2024 has been a pivotal year for Filecoin, with significant progress in the Filecoin Virtual Machine (FVM), Storage, Retrievals and Compute. In this blogpost, we’ll recap the key milestones of 2024 and take a look at the major growth drivers shaping Filecoin’s path into 2025.

2024 Retrospective

In our earlier blogpost ‘Charting Success for Filecoin 2024’, we mapped out three key priorities for the ecosystem in 2024:

1. Accelerating Paid Deals: Boosting paid services (storage, retrieval, compute) on Filecoin to generate cashflow for service providers. This helps to support more sustainable hardware funding beyond token incentives.
2. Growing On-Chain Activity: Increasing activity through programmable services, DeFi, and new use cases.
3. Becoming Indispensable: Establishing Filecoin as an integral component of other projects and businesses. 

These priorities are not mutually exclusive – they layer onto each other and are all signs that the Filecoin ecosystem is growing increasingly valuable. 

So how did we fare across these priorities in 2024?

1. Accelerating Paid Deals

Paid Deals is an ecosystem-level metric that reflects the volume of paid services within the Filecoin network. FilecoinTLDR is currently tracking this metric here.

In 2024, Filecoin made significant strides in accelerating paid deals by reducing friction for businesses entering the ecosystem, with key advancements like the development of Proof of Data Possession (PDP) and the emergence of Layer 2 solutions.

• Enabling Efficient Hot Storage with PDP
  • Projected for Q1 2025, Proof of Data Possession (PDP) introduces a new proof primitive to the Filecoin network, marking the first major proof development since Proof of Replication (PoRep) and Proof of Spacetime (PoSt). Unlike PoRep, which excels at cold storage through sealed sectors, PDP is designed for “hot data”, which is data that needs fast and frequent retrieval.
  • This new proof type enables cost-effective “cache” storage on Filecoin without sealing and unsealing, enabling rapid data onboarding and retrieval. PDP opens the door for a new class of storage providers focused on hot storage and fast retrievals, benefiting onramps like Basin, Akave, and Storacha.

• Scaling Filecoin with L2s
  • In 2024, we saw a rise in Layer 2 solutions built on top of Filecoin (We also covered this in our earlier blogpost “State of L2s on Filecoin”). L2s like Basin, Akave and Storacha enable both horizontal and vertical scaling with secure, customizable subnets. These L2s enhance Filecoin by unlocking new use cases: including managing data-intensive workloads, supporting AI and unstructured data, powering gaming and privacy-focused applications — all of which create more opportunities for paid deals.

2. Growing On-Chain Activity

Filecoin has made notable progress in accelerating on-chain activity through the FVM, which spurred growth in its DeFi economy. The proposed Filecoin Web Services (FWS) and launch of FIL-collateralized stablecoins are set to further boost this momentum.

• DeFi Milestones
  • As of December 16 2024, more than 4,700 unique contracts have been deployed on FVM, enabling over 3 million transactions. DeFi activity on FVM saw average net deposits exceeding 30M FIL ($200M), driven by staking, liquid staking, and DEXs, with GLIF leading at 62%, followed by FilFi (10%) and SFT Protocol (9%). Net borrows averaged 26M FIL ($173M), highlighting strong growth in Filecoin’s DeFi ecosystem.

• FIL-Collateralized Stablecoin for the Filecoin Ecosystem
  • USDFC is a FIL-backed stablecoin launched by Secured Finance in Q4 2024 to address key challenges in the Filecoin ecosystem. It introduces stability to a network previously lacking stablecoin options, reducing volatility and enhancing value storage, much like DAI did for Ethereum. 
  • By allowing FIL holders and SPs to collateralize their assets for USD, USDFC helps cover operational costs without selling FIL, preserving asset value and network support. It also boosts liquidity in lending markets by providing FIL-backed stablecoin liquidity, driving more efficient capital flows within the Filecoin ecosystem.

3. Becoming Indispensable

DePIN gained prominence, with Filecoin strengthening its position through key partnerships with AI and compute projects. Meanwhile, on-chain archival received significant recognition through major on-ramp partnerships.

“…thanks to Filecoin for building an awesome decentralized archive layer. “ – Anatoly (Solana Co-Founder)

• Notable On-Ramps of 2024
  • At Solana Breakpoint this year, Filecoin founder Juan Benet highlighted how Filecoin’s zero-knowledge (ZK) storage is securing the entire Solana ledger.
  • Similarly, Cardano apps now have the opportunity to boost data redundancy and decentralization through the Blockfrost integration with Filecoin.
  • SingularityNET’s integration with Filecoin (via Lighthouse) emphasizes the growing need for scalable and cost-effective storage in the AI-driven era, where managing vast amounts of data efficiently is critical.
  • These meaningful partnerships help signal Filecoin as a key player in both the Chain Archival and AI narratives.

