With the development of blockchain technology, hardware networks built on top of blockchain began to develop and spread. They provide services such as storage, bandwidth, computing, and communication in a decentralized way. In such a network, the service providers are no longer companies but freely accessible ‘nodes’ who receive profits by providing services.
Decentralized networks are better equipped to integrate long-tail and idle resources, thereby reducing costs compared to centralized service providers. Additionally, they can incentivize and coordinate a broader range of participants through a Token economy.
As important use cases of Web3, these decentralized hardware networks are exploring new production relations for us that are more adapted to the development of productivity in the information age.
A decentralized network of storage services is Filecoin. Storage Providers earn FIL by providing storage space to the system, and users of storage space pay FIL for file storage services. Since the mainnet went live in 2020, Filecoin has amassed 400 PiB of storage space from tens of thousands of storage miners globally.
Besides Filecoin, there are several niche track players in the decentralized storage space, such as Arweave network, which provides perpetual storage services; Sia, which delivers file backup storage services; Storj and Crust, both providing encrypted storage services.
In the computing space, systems like Golem and iExec provide general-purpose computing services in a decentralized manner, integrating numerous idle devices to create computing power at scale and provide cloud computing services to application developers. This area is known as edge computing in the industry. Public chain systems are essentially general-purpose computing platforms; however, this kind of computing is highly redundant, so the cost is high, and the way to reduce cost is “off-chain computing, on-chain verification”.
Platforms like Livepeer for decentralized video transcoding, Render for decentralized graphics rendering, and Phala for privacy computing offer domain-specific or type-specific dedicated computing services.
We expect more dedicated computing services in the future.
In addition to storage and computing, bandwidth is a third crucial component of the Internet infrastructure. Meson Network is the decentralized system in the bandwidth space and the data transfer foundation for the dApp ecosystem.
Instead of dealing with salespeople from centralized bandwidth organizations, users will upload or access resources in the marketplace according to the standards and protocols in the Meson Network.
In the field of telecom communications, with the development of 5G networks, the traditional top-down approach of building networks by telecom companies is no longer an advantage. Helium, the representative project of DeWi, is transforming telecom network construction, operation, and ownership structure. Helium is a globally distributed network of hotspots that provides wireless networks for mobile devices, including IoT devices. Any entity can operate mobile hotspot devices and provide hotspot services to earn HNT, and today, Helium’s nodes have deployed hundreds of thousands of hotspots worldwide. In short, a decentralized hardware network has this advantage:
Anyone can operate the hardware, access the network, and provide the service, and access the service from the network without access restrictions.
Using the token economy to coordinate the exchange of resources within the network stimulates global collaboration, regardless of geographic location and jurisdiction. In addition, the token economy makes the network resilient and responsive to changes in supply and demand.
There is competition among nodes, so there is no exploitative pricing or monopoly profits, while the system rules are clear and transparent, a fundamental condition for fairness.
We can foresee that with the development of IoT, more and more types of hardware resources will be organized into networks, based on blockchain technology, to provide services in a decentralized way. The future is a “Proof of Anything” world.
In this trend, Bifrost, as a DeFi protocol, wants to combine hardware networks and finance, adding value to the ecosystem. After years of development, Bifrost is already the leading protocol in the LST (Liquid Staking Token) space, and we are opening a new branch type of LST, specifically oriented to Hardware Networks, hoping to enable hardware resources to become assets in DeFi, with more liquidity.
The decentralized hardware network has lifted the access restrictions so that hardware resources no longer belong to centralized institutions such as monopolies. However, since there is still a certain threshold in providing services at the technical and capital level, ultimately most of the benefits in the network may still be captured by big institutions and big miners.
Through LST, we will allow more people to own hardware resources, increasing the participation of decentralized networks.
We have already taken the first step towards this goal, issuing vFIL: The first liquid staking product for hardware networks based on the SLP protocol.
vFIL is equivalent to participating in the Filecoin storage pool and will automatically earn FIL rewards. vFIL can be traded at any time through the FIL/vFIL liquidity pool and can be used as the underlying asset for future interest-bearing activities in additional DeFi protocols.
vFIL will be divided into a Beta phase and a formal phase. vFIL will be implemented in the Beta phase using a multi-signature account on Filecoin and an off-chain prophecy machine, where the user transfers FIL to the multi-signature address on the Filecoin chain and the off-chain prophecy machine notifies the SLP module on the Bifrost chain to mint vFIL for the user. The multi-signature address will then delegate the FIL to the storage provider and start generating revenue. The multi-signature phase will set a minting hard top, after which the vFIL cannot be newly mint.
In the formal phase, we will implement vFIL based on the Filecoin network’s virtual machine environment or FVM. vFIL will enter the formal phase after we have completed the appropriate contract development. At that point, the vFIL minting hard top will be removed.
More technical details on vFIL can be found on: https://wiki.bifrost.finance/staking-liquidity-protocol-slp/vfil
Through the liquid staking, Bifrost becomes a real “Rainbow Bridge” between the Hardware Networks and DeFi, which on the one hand will promote a more inclusive hardware network and on the other, will bring more quality assets to the DeFi ecosystem.
