Right now the Chia ecosystem is going through a very strange phase. On the one hand the application ecosystem of tools built on top of the platform is starting to explode. On the other, the number of nodes and netspace is dropping as well as a general decline in participation for what we would call the “Chia Community.” So what gives?
First lets talk about the explosion of services and applications that has been happening. Since the release of Chia Asset Tokens (CATs) and offer files there have be new services coming online faster than I can look at them. There are a number of DeXs, little gambling sites, strange CAT games, Goby Wallet and a number of NFT projects springing up in a small amount of time. In the first phase of Chia application development we had Nucle and Arbor, basically. And there was a lot of scrutiny on those projects, but they saw some relatively little use because there wasn’t really anything to do with them, other than a few one-offs.
Now we are getting the stuff to do. With Stably offering a real, if not user-friendly, way to interact with the rest of the cryptocurrency ecosystem and the DeXs offering a way to easily transact them it has resulted in a relatively consistent set of trade boards. There are XCH/USDS transactions happening all the time. But volume is still low. Goby wallet integration will assist with that as well as it really does reduce the friction and offer a real “web 3” (god I hate that term) experience.
But even as the developer ecosystem enters a real renaissance the farming community is slowly dwindling. Netspace is slowly shrinking. Not in any way that is concerning to the project itself, but clearly showing that even while some people are increasing the size of their farms just as many are shutting them down entirely. Six months ago the story was 350 000+ full nodes and now its 200 000+. That’s a big decrease, even while staying a big number worth bragging about. And a way bigger loss of nodes than netspace, which suggests its the small farmers dropping off. So what is causing those farmers to walk away? The price, I imagine. And it could become a stampede.
Right now anyone farming Chia is doing so purely as a speculative move. It is basically break even or slightly profitable at best. Profitability has actually shrunk less than PoW coins in the last little while, and Digital Spaceport has been tracking this stuff really well on his YouTube channel. But no one is getting rich farming Chia right now. Pools are hanging on by the skin of their teeth, or shutting down. Its not great. So what can Chia Network do to help this?
I have no idea. I am not an expert here, and while I have some opinions on how they could produce short term price increases I don’t know that it would have any lasting effect and whether or not they would actually reduce market confidence in Chia over the long term, or possibly cause the company problems when going public. But something does need to be done. There is a price point where enough people will start shutting down their farms that it does cause systemic risk.
My gut feeling is that it isn’t going to drop down that far, and that there is enough interest in the technical side of the project from enough people that it will remain a secure network for a long time to come. But without new people discovering Chia and bringing equipment online there is a bit of a ticking timebomb there. This is why I think that even though the fury of plotting has ended and most farmers are in a holding pattern with the space they already have I think the storage work being done by JM Hands at Chia Network is crucial.
Getting onto exchanges will help some, and provide liquidity and velocity to XCH that is sorely lacking, and that will be great in the short term. But in the long term I think it is crucial that it becomes as easy and frictionless as possible to get into Chia in the first place. The new release of Chia Blockchain 1.3 goes a long way in this regard, by getting rid of the extremely lengthy initial wallet sync and subsequent long wait to start plotting. Also, I have seen some evidence that my initial thoughts about cloud farming on Akash were overestimates and that it is actually quite economical to produce plots there. That is amazing news. JM also has an AMA coming on Friday at 2PM EST focused on storage that I would like to see the community come out for.
Remember, nobody is mining Bitcoin on the same stuff they were in 2009, or 2012, or 2015 etc. Its mostly not even the same people. And the reward for that community growth is network security, and the value on that network security. I firmly believe that the price of XCH will be coupled to netspace and node growth in some way over the next few years, and that getting even more farmers helping will make all the difference to the price over time. It doesn’t have to shoot to the moon, but it does need to level out some and the path to that is community growth.
My fear right now is, “World Climate Bank gives up on using Chia ecosystem.”
Yes! That is a big risk of contraction
Another detail that I think is important to emphasize, STABLY only accepts dollars, this limits and alienates people interested in the project.
How do I, Brazilian, have the option to compare XCH?
Via exanges…obviously.
The partnership with STABLY is excellent, due to the morally correct details, but very deficient in terms of technology and scope.
Hug.
(Brazilian using translator).
That’s a great point
Unless the WCB gives up on the project as a whole, I do not know of another blockchain that can satisfy the requirements for the WCB project.
Giving up would be a tragedy.
“The cost of farming is almost zero if the person already has the equipment.” Who wrote this? This is not true. Here I pay the electric bill with half of my farming income. A chia disc uses 11 watts/h of electricity. 80 disks 630kW+farm pc 70kW per month. What is the unit price of electricity in your village?
I totally agree! I pay a shit load 4 electricity already mining ETH. This XCH serves just as a bit of a collateral and poor one at this price. My first question to Cohen and goons would be – what are you doing about the price? Second – when is XCH going to be traded at Binance? Coinbase? From what I heard during one AMA they are talking about making ASIC’s so fucking us all smaller farmers in the ass. 4 now, I feel really dissapointed, good thing I only invested in like 2000 USD.
Yes, more exchange participation is needed to stave off the CHIA project getting left behind altogether. With as low as XCH prices are, more and more people are walking away.
It’s normal that netspace is correlated with Chia price in fiat, since netspace is directly correlated with the average rewards in Chia. Given that for many people the cost of running a small farm is essentially zero (by using their existing hard drives), the farmers who bought equipment just for farming purposes will probably shut down their farms and repurpose their equipment. Unless the price of chia goes up, or those farmers expect prices will go up eventually. To me, what’s interesting about graph is that the size of netspace does not shrink as fast as the price goes down which shows that many farmers still expect the price to come up.
We live in interesting times. The war in Ukraine. Falls on the stock exchanges. It’s hard to find optimism in yourself. It would be very strange if Chia had not succumbed to this situation. You shouldn’t give up. The project has a “moment of weakness” independent of each other.
If Chia lost 90% of the netspace / 90% of farmers… wouldn’t the network continue to function the same as it does today? And it would still have double the nodes needed for decentralization? Netspace reduction doesn’t seem to be a problem.
I’m wondering if there’s a direct correlation between the drop in netspace and the number of articles per day thechiaplot is producing 😛
it is interesting to see netspace dropped from maybe 35EiB down to 28.8EiB as of now. I currently have more than six 16TB (14.55TiB) HDD dedicated for Chia farming, which were bought new. Given that the gov’t (somewhere in Asia) is going to give citizen extra money to spend, I am planning to invest more in Chia using that money. Based on my own calculation I can still break even with new 16TB HDD purchases before the first halving comes 2 years from now, at current price of around US$70. Perhaps I would stop once I’m done with this expansion (7 to 24 16TB HDD, each can hold up to 147 plots).
I have quit (maybe temporarily) due to technical issues. It would be nice if Chia Network had assistance available to troubleshoot rather than relying on the community to assist each other like Apple does. I may get the problems sorted out eventually, maybe not. Sad, but I have lost my Chia enthusiasm.
Since the original concept was to utilize unused disk capacity, there may be larger participants that are using more of their available disk capacity for its original use. Also the price drop is discouraging new participants with dedicated capacity. There may be some degree of switching capacity over to filecoin too.
Some of the fork coins have employed staking and ‘HODL’ing (Silicoin and HDD coin) and their netspace is still increasing. Some forks with no exchange mechanism have been losing netspace.
As you alluded to, there are a lot of dynamics acting on the XCH marketplace right now.