Original author: Filecoin Network
2024 is a pivotal year for Filecoin, with significant progress in the Filecoin Virtual Machine (FVM), storage, retrieval, and computation. In this post, we’ll review key milestones from 2024 and examine the main growth drivers for Filecoin’s development in 2025.
Source: Charting Success for Filecoin in 2024
2024 Review
In our earlier article Filecoins Road to Success in 2024 , we listed three key priorities for the ecosystem in 2024:
Accelerate paid transactions: Promote paid services (storage, retrieval, computing) on Filecoin, create cash flow for service providers, and help support more sustainable hardware financing beyond token incentives.
Promote on-chain activity growth: Increase on-chain activity through programmable services, DeFi, and new use cases.
Become indispensable: Make Filecoin indispensable to other projects and businesses.
These priorities are not mutually exclusive, they add up to each other, indicating that the Filecoin ecosystem is becoming increasingly valuable. So, how are we doing on these priorities in 2024?
1. Accelerate payment transactions
Paid Transactions is an ecosystem-level metric that reflects the number of paid services in the Filecoin network. FilecoinTLDR is currently tracking this metric here .
In 2024, Filecoin made significant progress in accelerating paid transactions by reducing the friction for enterprises to enter the ecosystem, mainly including the development of Proof of Data Ownership (PDP) and the emergence of Layer 2 solutions.
1. Using PDP to achieve efficient thermal storage
Proof of Data Ownership (PDP), expected to be launched in the first quarter of 2025, introduces a new proof primitive to the Filecoin network, the first major proof development since Proof of Replication (PoRep) and Proof of Spacetime (PoSt). Unlike PoRep, which excels at cold storage through encapsulated sectors, PDP is designed for hot data, that is, data that needs to be retrieved quickly and frequently.
This new type of proof enables cost-effective “cached” storage on Filecoin without the need for sealing and unsealing, enabling fast data loading and retrieval. PDP opens the door to a new type of storage provider that focuses on hot storage and fast retrieval, benefiting companies like Basin, Akave, and Storacha.
2. Scaling Filecoin through Layer 2
In 2024, we saw an increase in Layer 2 solutions built on Filecoin (see our previous article The State of Layer 2 on Filecoin ). L2s like Basin, Akave, and Storacha can scale horizontally and vertically through secure, customizable subnets. These L2s strengthen Filecoin by unlocking new use cases: including managing data-intensive workloads, supporting artificial intelligence and unstructured data, supporting games and privacy-focused applications, all of which create more opportunities for paid transactions.
2. Promote the growth of on-chain activities
Filecoin has made significant progress in accelerating on-chain activity through FVM, which has stimulated the growth of the DeFi economy. The proposed launch of Filecoin Network Services (FWS) and Filecoin-backed stablecoins will further promote this momentum.
Source: Defillama (as of December 16, 2024) (https://defillama.com/chain/Filecoin?pool2=falsegovtokens=falsedoublecounted=falseliquidstaking=truestaking=true¤cy=FIL)
1. DeFi Milestones
As of December 16, 2024, more than 4,700 independent contracts have been deployed on FVM, facilitating more than 3 million transactions. DeFi activity on FVM has an average net deposit of more than 30 million FIL (about $200 million), mainly driven by seed pledge, liquidity pledge, and DEX, of which GLIF accounts for 62%, followed by FilFi (10%) and SFT Protocol (9%). Net borrowing averages 26 million FIL (173 million USD), demonstrating the strong growth of the Filecoin DeFi ecosystem.
2. Filecoin Ecosystem’s FIL-backed Stablecoin
USDFC is a FIL-backed stablecoin launched by Secured Finance in the fourth quarter of 2024, designed to address key challenges in the Filecoin ecosystem. It brings stability, reduces volatility and enhances value storage to networks that previously lacked stablecoin options, similar to what DAI does for Ethereum.
By allowing FIL holders and SPs to pledge their assets with USD, USDFC can help pay operating costs without selling FIL, thereby preserving asset value and network support. It also improves the liquidity of the lending market by providing stablecoin liquidity backed by FIL, thereby promoting more efficient capital flows within the Filecoin ecosystem.
3. Becoming indispensable
DePIN has risen to prominence, and Filecoin has solidified its position through key partnerships with AI and compute projects. Meanwhile, on-chain archiving has gained widespread recognition through major on-ramp partnerships.
“Thanks to Filecoin for creating an excellent decentralized archiving layer,” said Anatoly, co-founder of Solana.
1. On-Ramps worth noting in 2024
At this year’s Solana Breakpoint , Filecoin founder Juan Benet highlighted how Filecoin’s zero-knowledge (ZK) storage protects the entire Solana ledger.
Similarly, Cardano applications now have the opportunity to enhance data redundancy and decentralization through Blockfrost’s integration with Filecoin.
SingularityNET ’s integration with Filecoin (via Lighthouse) highlights the growing need for scalable and cost-effective storage in the AI-driven era, where efficiently managing massive amounts of data is critical.
These meaningful partnerships help showcase Filecoin as a key player in the blockchain archive and AI space.
Source: Filecoin (X) (https://x.com/Filecoin/status/1831629192133218683)
2. Computing and AI Partnership
This year, Filecoin has positioned itself as a key player in the growing decentralized AI space. Projects such as Ramo (network participation), Bagel (AI and cryptography research), Swan Chain (AI training and development), and Lilypad (AI distributed computing) were released within the ecosystem, highlighting Filecoin’s expanding role in driving AI innovation .
