 And so, without further ado, let's introduce our first speakers, ZX Zhang. ZX leads CryptoEcon Lab at Protocol Labs, where he studies the intersection of networks, incentives, and optimization. He'll be giving us an introduction to Filecoin, cryptoeconomics, and its opportunities and challenges. Welcome ZX. Thank you, Karola. And well, my name is ZX, and I lead CryptoEcon Lab at Protocol Lab. I'm super, super excited to be here. Thank you for all the organizers for putting together this amazing event, and thank you to all the speakers and you for coming to our event. The goal of today really is to kind of showcase, or my talk is to showcase the scope and this range of topics covered by Filecoin CryptoEcon, and its amazing opportunities and challenges. Here's our rough agenda. So we start with what is Filecoin to bring everybody onto the same page, and then we talk through some on a high level, some of the CryptoEcon challenges that we face when designing and governing the network. Right, then we talk about some of these latest exciting opportunities, and many of these could be either start opportunities or like just interesting research ventures. And then lastly, we just covered the agenda for CryptoEcon Day today. Just before we get started, we are hiring a CryptoEcon Lab. Our goal, our aspiration is to be this hub that goes from research to protocol and then protocol to product. We start with work with university and research groups and all the general incentive research topics that is central to Web 3 and CryptoEcon. And the other really interesting exciting aspect working in CryptoEcon in the protocol lab network is with us, there are always many new interesting upcoming protocol and research in cryptography consensus, which you guys will hear about some aspect of that today. Right, and they always call for the need for new incentives, right? Of course, there's always protocol improvement in governance, and then we also participate very actively downstream in the network analytics and ecosystem. After all, the success of an economy really depends on the success of this ecosystem. So that we are hiring across the board from research engineering to product, if there's no road that suits you, feel free to email us and then we can always carve something out. And then we sort of also a pioneer champion in this CryptoEcon process, design, validation, deployment and governance. Right, so this is something that we kind of like apply this systematically in thinking about new problem and how do we model them? How do we design around it? And how do we know our design is good, right? So and then CryptoEcon is really interdisciplinary as we can see from this diagram here and then we are looking for collaborators from like different backgrounds and experience. Without further ado, let's dive right in. So what is Filecoin? So there are many definitions of what Filecoin is. And here's I'm giving one that from our take at CryptoEcon Lab where Filecoin is besides being a storage network, we think of it as like a layer one protocol that starts with data, right? And then it's also a multi-sided marketplace enabled by blockchain, which also makes working in crypto economics on Filecoin so interesting because there's suddenly tremendous scope. It's like a live economy running with like different kinds of marketplaces emerging on this system, right? It's also an island economy. People are massing cloud resources and building new experiences. I want to highlight new experiences as much as like storage is really cheap and competitive on Filecoin today, right? Like I think for Web3 to win, it's not about cost. It's always about the new experience and thinking about new incentive structure, new marketplaces. And that's why it makes it such an interesting place. It's also an Airbnb for cloud services, right? It's kind of like it's a platform where anyone can become a storage provider or compute provider or connectivity provider, which we'd hear more speakers talking about it later today as well. People kind of like come together on this island, amassing different resources and then offering this network of utility to the outside world, right? And it's a really passionate research, engineering and product community and hopefully after today you learn more about our kind of unique opportunity and challenges you would choose to work with us. Here's a kind of like stakeholder diagram of different participants on the Filecoin network where storage providers provide reliable and useful storage and get rewarded by the blockchain for it. We could incentivize other things as well in a decentralized manner, but the other things are much harder to prove. There are many teams in our ecosystem working on like improving the verifiability of this matrix, which you will also hear about later today. But in some setting, like let's say we can't verify completely. Can we design like new incentive and new market structure, reputation and metrics? There are other teams that would talk about this today as well, right? And then a client today, they can only store data on Filecoin, but they will soon be able to do a lot more when a user defined EVM smart contract coming to Filecoin. We also hear different teams talking about that today as well. And developers are here to build new experiences. As I mentioned earlier, it's not about cost, it's about something new, right? And that's what all these exciting opportunities come from. And token holders take Filecoin, which is another big opportunity, and