then be able to make distribution more fairly. The entire construction role is divided into three roles. The first role is the sponsor, also the initiator of the joint construction plan, who creates and issue the “node plan” . Usually, the sponsor has hardware resources (by purchasing or leasing), seeking the pledge cooperation of the fil holder, and selecting service providers to provide technical support. The sponsor defines the construction parameters, pledge objectives and distribution scheme of the storage node. The core task of the sponsor is to design a reasonable distribution scheme, attract the fil holder to participate in the “node plan” with a good rate of return, and bind the technical service provider to provide long-term and stable services with a reasonable proportion of income. The sponsor issues the “node plan” on the Filecoin chain and promotes the community to achieve the pledge target within the agreed time. After the pledging is completed, the sponsor coordinates the sealing resources of the technical service provider to complete the construction task. The sponsor needs to pay the “sponsor deposit” in advance to protect the default risk of the “pledge period” and “sealing period”. When a default occurs, the FilFi protocol incurs a penalty, which is paid from the “Sponsor’s Deposit”. The second role is the builder: Due to the complexity of Filecoin construction, it is more difficult for FIL holders to directly build Filecoin nodes. Before the smart contract went online, it was possible to indirectly participate in the construction through centralized mining pools, but it lacked the necessary transparency. The “Node Plan” of the FilFi protocol realizes full smart contract management, and every FIL holder has the opportunity to directly participate in the construction of Filecoin nodes and share the benefits. The FIL holders who participate in the “Node Plan” are called “builders” in the FilFi protocol. The builder pledges the FIL to the “Node Plan” and seal it into the newly added sector as a “priority pledge”. The construction receives stored computing power assets and continues to share network incentives. The ownership of the builder’s input pledge remains unchanged, and after the sector expires, all of it is returned to the builder. The third is the technical service provider who provides technical services for the implementation of the node plan, including IDC operations, sector sealing, DC data support, technical operation and maintenance, etc. Optional technical service providers need to meet the KYC specifications of the FilFiDAO community. The sponsor selects the technical service provider to implement the “node plan”, and the technical service provider receives operating income through “technical service fee”. Finally, there is a role of the guarantor: the guarantor is a special type of builder, served by the node technical service provider, who also invests in the pledge and shares the incentive, but will first bear the risk of the network penalty. The guarantor’s input is called the “operation and maintenance deposit”, which is sealed into the new sector with the builder’s input in the same proportion. When a network penalty occurs, the “operation and maintenance deposit” takes priority. At present, the role as a guarantor can only be assumed by the technical service provider. All the operations performed by all the roles on the FilFi platform are all recorded on the chain, and all the processes are all open and transparent. Of course, the advantage of openness and transparency is that our builders, sponsor and the technical service provider, can be more aware of the incentives they have received, and all assets can be more secure and transparent. Compared with the situation in the first stage of Filecoin, this more transparent way can ensure the transparency of each node, from its initiation of plan, then to the pledge, and then to the sealing so that everyone can see the operation of every step.

The whole process of the construction process is transparent and open. For example: Everyone may be used to the offline process before, handing their investment over to a centralized service provider, and then you may just care about the income, but in fact, the process behind your investment such as how does the FIL enter this node and make production is not very clear to you. So I think that after the release of FVM, we use decentralized contracts that I think it opens a door for ordinary investors for the first time, so investors can see the whole process of this node, from the entire collection of nodes, including sealing, the production of every nodes, to payback of the last pledged coins, The whole process, every step, every link, investors can see it very clearly. After the pledging is completed, the raised coins are transferred to the miner address, and the smart contract manages these coins.The coin is transferred to the miner address, which means the coin is transferred to the available balance of the node, and the withdrawal of the available balance is controlled by the owner. Because the smart contract takes over the owner of the node, only smart contracts can withdraw coins. In addition, SP can seal the available balance as a pledge to the sector, which can only be used for these two purposes. So in theory, the withdrawal is controlled by the contract, and the sealing is controlled by SP. That is, in the most complex sealing process, the security management of the pledged FIL by the smart contract is completely effective. However, in the past centralized era, such a process was opaque. Investors could only see the profit given, and could not guarantee whether the pledged FIL was truly sealed, and there was a risk of misappropriation or theft. The source of the distribution income is also unrelated to node production, and is distributed commercially by centralized institutions. Through the decentralized contract method adopted by FVM, the entire node’s collection, sealing, production and payback of pledged FIL have become very transparent and public. The node collection can only be used as sealing, and the sealing process is fully on-chain. Production incentives are open and transparent, and are immediately distributed to each participant’s account, and each participant can withdraw to the wallet according to their own needs. It is worth mentioning that in this process, the smart contract has a strong binding force on the raised coins, which can ensure the security and stability of the pledged FIL of the node. At the same time, the pledged coins can also be sealed in sectors, which are controlled by the service provider. Therefore, investors can not only clearly understand the entire investment process, but also ensure the security and stability of the pledged coins. These are the advantages of FVM and decentralized smart contracts.

Elimination of risks: In the specific environment of China, the introduction of smart contracts provides a unique solution to solve the risk problems that arise in multi-party business processes and transactions. Traditional business models may have a series of problems in some cases, such as institutions that are too large will attract more attention, and the environment is in a gray area, so on. The emergence of smart contracts has brought new hope to solving these problems. In traditional business models, specific roles play an important intermediary role, but this centralized model also brings corresponding risks. First, specific roles may have risks of manipulation and unfair competition. Second, due to the existence of specific roles, the resources concentrated by institutions are often too large, resulting in the problem of being targeted. In a specific environment like China, due to the complexity of regulation and policies, these problems 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, so there is no specific role, and a more transparent way to disperse everything to relevant roles eliminates the risk of being targeted centrally.

FilFi — compliance construction: Contract with open source bounty and starting audit. Immediately at the end of this month, the FilFi joint node version will be open source, including providing two global professional auditing institutions to do third-party auditing, and publishing FilFi’s audit report to everyone. The community will also provide an open source bounty program to encourage the technical partners of the SP Alliance to ensure contract security together. For those participants who don’t understand code or contract, it would be better to have these very professional third- party audit companies. Decentralized management of the highest authority of the contract: the highest authority of the FilFi smart contract is managed by the FilFi Community Technology Alliance, which is composed of the SP Alliance and other technical ambassadors to realize the decentralized management of the highest authority of the contract. Subject compliance; Spiritual Realm Labs (Hong Kong) is responsible for the construction of the platform and products, which complies with local regulations and will continue to build in accordance with regulations. Strict KYC: the FilFi community initiated the establishment of the SP Alliance. The platform adopts a strict KYC and deposit system, so as to ensure the authenticity of the participant’s identity and then to evaluate the security report, so that users can enter this smart contract with greater confidence and participate in this node.