A decentralized network presents problems of trustiness, this is, how to know that the intentions of each node are honest?. In a marketplace of storage, how can a renter know the host will keep his files intact? How can a host trust he will receive the payment from the renter? How is this achieved in a decentralized network where the main feature is the absence of a central organism?

For this reason, the existence of mechanisms that avoid the need of mutual trust, or trustnessless, is required in decentralized networks.

The main mechanism that achieves the trustlessness in the Sia network is the existence of file contracts: smart contracts enforced by the blockchain that allow unknown renters and hosts to interact with a defined set of rules. The renter locks the payment in advance, the host locks collateral in advance, the integrity of the data in the host is being proved by the blockchain over time and the contract and payments are resolved automatically by the blockchain.

Hosts in a decentralized storage network could potentially delete the files they are storing and use their disks for more profitable activities if market conditions change. In Sia, this is avoided (thus, trustlessness is achieved) thanks to two mechanisms:

• An incentive to keep the files: The payments for the storage and bandwidth usage are done only at the end of the contract, and only if the host kept an uptime of about 97%. If a host deletes the files, he will not receive the payment for both the accomplished and the remaining part of the contract. Other storage solutions, like Filecoin or StorJ use a similar incentive, but in their case the host only ceases to receive future payments.

• A disincentive to drop the files: In Sia, hosts set up collateral for the files they store as a guarantee that they’ll be compliant with the file contract. Renters choose their hosts according to an [scoring system], and one of the factors that affect this score is the collateral. Thus, for being competitive hosts set up collateral several times higher than their storage price. If hosts don’t keep their promise of storing the files during the whole contract, they lose all the collateral. At the present moment (August 2017), this kind of disincentive is exclusive of Sia and is not present in Filecoin or Storj.

Let’s see how it works in an example:

Jane is a host that is storing 1 Terabyte of files of Joe at a pricing of 100SC/TeraByte/month. As Sia hosts are competitive, Jane set up a collateral 3x bigger than her pricing (thus 300SC/TB/month). When she started hosting, she did it because mining an alternative coin would yield only the equivalent of 90SC/TB/month. Market conditions have changed, so now she realizes she could make the equivalent of 110SC/TB/month mining that alternative coin. In spite of that, she will not delete Joe’s files to make room for mining, as she would lose not only 100SC/month in ceasing income, but also 300SC/month in collateral.