Foresight Ventures: The Present and Future of Decentralized File Systems

Data retrieval speed, incentive model and token economics, and data availability guarantee algorithm are key factors that determine whether a protocol is widely used.

Written by: Maggie

**1. What is a decentralized file system? **

Decentralized file storage refers to a set of systems that store data in a peer-to-peer network, which can store Dapp front-end, pictures, audio and video files in a decentralized storage system,** reducing the single point of Web3 projects Risk of failure, achieve serverless, remove trusted third parties, have better security, and be cheaper**.

In terms of demand, decentralized file storage is an alternative to centralized storage, which will help Dapp realize Serverless and will be an important part of the Web3 technology stack.

Decentralized file systems are suitable for storage

• Hot data (high access frequency): store Dapp front-end, NFT Metadata and pictures, Dapp file data, such as: data on the lens, blog, pictures, audio, video, etc.
• Cold data (infrequently accessed): archived historical data and backups.

2. Current status of decentralized file system

According to statistics from Messari, the top 4 decentralized file storage protocols have a market cap of nearly $1.6 billion, down 83% from $9.4 billion. The total storage capacity was 17 million TB, an increase of 2% year-on-year, and the used storage was 532,500 TB, an increase of 1280% year-on-year.

Let’s take a look at the current state of several popular decentralized storage projects. It is much cheaper to store data using all these decentralized storage protocols than AWS. While AWS charges around $23 per TB/month, these decentralized storage protocols range from $0.0002 to $20 per TB/month.

• IPFS: IPFS is currently the most widely used protocol for storing NFT images and Metadata. It is ideal for storing "hot" data that is accessed frequently. However, IPFS does not have any built-in way to incentivize storage, prove that data is stored correctly, or establish agreement between participants like a blockchain. This means that there is a risk of data loss if the data is only stored on IPFS. For example, Infura's IPFS service deletes data that hasn't been accessed in six months. Therefore, if you want to keep your data available for a long time, it is better to run your own IPFS node.
• Filecoin: Filecoin provides low storage costs and is mainly used to store "cold" data, such as archive data. Filecoin has no built-in fee mechanism for data retrieval, and currently some miners accept low-quality data for rewards and refuse to assist in data retrieval. The Filecoin community is actively addressing this issue and implementing measures to improve the overall quality of stored data.
• Arweave: Arweave's permanent storage concept is suitable for storing DApp data. The ecosystem is well developed, with decentralized database systems using Arweave to store database files, and Arweave-based two-tier scalability solutions. In Arweave's paid model, there are no bandwidth fees. Therefore, some nodes only provide storage services and do not provide retrieval services.
• Swarm: Swarm charges bandwidth for both storage and retrieval. The system is highly decentralized and has high bandwidth requirements for nodes.
• StorJ: Unlike other protocols, StorJ is partially decentralized and has good retrieval speed. Proven to be very effective for large video file sharing.
• Sia: Skynet Labs shut down due to lack of new funding, which also caused Sia usage to drop.

We mainly evaluate the usability of decentralized file storage protocols based on the following three factors:

1. Data Retrieval Speed. This is crucial because it determines the efficiency of the storage system in responding to DApps' requests and directly affects the user experience of DApps. Factors that may affect the speed of data retrieval include: whether there is a fee for data query, the degree of decentralization of nodes, node quality, data forwarding logic, and facilities for accelerating query (such as CDN), etc.
2. Incentive Model and Token Economics. Incentive models and token economics influence the participation of storage nodes and thus their behavior. At present, the mainstream pricing model consists of storage fees and bandwidth fees, which means that users need to pay storage fees when storing data and bandwidth fees when accessing data. If data queries are free, nodes generally lack the incentive to provide this service. In addition, the incentive model and token economics have an impact on the income of miners, which in turn affects the number of nodes and storage capacity of the service.
3. Data availability guarantee algorithm. This is an algorithm used in decentralized networks to ensure that nodes continue to provide data services and guarantee continuous availability of data. Currently, the most widely used method is the Proof of Random Access algorithm.

Summarize

1. Products and services utilizing decentralized storage protocols are still in their early stages.
2. The main focus of improving the storage protocol will be on reducing the retrieval time.
3. Data retrieval speed, incentive model and token economics, and data availability guarantee algorithm are key factors that determine whether a protocol is widely used.