SWARM is backed by the aura of “IPFS+FILECOIN” on Ether and the endorsement of V God and Ether Foundation, but it also faces the problems of unclear economic model, uncertain mining mechanism and doubtful application value.
Recently, Swarm, a distributed storage project developed by V God (the founder of Ether), has started to explode in the mining circle. When many mining machine manufacturers promote Swarm nodes to the public, they have given Swarm such labels: “incubated by Ether Foundation”, “developed by V God”, “the next Filecoin “, “luxurious investment team”, etc.
A series of bright labels have indeed made Swarm a hot topic nowadays. However, behind the project’s halo, there are many uncertain risks that are easy to be selectively ignored.
Swarm, a decentralized content storage and distribution network located in the Ethernet ecology, was launched in 2015 as one of the official projects of the Ethernet Foundation, and was initially incubated under the leadership of the Ethernet Foundation, after which the project was separated from the Ethernet Foundation and gradually developed and financed by an independent team.
It is reported that Swarm has completed two rounds of financing before and after, and the recent private round of financing amounted to $6 million, the average subscription price of token BZZ is about 0.25U, and the subscribed investment institutions include KR1, HashKey, NGC Ventures and so on. From the public list of institutions, the lineup of investment institutions is not very luxurious.
Swarm is currently at the end of the test network, which has attracted many miners to participate due to the 1 million BZZ airdrop reward. Up to now, Swarm has more than 270,000 active nodes in the test network, and the nodes are widely distributed around the world (see the chart below for details). The test network miners get checks of different scores after creating nodes, which can be used to redeem BZZ in the main network phase. the main network online time is uncertain.
Building swarm test nodes has evolved into a popular business. Numerous swarm miners are selling swarm nodes for retail investors, with individual nodes sold at varying prices, but mainly distributed between 10,000-30,000.
In addition, not long ago there were many cryptocurrency proxy investments reselling bzz shares subscribed by institutional investors, and the price of over-the-counter private placement of bzz has reached more than $30. If we calculate the average price of $0.25 at the time of bzz private placement, the early institutional investors have made a profit of 100 times.
The seemingly contradictory phenomenon of early investors selling private placement shares, retail investors snapping up BZZ shares or swarm test nodes, and miners enthusiastically participating in test networks and selling swrm nodes is worth a closer look. is Swarm really worth the investment? Before answering this question, it is worthwhile to think through the following three issues.
Swarm’s economic model is unclear
From the information published by Swarm so far, there is less content about the economic model that can be found. 62.5 million BZZs were initially issued (initial issue, with the possibility of additional issues), and the distribution is as follows.
The Swarm Foundation uses 50% of the initial offering BZZ for fundraising and 20% is divided among the team. And it does not see BZZ allocated to miner mining, which is a major difference from the route of many other storage projects.
The economic model determines to some extent whether a blockchain project lives or dies. So, where does BZZ fit into the swarm network and what role does it take on? What are the values? It is not explained in the white paper published by swarm, but the sale of BZZ private coins is unusually hot at this time, and the lack of clarity in the economic model hides a great risk.
Uncertainty about the mining mechanism
The current test network phase gives nodes in the Swarm network the opportunity to obtain checks and redeem them for BZZ as long as they establish a connection. checks of different denominations mean that the probability of redeeming BZZ varies.
The mechanism of the Swarm test network gives miners a greater opportunity to cheat. It is reported that since BZZ nodes do not need to occupy much storage and computing resources, Swarm miners have been opening multiple virtual machines on one machine to run multiple swarm nodes. Different nodes are then connected to each other to get more outgoing votes. This means that the cost for miners to run swarm nodes is extremely low, and many retail miners buy swarm nodes that are not standalone swarm miners.
From swarm’s publicly available monthly reports, we know that there are some differences between the main network phase and the test network in the future. At the beginning of the network, 35 nodes with high connectivity will be selected as “queen bee” nodes in the test network, and the “queen bee” nodes will be the main force of the network to ensure the stability of the network.
In the future, during the main network phase, 35 nodes with high connectivity will be selected as “queen bee” nodes in the test network, and the “queen bee” nodes will act as the main force of the network to ensure the stability of the network. Swarm miners can only be considered valid if they are connected to the “Queen Bee” nodes, which is different from the current mechanism of the test network.
Whether the main network stage needs to store data, whether it takes up too many computing resources, and whether the node’s bandwidth requirements are adjusted all determine the configuration of the miner. How long it takes to pay back the cost of buying the current market-hot VM nodes is as unassessable as it can be.
Does Swarm’s application have value?
Swarm is a kind of storage protocol adapted to Ether, and the consensus process and infrastructure are all designed based on Ether. That means that there are limitations to the versatility of swarm.
Swarm is more similar to IPFS protocol + filecoin, which is more suitable for hot data storage and has greater dependence on bandwidth resources, and will be of greater value to Dapp data transmission and storage within the Ethernet ecology. But at present, the number of Dapp and the scale of data are limited by the performance of Ethernet public chain to a certain extent.
In addition, Ethernet already supports IPFS protocol in the data layer, and the data on Ethernet can be stored to IPFS network (non-filecoin network) Swarm has a competitive relationship with IPFS protocol to a certain extent.
How to determine its own positioning and application scenarios, better provide good data storage services for Ethernet, and accept the challenge of external competitors will be the problem that Swarm continues to face. Meanwhile how to empower its service to the token BZZ determines the long-term value of BZZ.
However, at the business level, Swarm data storage and bandwidth sharing business has not yet been carried out, and BZZ cannot capture the value; at the consensus mechanism level, it is unclear how BZZ can participate in mining and consensus reaching; how the short-term value of BZZ can be supported by consensus alone, and who will be the main force of such support?
Back to the title of this article, Swarm mining investment should be involved or not. Gains and risks often go hand in hand, and based on the information publicly available about Swarm, please confirm whether you can accept the many uncertain, unclear risk points. Behind the clouds of people, the mining machine you buy may be someone else’s harvesting machine.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/filecoin-on-ethereumswarm-still-has-three-problems/
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