the ecosystem partner create a myriad of initiatives to jump-start the ecosystem. So this is like a comparison in terms of Filecoin with other storage networks. As we can see within the Web3 space, that pretty much is like a dominant pair. But however, from our ecosystem perspective, it's not about Web3 as a system, but more about how can we bring even greater adoption from the traditional Web, right? In comparison to AWS, right? Well, I think we're only another 10X to go to catch up to the size of AWS. And also just to call out, right? All this capacity and adoption was only a massive study over a year, which showed this tremendous power of crypto-economic incentives. But we are still just getting started in our quest to build greater adoption on a Web2 scale. And the Filecoin is a layer one. So we implemented a version of EIP-559 roughly a year before Ethereum Mainnet. Back then, we had a set of requirements of our gas model, and it checked the boxes. So this is like the kind of the network transaction fee on Filecoin since launch. At this peak, as we can see, it's actually consumed more than 200,000 Filecoin in a day. And then there's an interesting dip here, which I think some of us will talk about this as well. And how do we really design basically the short context here in the interest of time is Filecoin introduced an upgrade that scaled the network 10 to 25X at this point in time. But then some other things happened such that the network ended up consuming less fees. But we believe this is long-term good for the network because that makes it cheaper to participate in the network. And this kind of touch and tie into something more interesting about blockchain gasses in a world where scalability is no longer a constraint. One of our researchers would talk about that. How do we think about the new gas model from a crypto-econ standpoint when blockchain scalability is no longer a constraint? So with this brief overview of Filecoin is a layer one. It's a marketplace, an Airbnb for cloud services. There are many things we can provide beyond just storage. Now we want to talk a bit more about what makes working on Filecoin crypto-econ challenging. I think it really boils down to we try to do some of the network as a whole, or also the protocol lab network as a whole, envision to build network of utility. We want to make blockchain useful and then we want to make blockchain internet-scale. So instead of the blockchain merely just execute a transaction, there is something that blockchain wants to do. It's about building an economy. It's about creating something of value, about empowering traditional businesses. So that's what a lot of our goals and constraint challenges come from. We want to do it in a decentralized, permissionless, and trustless ways as much as possible. And that's where a lot of our constraints come in. But it's a progress as a community. We have more than 4,000 storage providers, more than 10,000 developers building our ecosystem. And then we exceed the 16 exabyte of storage capacity with more than 70 petabyte of data stored. And then you have a global community of storage providers. And also something that struck me during this DevConnect was, I think maybe like a year or two ago, the crypto-econ community was tiny. But I think during this time in Amsterdam, we actually see multiple projects working on very similar issues within the Web3 ecosystem. And we hope that throughout our talk today, we get more people excited and interested in working in Web3. So I want to talk through some of the high-level key economic policy that we picked and some of the considerations that went into it for Filecoin just to give people a glimpse of some of the trade-off and considerations that have gone into it. So the biggest lever that we have is a block reward policy. Before Filecoin, most of the crypto system kind of adopts something of a flavor of an exponential decay. It came from the Bitcoin land. The early adopter gets disproportionate reward and then it goes down from there. We identified a few issues and constraints with this early on. Sometimes when you give the most reward at the beginning, the network is the least mature. And it's also the smallest in adoption. We want the network minting to kind of be aligned with the network utility. So together with our collaborator at BlockSigns, we innovatively came up with this mechanism called baseline minting, where the block reward is minting based on the network KPI. And then in the case of Filecoin, because storage is the only thing that we can prove, we have this exponentially increasing baseline, which is a target, the KPI, that the network needs to hit in order for the minting to be at its maximum potential. So in reality, the network will be minting somewhere in between these two bands. So we are minting based on the utility that a participant provides to the network. So this is like, here's empirical data. We are more than one year in. So the network started with below the baseline and it catches up to the baseline in April last year. And then we can see the block reward was kind of just, well, the daily, the per E-part reward was low in the beginning and then slowly climbs up. And then now it's following exponential decay based on the initial promise. Once the network is crossing over the baseline. So the area under this curve, which is this part is invisible here, right? This whole section are reward that were not minted because the network was not hitting its KPI. And all the