Feb. 8 Update on SNO Payouts and High Ethereum Gas Prices

Node Operators
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Hello Storage Node Operators,

Last month in the forum, we announced the introduction of our new minimum payout threshold, wherein we won’t send a payout if the transaction fee costs more than 25% of the overall payout, in USD. This was in response to rising Ethereum gas prices and the associated impact on SNO payouts.

As you likely are aware, Ethereum gas prices have continued to increase significantly. As a result, STORJ transactions are now well into double-digits worth of USD per transaction fee. This obviously impacts every STORJ payment from Storj to you, and any subsequent transfer by you to an exchange requiring gas, so we wanted to share with you our thinking about ways to mitigate the impact of high transaction costs.

First and foremost, we are not changing any policies right now. Our goal with this post is to provide an update on prior communications and solicit your input regarding our current thinking about how to address high Ethereum gas prices. Independent of anything else, the only real thing in question is the frequency of payments; the amount you earn will not decrease as a result of implementing any of these approaches.

We remain excited about the future of the Ethereum landscape. We are encouraged by the efforts to address high gas prices as well, with new scaling options rolling out (including zkSync, the L2 solution which we wrote about before and are in the process of adopting) and others which are still in development. Many appear to have the ability to dramatically reduce the resources needed to transact in STORJ and other ERC-20 tokens. We’re glad to be on Ethereum and are invested in its future!

To address the rising Gas prices on Ethereum, we’re actively pursuing three options for SNO payouts:

  1. zkSync - last month we announced to the community that we will be introducing zkSync as an option to SNOs for STORJ payments. By way of an update, this effort is continuing on track for us to allow SNOs to choose zkSync in time for next month’s payouts (payouts for the month of February, paid in March). The main things we want in place to deliver this solution are a way for SNOs to opt-in to a zkSync solution, and payment of transaction fees in STORJ on the zkSync production mainnet. We’re in QA with an update to the SNO Board to allow SNOs to opt in to zkSync, and documentation for SNOs to use the solution.
    We recognize that zkSync is still new and unfamiliar to many. zkSync has the potential to significantly decrease transaction costs. We anticipate that many of the SNOs who choose to use it will want to withdraw their payments out of zkSync to a Layer 1 wallet, and that will cost gas for that transaction. If more of the Ethereum ecosystem supports zkSync, particularly exchanges, we would expect these withdrawal transactions to be unnecessary and the usage costs to be even further reduced. We remain hopeful that zkRollup-based solutions (such as zkSync) will be integrated into more of the Ethereum ecosystem.
    Preformatted textOnce zkSync is available to SNOs, we are contemplating a number of options to bridge the gap until zkSync (or another suitable scaling solution) is more widely adopted in the Ethereum ecosystem, including a temporary premium to offset transaction costs. As we get closer to rolling out zkSync, we’ll share additional details on how we anticipate this will work.

  2. Existing minimum payout thresholds - We already discussed last month the introduction of our new minimum payout threshold, wherein we won’t send a payout if the transaction fee costs more than 25% of the overall payout, in USD. Absent a change to policy, SNOs who do nothing (e.g., do not opt in to zkSync) will keep getting paid this way. For many SNOs, this means the SNO payments will happen much less often when fees are high. On the positive side of this option, we’re currently paying the transaction fee for SNOs here, but on the negative side, these fees really add up.

  3. Something else - While decentralized systems, Storj, and utility tokens have been around for a while, and some of these scaling challenges are well understood, there is still an enormous body of work underway outside of our project to solve these challenges in new and different ways. It’s worth pointing out that our v3 whitepaper explicitly anticipated SNOs covering their own transaction fees, but we recognize there are some factors in play that weren’t present when we drafted the whitepaper, including the high fees discussed above. We want to explicitly state to the SNO community that we’re in this together and the platform only works if it is economically viable for both Storj and SNOs.

We haven’t yet found a one-size-fits-all solution, but we would love to find a win-win solution that addresses the needs of all the different players in the Storj ecosystem. Option 1 may end up being great if zkSync gets wide adoption, but it does not have that wide adoption yet.

So, we’re opening an R&D effort to start considering out-of-the-box solutions. I know there have been a number of community discussions about this problem already and we’re grateful for them and are reading them and thinking about them. Please keep those discussions going! We want to explicitly invite any feedback or thoughts you may have about how we can improve the efficiency of SNO payouts.

Thanks so much for being an awesome backbone for our storage product. We literally couldn’t do it without you!

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One concrete followup - the threshold for the payouts going out now is $69.62. Here’s how we calculated this:

The median gas price from the last 12 hours is 278 GWei. Looking over the last 8 days, today looks like the best day since the 1st. STORJ token transactions cost a variety of different Gas amounts, depending on circumstances like whether the destination has received STORJ before. Gas can be as high as 51508, but could be as low as 36496. For the purposes of calculating a minimum, we assumed 36508 (which is the lowest reasonably common value, though 51508 is also fairly common). So, 278 GWei * 36508 is .010149224 Eth per transaction. At current Eth prices, 1 Eth is $1714.96. That means a transaction costs $17.41. Our minimum threshold policy (above) is that the transaction fee can’t be more than 25% of the payout, which means we’re doing payouts at 4x $17.41, so $69.62.

