Why Decentralized Hosting Doesn't Work

 

Why Decentralized Hosting Doesn't Work

Hornbeam
8 min
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    (cc) Pyramids of Giza outside the window of a pizzeria

    13 years have passed since the advent of bitcoin, which spawned hundreds of platforms with their own blockchains, protocols and smart contracts. And some smart people complain that in the past time we have not found new useful applications for all this economy. In addition to storing and transferring value, of course. Maximalists might say that this is more than enough. On the other hand, where are the useful use cases for the other 4,000+ tokens currently in circulation. After all, they were created with some good purpose, besides building pyramids behind the facade of a legal business , right?

    For example, decentralized P2P hosting such as Filecoin (for 0.0017% of the cost of Amazon S3 ) and StorJ are considered one of the utilitarian uses . They promised to radically change the storage market. What is it really? It's actually not very good...

    Just looking at Filecoin statistics is enough . By the first digits, it is clear that something is wrong ... We see that the cost of storing files at the moment is 0.0017% of the cost of S3. That is 58823 times lower than on Amazon! It's practically free:

    According to FilFox statistics , we can see that as of August 2022, the total available space for hosting (AdjPower) is 18.06 EiB (exbibyte, 1024 6 ).

    With such low prices for hosting, surely the service has no end of customers? Hmm ... something does not look like. As you can easily see, the space actually used on the network is only 143.67 PiB (pebibyte, 1024 5 ):

    3 047 615          
TOTAL UNIQUE CIDS          

806          
TOTAL UNIQUE PROVIDERS          

965          
TOTAL UNIQUE CLIENTS          

5 857 451          
TOTAL STORAGE DEALS          

161 760 355 696 994 050 BYTES (143.6721 PIB)          
TOTAL DATA STORED

    But this is about 0.14 EiB, that is, 129 times less than the entire available volume.

    Almost all nodes in the list of available nodes actually use no more than 1-2% of the free space.

    It turns out that in this “market” the supply of services exceeds the demand for it by two orders of magnitude. Not the healthiest situation. According to the laws of a market economy, it should put a lot of pressure down on the price of hosting.

    At first glance, this is exactly what happens.

    As we have already said, the cost of hosting here is almost zero. The official page states that at the moment, storing one gibibyte costs $0.000000317 per year. It turns out that the entire decentralized peer-to-peer system of Filecoin will bring infrastructure operators approximately ... $ 48 per year. This is the cost of one old hard drive. Here you have the whole economy of this enterprise.

    However, in reality, hosters do not receive payment from hosting clients, but from a block mining pool using the proof-of-replication (PoRep) algorithm , which is a type of proof of space-time (PoST) . Whoever provided more disk space is more likely to receive a reward, which at the moment is 20.44 FIL with a FIL (⨎) coin value of about $8.92. This is completely different money.

    Tellingly, the coin is traded on several exchanges, and its total capitalization exceeds two billion (!) Dollars. And this is with real income of the enterprise $48 per year!

    Looks pretty weird. Something not right is going on here.

    Let's go further. We learned that shared hosting costs 58,000 times less than S3. What does it say? Probably a lack of competitiveness. For some reason people don't come here even for free.

    What is the problem?

    Parallel reality


    You can't just pick up Filecoin hosting and start using it. That is, you can not create an account and upload files. There is no such option. The algorithm of actions is different.

    To begin with, you are asked to answer a dozen questions in order to choose the right “hosting provider”. Choose a region, talk about your dataset, indicate its size, the date of the proposed placement, and so on. Leave your contact details and wait for a letter from Filecoin. Apparently, at the moment, clients are onboarded manually. This immediately cuts off most potential customers.

    For example, to work with Filecoin, they suggest using Textile or estuary.tech auctions , this is open source software and a specialized Filecoin⇄IPFS node, which seems to “simplify the storage of large public data sets”, helping to upload your files to the network. But trying it in action is also not so easy - the service is available by invites .

