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:
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.
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.
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!