I recently completed integrating STORJ with my company’s platform as an additional offering to dip our toes into the decentralized pond.
After reading most of this thread, I get the impression that the small node operators are not being paid as expected and honestly, I cannot see how any of it makes sense economically. At least, from a node operator’s side. These payouts don’t seem to cover even a tiny fraction of overhead costs if one receives a payout at all. This whole thing reminds me of a business model created in the 1920’s and famously revived by Bernie Madoff in the 1980’s. I hope this doesn’t end like that!
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Hello @steven-tomlinson ,
Welcome to the forum!
They will be paid. The main problem is fee, it can consume almost all your earnings these days.
You will receive earned USD in STORJ tokens on send date.
If you choose the default Layer 1 (Ethereum), it could take a lot of time until you receive your payout. At the moment the earned sum should be in 4 times bigger than current ERC20 transfer fee on L1
From the current fee on L1 you need to earn (after held amount) $74.44 to be paid via L1.
The second option is to use zkSync (layer 2 or L2) and receive payout every month independently of Minimum Payout Threshold on L1.
The main difference:
- with the first option you will pay the transaction fee when you would send your earnings to the exchange via L1, the fee on L1 can be paid only in ETH, so you need ETH to send STORJ (as any ERC20 token).
- with the second option you will pay the transaction fee when you would withdraw your earnings to the exchange’s L1 address, but in this case the fee can be paid in STORJ tokens. However, it will be a little bit more expensive. You can check the withdrawal fee with this script using your exchange’s deposit address: ZkSync Payments - Storj Docs
So the more real difference - when you would receive your payouts. With L1 it could be months, with L2 it will be every month.
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I understand your concern, but I think it’s mostly a matter of expectations. Running a storage node does not have high hardware requirements. Anyone who has almost any kind of always on system with spare space can run it without any additional costs. And if you don’t already have an always on system, you can get a raspberry pi and run it on that. A lot of the potential node operators are more used to mining, which uses a lot of power and has bigger rewards. Running a storage node is different. It requires almost no power, but returns are less as well. However, if you buy a raspberry pi and an 8TB HDD today, you will make your money back in 2 years and have enough saved up to buy more HDD space. The hardware should survive much longer than that. And by the end of the two years you’ll make a pretty nice income.
So yes, Storj has a slow start, but that’s not necessarily a bad thing. This will just lead to the people who were only looking to make a quick buck leaving early. Those who stick around will provide more reliable nodes, leading to a more stable network as a whole.
The transaction costs on Ethereum really don’t help matters at the moment. But both ETH2.0 as well as ongoing development of L2 solutions will solve this eventually.
I do think it is important for node operators to be well informed on what they can expect. Which is why I put a lot of my free time in building and maintaining the earnings estimator. This allows new node operators to make an informed decision on what investment they would consider. Storj Labs has always been a little conservative in saying it is best to use existing hardware that is already online. That’s how I started too. But the financials ATM are such that it is also possible to make a small hardware investment and earn that back over time.
I don’t think comparisons with Madoff are fair here. SNOs do get compensated for the services they provide. There is no shady business of paying people with new investments from others or any pyramid scheme going on. Just fair compensation for services provided. Some just come in here with higher expectations. And I personally prefer to lead with the earnings estimates and then let them decide whether it’s worth it. To me and to many others, it is. But it isn’t for everyone and that’s fine too.
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I’ve not operated a storage node, have only been around a couple of months, and have no experience with crypto before Storj, so I’m not very familiar with things from a SNO perspective.
Storj had a customer price reduction to $4/TB/mo for storage and $7/TB for egress but my understanding is that SNO’s are still being paid $10/TB/mo and $20/TB for egress, both paid in Storj tokens.
As I understand it, Storj has an operating budget of tokens that it converts to USD to fund salaries and vendors such as Google (for satellites and gateways), and pays SNOs in tokens. For the 3Q2021, Storj used ~200K tokens to pay SNOs. I’m assuming this includes the actual payments and the transaction fees. There are high transaction costs to pay SNOs, and even higher transaction costs to convert Storj to fiat. The fees to pay SNOs are so high that Storj only processes payments if the SNO payment is at least 4x what the fees would be to execute the payment. My understanding is that to pay a SNO (transfer Storj tokens to the SNO’s wallet), the transaction fee, something like $15 (it varies), is paid by Storj for each SNO transaction.
It seems there is a crossover point where Storj is paying more in crypto transaction fees than they would in direct fiat payments + fiat transaction fees to SNOs. I have read several places how using tokens solves various fiat currency and banking problems, but tokens also have significant problems of their own, specifically, unreasonably high transaction fees.
I ran across this payment service the other day that supports payments to 90 countries with low transaction costs. In this example, a $2 transaction would cost 50 cents.
