FVM brings programmability to Filecoin, unlocking the immense potential of the data economy

Author: FalaBlock

The Filecoin network is about to welcome the v18 Hygge upgrade, which will bring us the long-awaited FVM. FVM will introduce programmability to Filecoin, allowing developers to deploy EVM contracts on the Filecoin mainnet through FEVM, enabling Web3 applications to operate similarly to Web2 applications, thereby solidifying Filecoin's leading position as the best protocol for an open data economy.

Existing Ethereum tools will be compatible with Filecoin, allowing user-deployed actors to interact with Filecoin's built-in actors and access Filecoin's functionalities. Developers can build various use cases on Filecoin, such as DataDAOs, permanent storage, lending markets, KYC and proof of claims, trustless FIL+ notaries, reputation systems, storage automation, cross-chain bridges, and oracles.

What is FVM?

With FVM, Filecoin will no longer be just about storage, as FVM combines the features of provable storage and smart contracts, bringing smart contract and data computation capabilities to the Filecoin network.

Currently, Filecoin is viewed as a distributed data storage and retrieval network. Through thousands of global storage providers, it offers nearly 19 EiB of distributed data storage capacity to the world.

The FVM virtual machine allows users to deploy their own smart contracts, enabling on-chain computations based on state data within the Filecoin network. This is indeed a very powerful feature. This method of allowing users to program on provable distributed storage for on-chain computations can facilitate many downstream use cases and applications.

Once FVM is successfully implemented, we can view storage and retrieval functionalities as the Layer 0 architecture of Filecoin, while the capability to execute on-chain computations will bring Layer 1 capabilities to Filecoin's tech stack.

What new changes will FVM bring?

Programmable storage markets. If you view the Filecoin storage network as a massive decentralized data warehouse, whose state is continuously proven to the public, you can see FVM as its programmable controller. In traditional cloud-based data centers, the strategies defining how data is inserted, placed, distributed, copied, and repaired are predetermined by the vendors, leaving users to configure them in proprietary ways.

With FVM, developers can envision and create data center logic to orchestrate, aggregate, and proxy storage capacity and data spread across the globe in novel ways, generating new storage primitives with relevant economies of scale.

For example, storage bounties, where storage providers compete to win transactions, lowering prices for customers. Bulk discounts, where the price decreases further for purchasing multiple sectors at once. Sector rebates, where providers refund customers (possibly Data DAOs) under triggering conditions, such as when they purchase N sectors within a specific time frame.

With the help of FVM, the Filecoin network can interconnect like Lego blocks, providing richer storage methods. Many automated solutions, variants, and styles have room to compete in the market. By standardizing open interfaces for abstract concepts, storage automation tools and other solutions like DataDAOs can integrate without lock-in. A derivatives market may emerge in the future, enabling seamless switching between vendors through interoperability solutions.

Reputation and quality of service systems. With nearly 4,000 active storage providers serving the Filecoin network, it is not easy for customers to choose who to store their data with. Different customers may value different attributes, and the priorities of the same customer's different datasets may vary. Storage providers can aggregate and promote their quality of service on portals, but the public must trust them, which is challenging due to the varying quality of storage providers.

Reputation systems are L2 networks that patrol the Filecoin network, assessing the quality of service of storage providers. Their activities may be funded by crowdfunding, DataDAOs, or specialized crypto-economics. They conduct storage transactions in the public market and record their observations in provable logs, calculating and publishing reputation scores and metrics in a traceable and auditable manner. Pando is a potential building block.

Reputation systems will provide services through on-chain, off-chain, or both APIs, possibly featuring complex query capabilities that allow storage applications to programmatically explore and filter storage provider transactions based on the exact characteristics they care about.

FVM has realized a new type of data-centric DAO, DataDAO, whose mission revolves around the preservation, management, expansion, and promotion of datasets that stakeholders find valuable. This includes datasets valuable to all of humanity, such as large genomic or research databases, historical indexed blockchain chains and transaction data, aggregated data, Wikipedia, NFT collections, metaverse assets, and more.

Because the stakes in DataDAOs can be tokenized, the data stored by the DAO (and its state) can be cryptographically proven, allowing the value and utility of the data to be objectively expressed and traded in the market. Tokens can then be used to pay for services executed on or using the data.

Interested individuals can earn FIL through analyzing datasets, executing scientific and ML modeling, calculating statistics, and more within a DAO-driven decentralized computing structure, all of which enhance the value, worth, and utility of the original data. SPs can be rewarded for replicating datasets, while CDNs can be rewarded for distributing data.

At the same time, stakeholders can spend FIL to incentivize the production of more original data, such as sensor data collection, generative art, or even manual tasks, thus forming a data-centric circular economy.

In summary, DataDAOs can create new incentive layers for datasets, combining or replacing FIL+ rewards, thereby driving the usage and circulation of FIL.

Trustless FIL+ notaries. Today, DataCap is allocated by notaries. Notaries help add a layer of social trust to verify the authenticity of customers (and prevent malicious behavior). However, through smart contracts, we can design permissionless notaries that can significantly reduce attack rates and enhance security.

Trustless notaries may resemble on-chain auctions, where all participants (customers, storage providers) need to lock some collateral to participate. Auctions conducted through smart contracts—everyone can verify that the winning bidder comes from a transparent process. Economic collateral (from customers and storage providers) can be used to create a slashing mechanism to deter malicious actors.

For simply running auctions, notary maintainers may charge a portion of the transaction settlement fees, fees on locked collateral (for example, if the locked FIL is used as part of the collateral's earnings), or some combination of both.

The arrival of FVM has invigorated the market of the Filecoin network, leveraging the Filecoin economy, strengthening believers' faith, solidifying the resolve of steadfast supporters, and giving investors more hope.

FalaBlock has been providing computational power support for the Filecoin network since the launch of the Filecoin mainnet. As FVM is about to go live, FalaBlock is also officially launching FIL staking mining services, providing users with the most stable FIL appreciation options based on real computational power, under the premise of a long-term upward trend for Filecoin.

Join FalaBlock in witnessing the upcoming v18 Hygge upgrade and welcoming the arrival of FVM.