If you didn’t meet the threshold last month, this month and last month’s payouts count toward this threshold. If you still didn’t meet this threshold this month, your undistributed amount from this month (and previous months) will count towards your payout next time.

The month of January’s payouts (being sent now) should be completed by the 15th if not sooner.

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thanks @jtolio for providing that extra info. And thanks too for @john for posting the first comment in the thread. It helps a lot that you both provided so much information.

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I know this is serious…but oof

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Thanks for the really great posts guys! I’ll be honest I don’t really understand the new proposals and I’m happy to just keep my balance accumulating and ask for it when I need it as long as it’s always paid out in the $ rate.

It seems crazy that your going to spend $17 sending me my tokens this month when realistically I’m just going to keep it in a wallet for 12 months untouched.

I know you can’t please everyone but do consider that some people might just be happy to see their balance increasing on the dashboard etc.

If you really want to burn your money, I’d rather have it as a surge payout next year :joy:

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Is it possible you could inform the effected SNO’s that their payments will be withheld?
Other than us waiting untill a post in here pops up titled “Payouts are finished” and seeing nothing in our wallets?

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We are working on having the storage node dashboard display not only that payments are withheld but how much has accrued, too.

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I am sure it has been thought of already but figured I would mention it here for discussion. Why not partner with an ETH mining pool and have them mine a block with low GAS fees like they do for themselves when they do payouts? Even if STORJ has to pay out 50% of the total from what they are paying now they will still save 50% of the cost.

Here is a page the explains what my pool that I am using does for payouts.
https://ezil.timelapsehc.com/en/a/kak-vyviesti-moniety-kak-sdielat-vyplatu

Here is an example of the last payout from my pool. It was 18 days ago but it only cost $.04. https://etherscan.io/tx/0xc77a6f53a4d21874e8ee8db731f643aac0e532971b239219aac7bc90b9e88efb

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What their benefit from that?

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I have no idea what STORJ pays in fees currently but maybe you pay them 50% of that cost to mine a block with all the STORJ payouts in it with low gas fees. They get the 50% payment. Hard to know if It’d be worth it for them without knowing what it’s costing STORJ. Maybe they need storage space for something and you work out a deal to give them a discount on storage? I am sure something could be worked out to benefit both parties.

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Many SNOs including myself have their dashboards accessible and unprotected on public IP. Is there going to be some kind of protection for opt-in feature so bad actors don’t do damage to SNOs? I would rather keep config in docker instead of having SNO board changing it. I hope storj team has thought through the the notion of dashboard not being read only anymore and all the implications it has.

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You been told not to make the dashboard public,
… why would they add protection for something they tell people not to do?

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You should have protected the dashboard access, either by using IP whitelists or by using a reverse proxy with authentication.

I do not think it makes a lot of sense for Storj to put in the effort to make the dashboard secure for allowing everyone to access it, because it is possible for the node operator do do it by himself.

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Could it be possible to allow SNOs to trigger payments assuming txn costs?

For example:

  • if your payment is at least 4x times txn fee and it’s the first payment of the month -> like now: txmn fees are not charged to SNOs.
  • if your balance is below 4x txn fees or it’s not the first payment triggered on the month -> SNO pays the fee - deducted from the amount to receive.

I suppose it will be much more complex: payment preparation on Storj wallets cannot be predicted like now, but it will give the community the opportunity to get paid under some conditions.

Also, there are some mining pools that allows you to set a max gas price for txn, not triggering payments until the gas reaches a given value. Could it be implemented the other way?
Like your payment is not triggered until the gas fee is 1/4 of your pending payment.

Just giving some ideas, gas situation is a problem for all of us (Storj included) and I think majority of SNOs understand the issue.

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as i am new to all this, i understand it must cost alot for the payouts, it would take me quite awhile to reach the minimum payout, thats not a problem for me,im saving all my payouts anyway. the thing i would like to understand, will it be paid into the wallet i have setup or would i need to setup a new wallet for payments.

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wow I don’t get paid this month with almost $60 :smiley: But then again… I was already thinking about using an exchange address so I could immediately dump my STORJ for USD/TUSD/USDT because I highly doubt this ridiculously high eth/btc prices are going to last. And I certainly don’t want to spend $17 TX fees to exchange my earnings before prices drop again.
So in this case I am actually happy to wait until the next month, maybe btc will go down to $20k again and I’ll get more tokens than now :smiley:

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Yes, it’s possible, it’s option 1. You can opt-in for L2 payouts and receive them without any threshold. You can withdraw them when you want, but you will pay fee. And you can withdraw them to other address, to the exchange deposit for example.

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I also changed my payout address to an exchange address last month for the same reason. But also still no payout this month. I’m a patient man, but this is getting annoying :smile:
Hopefully we can get back to a situation soon where we get paid monthly.

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You think prices are going to drop?