    As far as can be understood from the documentation , the procedure is as follows:

    1. We get an invite
    2. Create an account on estuary.tech
    3. We generate an API key
    4. We create a test application
    5. We upload our files to the network . This is the easiest step:
      curl
-X POST https://api.estuary.tech/content/add \
-H "Authorization: Bearer REPLACE_ME_WITH_API_KEY" \
-H "Content-Type: multipart/form-data" \
-F "data=@PATH_TO_YOUR_FILE"

      or so (JS):
      fetch('https://api.estuary.tech/content/add', {
method: "POST",
headers: {
Authorization: 'Bearer REPLACE_ME_WITH_API_KEY',
},
body: formData
})

      By default, among the available providers (miners), six will be selected, which will physically place our files. If a miner falls off, a replacement is found for him.
    6. Viewing a list of your files:
      curl -X GET -H "Authorization: Bearer REPLACE_ME_WITH_API_KEY" https://api.estuary.tech/content/list

      on JS:
      class Example extends React.Component {
componentDidMount() {
fetch('https://api.estuary.tech/content/list', {
method: "GET",
headers: {
Authorization: 'Bearer REPLACE_ME_WITH_API_KEY',
},
})
.then(data => {
return data.json();
})
.then(data => {
this.setState({ ...data });
});
}

render() {
return <pre>{JSON.stringify(this.state, null, 1)}</pre>;
}
}

      Sample answer:
      {
"id": 16,
"cid": "QmTMBh4bCQFgzr1fTCjVb5pRBUe7v9673HTLZWh77sUHUx",
"name": "nasa-space-settlements-a-design-study.pdf",
"userId": 3,
"description": "",
"size": 30886087,
"active": true,
"offloaded": false,
"replication": 6,
"aggregatedIn": 0,
"aggregate": false
}

    It is recommended to use rclone to manage file collections , including copying files to/from another cloud (40+ clouds).

    Traffic is free, storage costs a penny, as we discussed above. In theory it looks interesting. But in reality, registering and using the service is as difficult as possible. They didn't give us an invite.

    Also, the underlying incentive to use shared hosting is not well understood. On the one hand, it's cheap. But on the other hand, the payment process is difficult to be compatible with the normal accounting of a regular company that wants to pay for hosting. Accountant Marya Ivanovna sincerely does not understand what FIL tokens are and how they can be calculated in the 1C program.

    You will say hosting can be sold for fiat money, but no. Here it is fundamental. Adepts say that distributed independent hosting will not be possible using the traditional financial system. After all, then someone should open a bank account, register a legal entity and make a profit. He can set prices. And this reduces the reliability of the system, because bank accounts can easily be blocked by unauthorized persons and regulators, and a business owner can arbitrarily refuse service to anyone at their sole discretion and without explanation.

    So decentralized hostings deliberately do not use traditional financial institutions.

    But such a model takes these services into a kind of parallel reality, where traditional business tools and financial systems are not available. Roughly speaking, ordinary corporate clients cannot work there normally. Their clients are only the same "cryptopunks" from the same parallel universe.

    Probably, some gates/APIs like Stripe are needed, which in two lines of code will connect traditional financial infrastructure (for example, bank card payments) to the ecosystem of existing blockchains. Or something like a clearing structure that conducts mutual settlements in these “parallel realities” is understandable for official accounting.

    And if there are no gates, it is difficult to use these services.

    Other hosting


    Who else offers decentralized hosting services besides Filecoin? You can name the following projects (in alphabetical order):
    None of them are very popular. Of course, the token can be successful in the auction, but this does not directly affect the number of hosting clients.

    Pyramids behind the facade of a pizzeria


    The existing thousands of projects, all these alternative platforms and blockchains with smart contracts, so far have little practical use. And although they are only a few years old, it is still too early to assume that they are fully ready for use in real life. Optimists believe that something good can be born from the broth of innovations... But only when the foam of the gold rush settles. In the meantime, most of them look like a beautiful facade, behind which another financial pyramid is hidden.

    It seems that “shared hosting” also serves as such a front. Kind of like a Mexican cartel opening a pizzeria or a chicken wing joint to cover up their real operations. As a result, thousands of dollars pass through the checkout counters of the diner, and billions through the real business behind its facade.

    At least that's what it looks like from the outside...

    Interestingly, a beautiful facade (for example, distributed hosting) and a financial pyramid (tokens) exist, in fact, in different realities. Even their accounting does not converge, as we saw with the example of Filecoin. Hundreds of dollars are paid for hosting, and billions of tokens are sold.

    In general, all your peer-to-peer hosts are beautiful, but no thanks. If they were really that useful, then everyone would know and use Filecoin instead of S3, and Radicle instead of Github, but for some reason no one does this. And it remains to be seen whether such happiness is necessary for the mass market, or is it a very specific service for 0.01% of customers.

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