rewards here are being spread across to give more sustainable reward in the future. The other important policy is collateral. We want to align all those providers incentive with the network. So we want to make sure the storage is reliable, which turned out to be pretty reliable. We want to make sure people are not violating the consensus security of the network. So there's both the initial storage collateral, but there's also the initial consensus pledge collateral. So this is how I love how people mine become participants or providers on our point, right? They are part of the token. They kind of like commit, let's say like when you have the supply of storage, but there's no demand for it. You basically put that into a storage container. You call that we call them committed capacity. You put it on file point as well. And then you commit to the network and say, hey, we are going to prove this amount of storage on the network. And here's my collateral. And then when demand comes out, comes around, people can then say, oh, and I will take out my container. And then I can slot in the demand and slot in the deals. This analogy here is like empty Uber car driving on the road to demonstrate, hey, we have demand for all this capacity. We have supply for all this capacity. And then when a client comes around, they can flag down a Uber and say, hey, I want to get into the car. So this is made even more true with SnapDeals. Now people can just slot in their useful data into the capacity on Filecoin. And then one year in, like we lock, I think more than 120 million Filecoin on the network as collateral. If you compare that with like any of the DeFi protocol, you'll be easily ranked as among the top five across all Web3. But this is another aspect that people don't talk so much about Filecoin. And then this is also the percentage of the circulating supply being locked in Filecoin. Again, there's also major opportunities here as well. But I think some others speak more about them. Then the other interesting aspect is like slashing policy, right? This is also pretty interesting. So people, before Filecoin launch, people always talk about, oh, how do we guarantee some kind of quality of service on the permissionless network? And then it turns our crypto economies to the rescue. So on a high level, the Filecoin blockchain will come around every storage provider and ask them, hey, you said you're storing my data. Where is it? So the provider will say, hey, here's a proof of me storing it. And then the blockchain will check, OK, good, you have it. If not, oh, no, you don't have it. And then you get slashed for not storing the data that you promised to both the clients and the network. So on the right side, this is the chart of the daily thoughts of Filecoin. As we can see, the shape of this chart highly correlate with the daily thought penalties on the Filecoin network. And then later on, I think there's another talk that talks about penalty and how incentive is doing a really good job in making sure the Filecoin storage is super reliable. And then there's also gas policy, because after all, it's a layer one. Right? Like we implemented the 1550 variant. And then like we had like two other variations here. One is this over-estimation. We started since Genesis. Basically, it has to do with how the VM execute messages. We are not going into details. And then we also introduced a batching dynamic because Filecoin is a very, that's my personal take. It's one of the most scalable chain out there. Sometimes like from the crypto econ land, we sometimes will ask our engineer, hey, can we slow down the scalability so that we let demand catch up to the chain, right? But we introduced this like 10x, 25x improvement in scalability earlier last year. And then we also introduced a batching dynamic to kind of like to balance out the incentive misalignment. There's a whole separate talk there that we're not going into. But that's something interesting. Some of this innovation that we did and modification that we have done to the gas policy. There will be another talk, I think, by the block science team on gas today as well. So another challenge with, so we talk about all the policy side. But unfortunately, as like crypto economists, our job is not done. Once the protocol goes live, there's still like governance and analytics. So we also develop this like Filecoin improvement protocol in thinking about governance. How do we decide what policy go into the system? So FIP model after EIP, Ethereum improvement protocol, anyone can propose a FIP. But then sometimes it's like a FIP could be seemingly innocent or it could be universally positive. But then they actually have a very profound crypto econ impact, right? So we also develop a governance process within crypto econ lab. And we start from, we first take a look at the idea, we perform a smell test. Does it smell good for the overall economy? And then we do an impact surface assessment, right? Like if it's a very small impact surface, but it's also a very big improvement, there's no brainer. But then sometimes a big impact also comes with a big impact surface. And then we need to go into a lot more considerations. And then we do analytical analysis, where sometimes we just modeling, writing out the analytical equation, which you will see quite a lot from our colleague today in the various aspects of the work. And then once that further, sometimes we need to do modeling and simulation as well. The challenge with crypto econ sometime is