Filecoin (FIL)

Filecoin (FIL) is the native cryptocurrency of Filecoin, a decentralized network for storing data. People and companies pay FIL to storage providers, who rent out spare disk space and must prove with cryptography that they are keeping the data they promised to store. FIL is also used as collateral by those providers, as the reward for adding blocks to the network, and to pay transaction fees.

FIL is the coin; the Filecoin network is the marketplace and blockchain it runs on. Filecoin was created by Protocol Labs, the research company founded by Juan Benet that also built IPFS, a widely used system for finding files by their content rather than their location. IPFS and Filecoin work together but are separate: IPFS can be used without Filecoin or its token.

Imagine a city where anyone with a spare garage can rent it out as a storage unit, and an app matches people who need space with people who have it. Filecoin is that app for computer files. Instead of trusting one big company's data centres, customers spread their files across many independent providers around the world.

The obvious worry is that a provider takes the money and throws the boxes away. To prevent that, every provider puts down a deposit and must regularly prove, using maths rather than an inspection visit, that it still holds each customer's files. A provider that fails the checks loses part of its deposit. Providers are paid in FIL, and earn extra FIL for keeping the network running.

Protocol Labs published the first Filecoin paper in 2014 and an updated version in 2017. In 2017 it held one of the largest initial coin offerings of that boom, raising about 205 million dollars through sales to accredited investors that promised FIL once the network existed. After several delays, the mainnet launched on 15 October 2020, and FIL began trading on major exchanges the same day.

The Hygge upgrade on 14 March 2023 launched the Filecoin Virtual Machine (FVM), adding user-written smart contracts to the network. FVM includes a runtime compatible with the Ethereum Virtual Machine, so many existing Ethereum contracts can run on Filecoin with little or no change. In June 2023 the United States Securities and Exchange Commission named FIL among the tokens it alleged were securities in its lawsuit against Coinbase; the SEC dropped that case in February 2025.

Storage providers seal customer data into units called sectors. Proof-of-Replication shows that a provider has created a unique, encoded copy of the data on its own hardware, rather than pretending to store it or sharing one copy among several deals. Proof-of-Spacetime then shows, again and again over the life of the deal, that the provider is still storing it; each sector is checked at least once a day. Providers must lock FIL as collateral, which is cut, or slashed, if they fail to submit proofs or drop data early. A provider's share of the storage on the network determines how often it wins the right to produce a block and collect the reward, so the network is secured by useful storage rather than by pure computing work. Under Filecoin Plus, storage of verified useful data counts more heavily towards that share.

FIL has a maximum supply of 2 billion tokens. Of these, 55 percent, or 1.1 billion, is set aside as rewards for storage providers, with the rest allocated to Protocol Labs, its team and contributors, investors, the Filecoin Foundation and a mining reserve. Storage rewards are released in two ways: 770 million FIL through baseline minting, which pays out only as total network storage meets growth targets, and 330 million FIL through simple minting, which decays with a six-year half-life. The simple-minting amount released after $t$ years is:

• $M(t)$ is the total FIL released by simple minting after $t$ years.
• $330{,}000{,}000$ is the simple-minting pool in FIL.
• $t$ is the time since mainnet launch, in years.

For example, after six years $M(6) = 330{,}000{,}000 \times \left(1 - \tfrac{1}{2}\right) = 165{,}000{,}000$ FIL, half the pool; after twelve years three-quarters, or 247.5 million FIL, has been released. Part of every transaction fee is also destroyed, a form of token burning, which offsets some new issuance.

• Paying for storage. Customers pay providers in FIL for storage and retrieval deals.
• Collateral. Providers must lock FIL to take on storage and win block rewards.
• Fees and smart contracts. FIL pays for transactions and FVM programs, including pools that lend FIL to storage providers.
• Decentralized infrastructure. Filecoin is part of a wider group of Web3 networks selling computing resources, alongside projects such as Render (RENDER) and Internet Computer (ICP).

Critics have noted that much of the data stored on Filecoin has been placed there to earn rewards rather than by paying customers, and that real demand for decentralized storage has grown slowly compared with the network's capacity. Storage providers face high hardware and collateral costs, so falling FIL prices can push them to leave. The long token release schedule has added steady selling pressure, and FIL has been listed and traded as a highly volatile asset since 2020.

• Filecoin
• Filecoin documentation
• Filecoin specification