[Proposal] Address the Critical Token Supply Crisis to Restore Filecoin's Market Credibility #735
Description
Problem Statement
- The price of Filecoin (FIL) has dropped by approximately 98% from its all-time high (ATH).
- Only about 33% of the total supply is currently in circulation, with the remaining 67% scheduled for release in the future.
- This creates overwhelming supply-side pressure, leading to a continuous erosion of market confidence.
- Market conditions suggest that without proactive measures, recovery is structurally improbable in the short, medium, and long term.
Risk Analysis
- Supply Overhang: Scheduled token unlocks will impose ongoing sell pressure, exacerbating price decline.
- Community Attrition: Long-term investors and contributors are steadily abandoning the ecosystem.
- Ecosystem Erosion: Competing decentralized storage and DePIN projects (e.g., Akash, Arweave) are increasingly gaining mindshare.
- Technological Disconnect: Even with technological advancements, token value and ecosystem health continue to diverge.
Proposal
We respectfully propose the following actions:
-
Immediate Large-Scale Token Burn:
- Burn at least 300 million FIL from reserves or unreleased allocations to reduce perceived and real future supply pressure.
-
Supply Structure Adjustment:
- Officially revise the maximum supply cap downward to realistically reflect network needs and to support the market structure.
-
Community-Led Governance Initiatives:
- Open a Filecoin Improvement Proposal (FIP) for a network-wide vote on supply adjustments and burns.
- Increase transparency and community involvement in critical economic decisions.
Expected Outcomes
- Improved FDV (Fully Diluted Valuation) to Market Cap ratio, enhancing investor attractiveness.
- Restoration of both internal and external confidence in the Filecoin economy.
- Increased resilience and sustainability of the Filecoin network in a highly competitive decentralized storage landscape.
Conclusion
"Without a radical restructuring of its tokenomics, Filecoin risks losing market relevance—regardless of its technological superiority."
Additional Considerations
While Filecoin's technological foundation remains robust, it is critical to recognize that the system's true strength lies in its decentralized storage network, built collaboratively by a diverse set of global participants.
However, given the current token supply structure and the visible trajectory of value erosion, it becomes increasingly difficult to attract new participants and storage providers to the ecosystem.
No matter how superior the technology is, a network cannot thrive if its economic incentives are fundamentally misaligned with the interests of both new entrants and existing stakeholders.
Moreover, with the SEC recently moving to dismiss several crypto-related lawsuits, including its prior posture towards Filecoin, regulatory pressures have somewhat eased—creating a timely opportunity to reassess tokenomics without undue legal risk.
We respectfully urge the Filecoin Foundation and Protocol Labs to seriously reconsider the current economic framework.
Proactively addressing these issues could reposition Filecoin as a core infrastructure layer for the emerging AI-driven and decentralized internet era.
Together, with decisive and visionary leadership, Filecoin can regain its trajectory towards becoming an essential pillar of the next-generation digital economy.
Thank you for your consideration.