there's no right or wrong answer. And then the outcome can also depend on many external factors, as we can see from some of the hyperdrive example. But of course, we also invest a lot in analytics to make sure that whatever policy we pick as a community, we have like real-time feedback on how we're doing and analytics can also inform where are the most needed areas of the network and how can we improve network governance as a whole. We'll hear from a starboard team later to talk about how we apply analytics in network governance. There's a dashboard and then there's also both from the network level, a level dashboard and also from the actual level dashboard. Then this is also like about how people behave and stand in the network. And this is something, another call to action here. In a traditional web world, people already study data to its bone, everything is going to analyze on a traditional web. And in the case of web three, everything is public, but everything is public. But we are not spending nearly the amount of effort to understand what's going on and how do we use those insights to make better informed decisions and how do we improve the welfare of everyone in the ecosystem. So there will be more talks on this topic today as well, but I highly encourage you guys to check it out too. Now that we talk about all the challenges within CryptoEcon and Filecoin, let's also talk about the opportunities. So as I mentioned earlier, Filecoin is one of the most scalable chain out there. Even today, Filecoin is the largest deployed snack network in the world. We hear talks from our cryptography team later today as well, talking about some new direction that they are checking out. And also, as I mentioned earlier, we did this 10 to 25x increase in scalability earlier last year, and then there are more up in our research team's sleeps. Given this kind of increase in scalability and the parallel to the Ethereum world will be like, what happened to Ethereum after all the roll-up solution comes online? How would it impact the macro of Ethereum as a whole? So this presents lots of interesting questions from a crypto economic point of view that's not frequently asked. And later today, I think right after this talk, there will be a talk on how we're thinking about new guest models in the post-scalability world. Another unique filecoin in my opinion is really this verifiability of data and you have a proof that data is online every 24 hours. So in some sense, in my mental model, where a CID, a CID which is a content identifier, which is unique hash of the content of a piece of data. In my mental model, an NFT is nothing more than a unique representation of some digital content. You can technically create new interactions beyond just trading on NFTs and then you bring the value back to the content itself. So you have this pretty unique building block that's coming onto Web 3 where you have verifiable content that's being proven every 24 hours and what are some new interactions that we can build with this? I think we have another talk today that's dedicated towards this as well. And this is another interesting building. This is kind of illustrating what we were talking about earlier. You have this IPFS layer of a CID, which is the hashes of the content and then you have the filecoin layer which brings you the proof of internet-level scalability. Previously, people can try to do bridges to other smart contract platform where you can do the business logic that opens the door to a whole range of business applications. But as an even more exciting update, user-defined EVM smart contracts also come into filecoin. So this is what we call FEM Project where now you have smart contract and also like provable storage. Kind of a challenge to the audience is Web 3 evolves in waves, right? Every time there's a new building block, we always get excited about them but sometimes we haven't figured out what do we do with them. This is the case of ICO in 2017 and then that gave us with DeFi and CryptoKitties and FT's. The challenge here is now we have a new unique building block. What are some new experiences can we build? And then we have some other speakers sharing their kind of perspective and ideas here as well. And lastly, we have massive amounts of data being capacity, massive amount of data being stored. And then now people are also building different retrieval markets on top of that to really retrieve this data and in the context and use cases that they are using. So my personal take here, the retrieval is really context-dependent as far as it depends on the use case. On a technological level, nothing that stops you from being retrieved. It's more so like a business use case, more so like a product market if they kind of question. But the good news is there are many, many teams working on this and then we also hear another talk today by Patrick talking about retrieval markets on Falcone. And lastly, today is Falcone CryptoEcon Day. Today is the day you guys are at the right spot. I'm very happy to have all of you here as a fashion earlier where like maybe just two years ago, it's very hard to put together a CryptoEcon event. There aren't that many people in this space. I'm super, super excited. Now we have more and more talent, developer, researchers, mind share, interested in CryptoEcon. And I hope I have sufficiently convinced you in the context of Falcone, there are so many exciting opportunities and challenges with CryptoEcon. And with that, thank you for your attention.