Decentralized storage tokens surge as Filecoin's FIL jumps 62%. FVM unveiling in March is expected to drive Increased Usage of smart contracts.
Native Tokens of Decentralized Storage Protocols Soar on Increased Usage
The native tokens of decentralized storage protocols have seen a surge in their prices in the past week due to increased usage, according to analysts. Among the top performers is Filecoin's native utility FIL, which has jumped over 62% from just above $5 to $8.10 on Tuesday, outperforming bitcoin and ether in the past seven days.
Filecoin is set to unveil its Filecoin Virtual Machine (FVM) in March, which creates a "runtime environment" for smart contracts. Mihai Grigore, a research analyst at Messari, believes that FVM will enable new applications for smart contracts, leading to increased usage. Colin Evran, ecosystem lead at Protocol Labs, tweeted that writing smart contracts on Filecoin allows users to create "perpetual storage contracts" and their own "storage market," "on-chain cloud solutions," "data DAOs" and "DeFi contracts."
Other computing and storage networks such as Storj and Siacoin have also climbed by 16% for the week. The CoinDesk Computing Index, which measures the market capitalization-weighted performance of computing protocols, was up 16% over the past week.
Grigore said that decentralized storage is an appealing choice for Web2 entities seeking cost-effective alternatives for storing large amounts of archival data due to its competitive pricing relative to Amazon Simple Storage Service (S3).
Market Performance
On Tuesday, bitcoin was trading at about $24,273, down 2.2%, while ether was changing hands at $1,647, off 3.5%. Bitfinex's analysts noted that bitcoin's recent rally to over $25,000 last week was driven by both "over-leveraged long positions" and "liquidating over-eager shorts." Traders who bet on price increases liquidated $130 million of their long positions, while those who bet on price falls liquidated around $179 million of their BTC short positions in the past seven days.
Conclusion
The recent surge in native tokens of decentralized storage protocols can be attributed to increased usage, especially with the upcoming launch of Filecoin's FVM. Decentralized storage has become an attractive option for Web2 entities due to its cost-effectiveness compared to traditional cloud storage services. While bitcoin and ether have experienced a dip in their prices, the overall market performance of computing protocols has seen a 16% increase in the past week.