Filecoin Challenge 2024
While great progress has been made, we are also aware of some challenges facing the community. While Web3 products are still in their early stages, forming a reliable alternative to the centralized cloud is a huge challenge.
Product-Market Fit:
Obstacles such as limited retrievability and high costs (driven by data replication) pose challenges to the efficiency of the Filecoin network.
Payments need to be made more convenient by conducting transactions directly on the Filecoin network, such as using stablecoins or flexible payment options.
Gaining greater visibility into storage processes and leveraging user data can help refine strategies and improve performance in key areas.
Establishing a sustainable economic model + a stronger economic cycle:
Thinking of Filecoin as an island economy highlights its focus on accumulating value by exporting goods and services, while keeping as much value as possible within the network by minimizing outflows.
Source: Realizing the Filecoin Vision (Part 2) - Juan Benet (https://www.youtube.com/watch?v=kSE1gZVMXHkt=479s)
The key challenge is to reduce external capital outflows while finding ways to promote exports and capture more demand within the ecosystem.
Ensuring that transactions remain on-chain is also critical to strengthening this economic model and creating a stronger economic cycle.
Filecoin Outlook 2025
As we look ahead to 2025, Filecoin’s development continues. Here are three key themes that can drive transformational growth for the network while addressing the 2024 challenges outlined above.
Blockworks Research said: Filecoin is at an inflection point.
1. Speed up Filecoin by 450x with Fast Finality (F3)
Fast Finality (F3) is one of the most impactful upgrades to the Filecoin consensus layer since the launch of the mainnet. By significantly reducing transaction completion time, F3 overcomes a key limitation of the networks original consensus mechanism. This upgrade is scheduled to be launched on the mainnet in the first quarter of 2025 .
New and old comparison:
Before F 3, Filecoin’s consensus mechanism ensured secure block verification, but it took 7.5 hours (900 epochs) to complete transactions, which was too slow for applications such as smart contracts or cross-chain bridging.
With F 3, transactions can be completed efficiently in minutes, a 450-fold improvement.
What it means to Filecoin:
Faster speed and better user experience: Transactions are completed in minutes, supporting low-latency applications and eliminating previous long waits.
Expanded use cases and accessibility: L2 subnets such as InterPlanetary Consensus (IPC), efficient smart contracts and decentralized applications, blockchain bridges for interoperation with other chains.
Ultimately, this enables Filecoin to increase its usability across a wider range of applications.
2. Beyond Storage with FWS
Filecoin Network Services (FWS) is a key concept that emerged this year and represents a strategic shift for Filecoin, expanding its scope from a primarily decentralized storage network to a broader blockchain-based cloud services market. This diversification can attract a wider range of users and use cases, potentially creating a more positive economic cycle within the network. Here are the reasons why FWS is worth paying attention to:
Strengthening Filecoin’s competitive advantage: FWS will introduce features such as programmatic SLAs (automatically executing service agreements through smart contracts, ensuring clear performance expectations and penalties) and verifiable proofs (providing cryptographic evidence of service delivery, allowing users to independently verify service execution).
Expanding Filecoin functionality: By adding Proof of Data Ownership (PDP), we go beyond Proof of Replication (PoRep), enabling a powerful hot storage use case. PDP will help improve data retrievability, a key factor in achieving product-market fit that has been widely discussed in the Filecoin community this year.
Positioning Filecoin as the leading platform in the decentralized web: FWS will facilitate the integration of multiple networks and protocols, creating a cohesive market for storage, computing, bandwidth, and other services, which will make Filecoin a key player in the development of the decentralized web.
FWS is currently a concept under development and is currently developing a new storage service featuring PDP (v 0). After this milestone, development of the FWS Marketplace will begin, with an expected launch in Q1 2025.
3. Unlocking Filecoin’s new value stream
As a Layer 1 blockchain, Filecoin generates revenue primarily through gas fee burning (which occurs when chain resources are used or fail). However, relying on gas fee burning as the main source of revenue is not scalable, and more importantly, it increases operating expenses and service costs.
The sustainable approach is to return value to the Filecoin economy by using the services of the FWS market, thus forming a more scalable and balanced income model. The proposed value accumulation mechanisms include:
FWS Fee: Commission (%) based on market volume.
Service Fee: Charged when a user uses a service or when a supplier provides a service.
SLA Penalties: Penalties imposed on service providers who fail to meet agreed performance standards
This shift is expected to result in more robust and diversified revenue streams, ensuring Filecoin’s continued relevance and profitability in an evolving market.
Final Thoughts
As the value of data grows, we expect advances in privacy-preserving machine learning, data-driven business models, and AI agents to play an increasingly important role in unlocking the potential of decentralized storage.
Looking ahead to 2025, with the upcoming launch of Fast Finality (F3) on the mainnet and the continued development of Filecoin network services, Filecoin will play a central role in shaping the future of decentralized ecological data and artificial intelligence. We hope to see these advances position Filecoin beyond storage and unlock sustainable economic models through new revenue sources generated by FWS.
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Many thanks to HQ Han and Jonathan Victor for their review and valuable comments on this article.
Disclaimer: The above information is for reference only and does not constitute investment, financial, legal or other advice, nor does it represent an endorsement, offer or recommendation to use any specific service, product or application.