It seems like an alternative might be to let SNOs choose to be paid directly in fiat or in Storj tokens. If it’s more advantages to the Storj company, they could pay higher rates in tokens than in fiat. I don’t see any advantage of many token transactions with high fees vs cashing in a blob of tokens for lower fees and then paying in fiat. But as I said, I’m completely dumb about crypto.
$1.5/TB*mo, $20/TB egress, $10/TB audit and repair egress.
See Node Operator Terms & Conditions
There is no alternative in the payout method.
The fiat is no go for most countries, because payout in USD.
For example in Russia I must be an Individual Entrepreneur or LTD to accept foreign currency, we have a Currency Control and Financial Control, you can’t avoid them. You can’t receive USD from the other Organization as an Individual, otherwise you can easily be get into jail. The easiest punishment from possible is blocking all your accounts in all banks.
You can avoid that if you would receive a payout in RUB. However, when the sum would exceed some level you will be asked what’s your relations with that Organization and will request to provide documents confirming relationships and paid tax bills. Otherwise result will be the same.
And this is only one country. Each country have an own regulations around fiat, especially foreign ones.
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I can verify this. Just for me to send money to my wife in paypal her ability to accept transfers was suspended until she provided them documentation about our marriage.
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Yeap. This is the only way when you can transfer USD between Individuals - you must be relatives accordingly laws.
And things become worse if the sending party is Organization/Firm.
Even RUB transfers now would be suspended until you provide documents (for transfers to/from card) - the CB published directive to banks about demanding such docs.
Hmm… The wife works for a Cyprus company at the moment and recently moved to a Canadian Project (for the same company). I should ask her what she needed to do for that as she is paid directly to her Russian Bank account. She has been with them nearly year now so any rules would have been met already. Laws here certainly are a pain. I can’t even get a DHL/Fedex package delivered here unless we have a Business name.
Last year I bought a server on ebay from a company in Poland. They had to decline to ship it to me not because they didn’t want to but it was too heavy for the post and they could not use a courier since we didn’t have a business name.
We did have a business at one point but we had to close it as our staff stole from us constantly. One staff member even took instant coffee packets and baby clothes we were donated for a our first child - in fact the stealing escalated once my wife went into hospital to give birth…
This is primarily a comment for @Alexey but one of the funny things I noticed in the cities I have lived in Russia so far was that you can’t buy bubble wrap or tape at the Post Office - but you can buy washing powder!
This is the key - if you are employee you can receive payouts/salary from foreign countries, but only in RUB. Otherwise you should be an Individual Entrepreneur and pass Currency and Financial Controls for every single payout in foreign currency.
At least my Accountant and Finance control officer told me so.
Perhaps depends on contract, I’m not a lawyer anyway.
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Out of curiosity - what does the Russian government think about cryptocurrencies as far as you know? Assuming you will sell STORJ for rubles at some point.
We have a law that cryptocurrency is treated as a property. You can buy and sell it, and should pay income tax from a difference. It’s not forbidden. But accept payments to/from residents or pay for the goods or services to/from residents are forbidden.
However, even if the CB has failed attempt to make it illegal by law, they found another way and sent a circular to all banks with “recommendations” to block any banks transfers related to cryptocurrencies under the guise of combating terrorism, drugs and money laundering.
So practically you will have troubles if you try to buy or sell any crypto as an Individual, you will be a subject of blocking at least remote bank service or all bank accounts at all. You can avoid that, but it’s not easy - you should provide an evidence of income, tax reports and be at least a self-employed or Individual Entrepreneur or LTD.
So it’s still a grey zone, even if it is not forbidden by the law… 
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Russian banks are also known to seize money if they think they can get away with it. My family had a court case and took one well known Russian bank to court for seizing bank transfers. We actually won the case and got the money back but it took a very, very long time.
I’m sorry to hear about all these barriers - I live in the US now but I grew up in Eastern Europe in the 80s and can relate to the issue of heavy handed state control over one’s activities. Clearly crypto is required to allow SNOs from many countries to participate in the STORJ network. I do still wonder why not offer fiat payments as an option for countries where receiving this type of payment is not a problem.
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Yes, let’s implement 89 types of fiat transfers to meet all these countries requirements.
And, of course - KYC with 89 tax reports in 89 different forms.
Yes, sure, a piece of cake.
You are welcome to implement this easy task.
If serious we doesn’t have so huge amount of resources to do that.
Well, I wasn’t kidding - but I’ll stop beating a dead horse.
Unfortunately there is a big difference between Individual-to-Individual fiat transfers and the Company-to-Individuals fiat transfers. Much more restrictions and requirements.
You need at least conclude a contract, even in the USA. And I’m not talking about other countries yet. In other countries you will be obligated to do much more than that. In some cases you need a representing company in said country.