TokenInsight Global Token Data & Rating Agency Filecoin Rating Report Overview Rating BB As the project that has received up to now the largest amount of crowdfunding, Filecoin uses Outlook Positive the IPFS protocol and blockchain technology to try to create a decentralised, distributed Decentralised storage network. Building upon the foundation of the IPFS distributed file system, using Tags blockchain technology and FIL function as a medium of exchange, Filecoin has built a multi- Storage Network participant economic-ecosystem system. In terms of storage, Filecoin has rolled out two new Time July 4, 2018 proof mechanisms, used to ensure that user's files will be securely stored, and at the same time provide encryption options to protect the privacy of users' files. Price (USD) 7.54 Market Cap(USD) - In terms of security, FIlecoin also faces some problems. The first has to do with the money it has raised in the crowdfunding. Filecoin's conditions for participating in the crowdfunding as Ranking - well as changes in the price of the token mean that those investing at different times faced *Only forwarding trading is available at the time. different capital requirements for doing so. Taking advantage of "FOMO" (fear of missing out) Contents of participants, the cost of participating crowdfunding increases greatly over different rounds. Project Introduction .................................................................. 3 In such a large crowdfunding, funds should have come from those who believe in the future IPFS ........................................................................................... 3 of the project itself, instead of those seeking to speculate. Aside from this point, Filecoin also Filecoin ..................................................................................... 5 has risks in other places, such as the legal risk that arises from the resistance to censorship, in Description ....................................................................... 5 terms of copyright and illegal material. Mining and the fees set for mining have a trend Market Scale ..................................................................... 6 towards centralisation; network resource search frequency entails certain risk on the distribution of storage resource, and so on. Risks ................................................................................................ 7 Economic Ecosystem Risk .................................................. 7 The development of Filecoin is currently underway, but a concrete time of the mainnet launch Other Risks .......................................................................... 13 hasn't been given. As for the mining mechanism, miner's benefit chiefly depends on the storage capacity provided and network bandwidth; thus as for Filecoin mining machines on Team and Investors ................................................................. 16 the market, TokenInsight reminds investors to exercise due diligence before investing. Project Progress ....................................................................... 17 Conclusion ................................................................................. 17 Outlook The Filecoin project is huge and has a certain market prospect. The incentive layer design Analysts based on IPFS is more reasonable. However, the development process is slow and the launch Wei Zhao, ZHuowei Liu, Longwen Zhao time is not given yet. In general, the rating outlook is positive [email protected] TokenInsight.com 1 04 July, 2018 Filecoin Rating Report TokenInsight Global Token Data & Rating Agency Limitations and Disclaimers TokenInsight Inc. hereby makes the following statement in connection with the issuance of the rating report: 1. There is no relationship between TokenInsight Inc. (including TokenInsight Rating Project Team Members, and Review Committee Members) and the subject of this rating would affect the objectivity, independence, and impartiality of the rating. 2. The project team members of TokenInsight Inc. take their due diligence obligations seriously and have a good reason to ensure that rating reports followed the principles of objectivity, truthfulness, and impartiality. 3. This report is an independent judgment made by TokenInsight Inc. in compliance with applicable laws, regulations and reasonable internal credit rating processes and standards, and there are no changes in rating opinion due to improper influence of the rating target or any other organization or individual. 4. All information contained herein is obtained by TokenInsight Inc. from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical errors as well as other factors, however all information contained herein is provided “AS IS” without warranty of any kind. TokenInsight Inc. checks verifies, as necessary, the authenticity, accuracy, completeness, and timeliness of the information relied upon in the rating report, without making any representations or warranties, express or implied, as to authenticity, accuracy, completeness, timeliness and feasibility and appropriateness for any commercial purpose. 5. The inclusion of a credit rating or secondary market price analysis in this rating report should and can only be interpreted as an opinion and not as a statement of fact or a recommendation to buy, sell or hold any token. 6. The risk ratings indicated in this rating report are valid from the date of issuance of this report until the date of the next adjustment; at the same time, TokenInsight Inc. will periodically or irregularly track the ratings of the rating recipient to determine whether to adjust the credit ratings and will publish them in a timely manner. 2 04 July, 2018 Filecoin Rating Report TokenInsight Global Token Data & Rating Agency Project Introduction Filecoin is, in the field of digital token projects, the largest recipient of crowdfunding to date: 257 million dollars. Strictly speaking, Filecoin can't work as an independent project; it needs to be built upon IPFS (the InterPlanetary File System). IPFS is a distributed network file system, a low-level protocol that allows for the transmission and storage of data on a network. Filecoin has added incentives on top of the foundation of IPFS, using the Filecoin projects eponymous token ("Filecoin", FIL) as a medium of exchange. It has created a market for storage and transmission. As a file network system, it must provide sufficient capacity and resources in order to attract a sufficient amount of users; at the same time, as more and more users join the network, more and more storage space and resources will make the file network system continually expand. In traditional distributed networks, lacking a good reward mechanism, few users join in, which limits large-scale development. Using blockchain technology, upon an IPFS foundation, users are encouraged to join the network and provide service for other users. Adding in the benefits of IPFS, Filecoin is working hard to make a totally new data storage network. IPFS is a distributed file system initiated by Juan Benet in May 2014, developed with the help of the Protocol Labs open-source community. It has the special features of content orientation, versioning, and point-to-point transmission. The vision of IPFS is to form infrastructure for a worldwide decentralised internetwork. After three years of development, IPFS has already matured to a relatively high degree, and has been applied in many fields, such as Akasha (a social network application), computes.io (distributed computing), Alexandria (a decentralised content publishing platform, Orbit (a distributed chat tool), OpenBazaar2.0 (a decentralised online transactions platform), EOS.IO Storage, and Interplanetary Wiki2. 1. Features and Advantages IPFS has modified and combined numerous previous point-to-point systems, including DHT, BitTorrent, subversioning system Git, and SFS. It has the following special characteristics: Content Orientation Unlike HTTP, IPFS has content orientation, rather than address-based orientation. When using address-based orientation the browser will look for a server at an address (IP address) based on a domain name the user inputs, and then query the server at the location for a file. In IPFS when searching for the address of content, every file put into the system will be given a hash value. As this value is calculated from the contents of the file, all identical files will have an identical hash value. Also, when a file is modified, its hash value will change. When users request a file, they only have to use the file's hash to send the request, and IPFS will automatically search a distributed hash table (DHT) to locate a list of notes which have the file, and then retrieve the file to verify its data. 3 04 July, 2018 Filecoin Rating Report TokenInsight Global Token Data & Rating Agency Version Control IPFS uses a data structure based upon Merkle DAG (directed acyclic graph) and version control system similar to Git. Combining these two technologies with content addressing makes IPFS able to inspect and delete redundant storage, avoid wasted storage space, and improve efficiency. At the same time, IPFS provides the ability to roll back to previous file versions. This kind of storage logic allows data to be stored for a longer time, and ads to the stability of the content of the internetwork. Point to Point Transmission IPFS' file transmission is similar to that of the traditional BitTorrent protocol. In this