• Compute & AI Partnerships
  • This year, Filecoin has positioned itself as a key player in the growing field of Decentralized AI. The onset of projects within the ecosystem like Ramo (network participation), Bagel (AI & cryptography research), Swan Chain (AI training and development), and Lilypad (distributed compute for AI) highlight Filecoin’s expanding role in powering AI innovation.

2024 Filecoin Challenges

Despite the immense progress, we noted some challenges that the community faced. Though bearing in mind that Web3 products are still very early, and the problem statement of forming a credible alternative to the centralized cloud is a huge one.

Product Market Fit:

• Roadblocks like limited retrievability and high costs (driven by data replication), challenge the efficiency of the Filecoin network.
• There is a need to make payments easier by allowing transactions directly on the Filecoin network, using methods like stablecoins or flexible payment options.
• Improving visibility into the onboarding process and using customer data can help refine strategies and boost performance in key areas.

Building a Sustainable Economic Model + Stronger Economic Loops:

Viewing Filecoin as an island economy highlights its focus on accruing value by exporting goods and services while also keeping as much value as possible within the network by minimizing outflows.

• A key challenge lies in reducing external outflows while finding ways to boost exports and capture more demand within the ecosystem.
• Ensuring that transactions remain on-chain is equally crucial to strengthening this economic model and creating stronger economic loops.

Filecoin’s 2025 Outlook

Looking ahead to 2025, Filecoin’s evolution continues. Here are three key themes that could drive transformative growth for the network while addressing the 2024 challenges outlined above.

“Filecoin is at an inflection point.” – Blockworks Research

1. Accelerating Filecoin by 450x with Fast Finality (F3)

Fast Finality (F3), is one of the most impactful upgrades to Filecoin’s consensus layer since the launch of its mainnet. By drastically reducing transaction finality times, F3 overcomes a key limitation of the network’s original consensus mechanism. This enhancement is scheduled to go live on the mainnet in Q1 2025.

Old vs. New Finality:

• Before F3, Filecoin’s consensus mechanism ensured secure block validation but required 7.5 hours (900 epochs) to finalize transactions, which was too slow for applications like smart contracts or cross-chain bridges.
• With F3, transactions can now optimistically finalize in minutes—a 450X improvement.

What this means for Filecoin:

• Enhanced Speed & UX: Transactions finalize within minutes, enabling low-latency applications and eliminating the long waits previously experienced.
• Expanded Use Cases & Accessibility: L2 subnets like Interplanetary Consensus (IPC), Efficient smart contracts and decentralized applications, Blockchain bridges for interoperability with other chains.

Ultimately, this allows Filecoin to improve its usability across a wider variety of applications.

2. Moving Beyond Storage with FWS

Filecoin Web Services (FWS), emerged this year as a pivotal concept. It represents a strategic shift for Filecoin, expanding its scope from primarily a decentralized storage network to a broader marketplace for blockchain-based cloud services. This diversification can attract a wider range of users and use cases, potentially creating more positive economic loops within the network. Here are some pointers on why FWS should be on your radar:

1. Strengthening Filecoin’s Competitive Edge: FWS will introduce features like Programmatic SLAs (which automate and enforce service agreements through smart contracts, ensuring clear performance expectations and penalties) and Verifiable Proofs (which provide cryptographic evidence of service delivery, allowing clients to independently verify service execution).
2. Expands Filecoin’s Capabilities: Goes beyond Proof of Replication (PoRep) by adding Proof of Data Possession (PDP), enabling robust hot storage use cases. PDP will help improve data retrievability, a crucial factor in achieving product-market fit that has been widely discussed within the Filecoin community this year.
3. Positions Filecoin as a leading platform in the decentralized web: FWS will facilitate the integration of multiple networks and protocols, creating a cohesive marketplace for storage, compute, bandwidth, and other services. This could make Filecoin a key player in the growth of the decentralized web.

FWS is currently a concept in development, with a new storage service featuring PDP (v0) underway. Following this milestone, the development of the FWS marketplace will begin with its expected launch in Q1 2025.

3. Unlocking new value streams in Filecoin

As a Layer 1 blockchain, Filecoin primarily generates revenue through gas fee burns (which happen when chain resources are used or when faults arise). However, relying on gas fee burns as a main source of revenue is not scalable and more importantly increases operational expense costs as well as service costs.

A sustainable approach involves value returning to the Filecoin economy through the use of services in the FWS marketplace, fostering a more scalable and balanced revenue model. A proposed value accrual mechanisms includes:

• FWS Fees: Commission (%) charged based on the transaction volume in the marketplace.
• Service Fees: Applied when a user accesses a service or a vendor provides one
• SLA Penalties: Imposed on service providers who fail to meet agreed-upon performance standards

This shift promises a more robust and diversified revenue stream, ensuring Filecoin’s continued relevance and profitability in the evolving market.

Final Thoughts

As data grows in value, we expect advancements in privacy-preserving machine learning, data-driven business models, and the increasing role of AI agents in unlocking decentralized storage’s potential.

Looking towards 2025, with the upcoming Fast Finality (F3) launch on the mainnet and the continued development of Filecoin Web Services, Filecoin is set to play a central role in shaping the future of data and AI within decentralized ecosystems. We expect to see these advancements positioning Filecoin beyond storage and unlocking a sustainable economic model through new revenue streams generated by FWS.

To stay updated on the latest in the Filecoin ecosystem, follow the @Filecointldr handle or join us on Discord.

Many thanks to HQ Han and Jonathan Victor for reviewing and providing valuable insights to this piece.

Disclaimer: This information is for informational purposes only and is not intended to constitute investment, financial, legal, or other advice. This information is not an endorsement, offer, or recommendation to use any particular service, product, or application.

The Filecoin community celebrated the first anniversary of the Filecoin Virtual Machine (FVM) launch on March 14, 2024. The FVM has brought programmability to Filecoin’s verifiable storage and opened up a unique DeFi ecosystem anchored around improving on-chain collateral markets. Liquid Staking, for example, as a subset of Filecoin DeFi, has hit over $500 million in TVL. As the network grows, several critical infrastructures across AMMs, Bridges, Oracles, and Collateral Debt Positions (CDPs) are coming together to propel DeFi expansion in 2024. 

In this blog post, let’s take a look at the latest DeFi projects launched on top of FVM and provide a view into future areas of activity. 

DeFi Developments on FVM

Automated Market Makers

Automated Market Makers (AMMs) connect Filecoin with other Web3 ecosystems, enabling on-chain swaps, deeper liquidity, and fresh LP opportunities.

Decentralized Exchanges: ✅ 

Recently, leading Decentralized Exchanges Uniswap v3 (via Oku.trade) and Sushi integrated with Filecoin by deploying on the FVM. Oku Trade’s interface enables Uniswap users to easily exchange assets and provide liquidity on Filecoin. With this, FVM developers can effortlessly access bridged USDC and ETH assets natively on the Filecoin network, broadening Filecoin’s reach. As a foundational DeFi primitive, DEXes also opens the floodgates for non-native applications to leverage Filecoin’s robust storage and compute hardware. 

Interoperability Networks

Bridges: ✅ 

Bridges help bring liquidity into DEXs and AMMs on FVM. For developers building on FVM, Bridges connects Filecoin’s verifiable data with tokens, users, and applications on any chain, ensuring maximum composability for DeFi protocols. For this purpose, messaging, and token bridging solutions by Axelar and Celer were added to the Filecoin network immediately post-FVM launch. 

Today, AMMs Uniswap v3 and Sushi along with several other DeFi applications are natively bridged to Filecoin with the help of cross-chain infrastructure enabled by Axelar and Celer. 

Liquid Staking

Liquid Staking protocols have been the prime mover within Filecoin DeFi. They’ve played a vital role in growing and improving on-chain collateral markets. Today, nearly 17% of the total locked collateral (approx. 30 million FIL) by storage providers comes from FVM-based protocols such as GLIF (52%), SFT Protocol (10%), Repl (9%) and the rest (29%). These protocols have increased capital access to storage providers while simultaneously enabling better yield access to token holders. Read more to learn how Filecoin staking works. 

GLIF Points: 🔜

GLIF, the leading protocol on Filecoin, has a TVL of over $250 million. To put this into context, this surpasses the largest Liquid Staking protocols on L1 chains like Avalanche. As of writing this (March 06, 2024), 32% of all FIL stakes into GLIF liquidity pools were deposited shortly after its announcement to launch GLIF points (on Feb. 28, 2024), a likely precursor to a governance token. 

Typically, to participate in the rewards program, GLIF users will have to deposit FIL and mint GLIF’s native token, iFIL. Similarly, the SFT protocol launched a points program in 2023 based on its governance token to incentivize community participation. 

Overall, we look forward to how the gameplay of points, popular among DApps in Web3 ecosystems, will act as a catalyst to decentralize governance and incentivize participation for Filecoin’s DeFi DApps. 

New Staking Models: 👀

The influx of protocols experimenting with new models to inject liquidity into the ecosystem hasn’t slowed down. Two projects worth mentioning are Repl and FILLiquid. 

• Repl.fi introduces the concept of “repledging.” Under repledging, SP’s pledged FIL are tokenized into pFIL, Repl’s native token, and used for other purposes including earning rewards. Repleding essentially increases the utility of locked assets thereby reducing opportunity costs for SPs. In just a few months after launch, Repl’s TVL has soared past $30 million.
• FILLiquid, currently on testnet, models the business of FIL lending for SPs on algorithm-based fixed fees instead of traditional interest rates. The separation of payouts from the duration of deposits is expected to nudge long-term pledging and borrowing activities from token holders and SPs respectively, saving costs and increasing efficiency. 

Price Oracles

Oracles, services that feed external data to smart contracts, are critical blockchain infrastructure essential for DeFi applications to grow and interact with the real world. 

Pyth Network: ✅ 

Pyth recently launched its Price Feeds on the FVM. The integration allows FVM developers to access more than 400 real-time market data feeds while exploring opportunities to build on top of Filecoin’s storage layer. DeFi apps benefit from Pyth’s low-latency, high-fidelity financial data coming directly from global institutional participants such as exchanges, market makers, and trading firms. 

Filecoin is also supported by Tellor, an optimistic oracle that gives FVM-based applications access to price feed data. 

Collateralized Debt Positions 

As DeFi activity on Filecoin is climbing, Collateralized Debt Positions (CDPs) will add more dimensions for other decentralized applications to build on FVM. 

Chymia.Finance: 🔜

Chymia is an upcoming DeFi protocol on FVM. With a growing number of Liquid Staking Tokens (LST) on Filecoin, CDPs will extend the utility of locked tokens by generating stablecoins. Through Chymia, holders of LST can generate higher yields while using it as collateral for deeper liquidity. 

Ajna: 🔜

Ajna is a noncustodial, peer-to-pool, permissionless lending, borrowing, and trading system requiring no governance or external price feed to function. As a result, any ERC20 on the FVM will be able to set up its own borrow or lend pools, making it easier for new developers to build a utility for their protocols. 

Payments 

Adjacent to storage offering on Filecoin, the FVM allows developers to bind DeFi payments to real-world primitives on the network. Built intuitively, Filecoin’s core economic flows enable paid services to settle on-chain. Station and Saturn are two notable Filecoin services to have successfully leveraged FVM for payments. 

Filecoin Station: ✅

Station is a downloadable desktop application that uses idle computing resources on Station’s DePIN network to run small jobs. Participants in the network are rewarded with FIL earnings. Currently, Station operates the Spark and the Voyager modules, both aimed at improving retrievability on the network. In February, roughly 1,900 Station operators were rewarded with FIL for their participation. 

Filecoin Saturn: ✅

Saturn, a decentralized CDN network built on Filecoin, also leverages FVM for disbursing FIL payments to retrieval nodes on the network. In 2023, Saturn averaged over 2,000 earning nodes (retrieval providers on the network receiving FIL) for their services. 

Decentralized Options

With growing liquidity, options are yet another emerging product in DeFi. Options facilitate the buying or selling of assets at a predetermined price on a future date, giving token holders protection against price volatility and an opportunity to speculate on market moves. 

Thetanuts: ✅ 

Currently, Thetanuts Finance, a decentralized on-chain options protocol supports Filecoin. The platform allows FIL holders to earn yield on their holdings via the covered call strategy. Thetanuts FIL-covered call vaults are cash-settled and work on a bi-weekly tenor.

Wallets 

To use dApps on the FVM, users would be required to hold FIL in a f410 or 0x type wallet address. Over time, many Web3 wallets such as MetaMask, FoxWallet, and Brave have started supporting 0x/f410 addresses. MetaMask also supports Ledger. With this, it is possible to hold funds in a Ledger wallet and interact with FVM directly. 

In addition, exchanges like Binance natively supporting the FEVM drastically reduce complexities for FVM builders. To learn more about the most recent wallet upgrades, visit the Filecoin TLDR webpage. 

What’s Next?

The obvious near-term impact of various integrations across AMMs, Bridges, and CDPs is a fresh influx of liquidity into the Filecoin ecosystem. Liquidity begets deeper liquidity with an increase in the number and diversity of DeFi protocols on Filecoin. DeFi’s growing economy clubbed with more services coming on-chain and utilizing FVM for payments will overall increase the revenue and utility of the network. We expect this strong DeFi traction to scale Filecoin as an L1 ecosystem, with core services of storage and compute becoming the backbone of the decentralized internet. 

To stay updated on the latest Filecoin happenings, follow the @Filecointldr handle.

Many thanks to HQ Han and Jonathan Victor for reviewing and providing valuable insights and to all the ecosystem partners and teams for their timely input.

Disclaimer: This information is for informational purposes only and is not intended to constitute investment, financial, legal, or other advice. This information is not an endorsement, offer, or recommendation to use any particular service, product, or application.