Let's talk about the elephant in the room: The Storj economic model (node operator payout model)

Node Operators
858

Don’t get me wrong, I love what Storj has done and I am hopeful that it will succeed. But the simple fact is the company isn’t making any money. It’s bleeding out because of the current market condition. This is happening all over the place and everyones trying to cut costs in every sector right now.

The adjustments are a bandaid. A temporary solution to a problem yet to be solved. It’s buying time at the node operators expense.

There are a lot of very smart people working on many other projects as well. This is not enough to convince me.

It’s exactly how many other crypto projects work. Very similar to regular startups that have a large funding pool to pull from. Luckily Storj has an actual marketable product though. Can’t say that for all of them. And to be clear, I’m not referring to wasting funds buying lambos or other pointless spending. I have no reason to believe anyone at Storj is doing anything other than what’s in the best interest of the company.

This is like saying you can’t live off your credit card forever. True… charge more for the product or find more products to sell!

Such is life. But there is a difference between people disagreeing with certain aspects of the project and it not being profitable for people to stick around. If you worked for me at a desk job and I said go clean the toilets there would probably be some disagreement there, but could be worked out. But if I say I’m barely going to pay you enough to cover fuel and lunch, even if you love your job, your probably going to quit.

In fewer words… pay cuts!

How? People already complain they don’t make enough, especially with rising energy prices.

Lol, sno’s aren’t going to wait another decade without making anything. Chances are when many peoples current drives die they will be out.

Appears that Storj IS in the red. Otherwise we wouldn’t be discussing changes to the “economic model” (cough, pay cuts). If Storj tokens tank, the company is dead in the water. The only reason it’s still there is because people are either stupid and blindly investing in utility tokens, or actually still have faith in the long term potential of the project.

Again, I’m hopeful for Storj, and I don’t mean any of this to seem like personal attacks or anything like that. And if I’m wrong about something please correct me (preferrably with sources if it’s that sort of thing).

I’m not claiming to know everything, I’m just trying to call things out for what they are base on my own observations.

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859

You’re making a lot of assumptions about the business and its financial condition and much of it is inaccurate.

Anyone can see that the economics of the SNO payout versus the customer payment is out of balance in favor of the SNO’s. This is why it has to change.

Guessing at the financial status of the company without the correct info is just FUD. I’ve been in recent meetings where discussions on the company ten years out have been happening. We have a long runway. Trying to correctly balance what we charge customers and what we pay SNO’s is not reflective of the status of the company. We are exiting the growth model we’ve been on for a couple years now and transitioning to a sustainable business model.

There’s been a lot of big news lately, and more to come. Storj has a bright future.

Anyway, I’m done talking about it for now as it is late here. Have a good evening.

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860

I hope if earnings are cut back the withheld model will also change at the same time. 10 months to get anything decent is already a long time. Reducing earnings per TB will impact that even more.

Can Storj update us as to average node life now since we are significantly down the track in terms of the last update?

861

Unfortunately, that doesn’t mean every SNO has one. We are going to see change - that much is certain.

862

Yes, I am making assumptions. And some of those assumptions stem from some similarities I see from other areas. I though I made that pretty clear. But so are many other people and for good reason. When a company has essentially one product to sell, and that product is clearly costing substantially more than it’s being sold for, thats a problem. Now if there’s other aspects to it and Storj has other sources of income then great! But as far as I’m aware, we don’t know about them.

So to reiterate one of my points, if I’m looking to move large amounts of data somewhere else, I want reasurances that the company is sustainable (among other things). I want to know I’m not taking a huge risk, otherwise it simply isn’t happening. I don’t think this is to much to ask for someone in that position. And considering that Storj currently only holds 17.5 PB of customer data (some of which is still test data) it doesn’t look to me like there’s any major customers onboarding large datasets yet.

Trust me, I want Storj to succeed. I love the project and I will continue to contribute as a node operator for now unless or until it’s no longer profitable, but if it never reaches a point that makes it actually worth the time put into it and on a large enough scale, enough to matter at least, I can’t say there’s much incentive for the long term. Making $20/mo won’t make or break most people. People will loose interest eventually. Please know I’m not trying to speak ill of the company or anything, but clearly there are concerns that people have on both sides.

I’ve been a sno since v2 and even with as far as it’s come, these concerns are still up in the air. It also hasn’t really gotten any more profitable yet as it’s been pretty consistent per /24 over the years, and now we’re being told it’s actually going to be less profitable… shortly after a bunch of people were laid off from the company. Point is, it generally doesn’t look good from an outside perspective, and simply saying things like everyones trying really hard etc isn’t very reassuring.

I understand that some if not many won’t like what I’m saying here. And again, I’m just calling it like I see it. Feel free to explain anything further and fill me in on some details if there are any.

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863

What does success look like? Storj impacts SNO earnings on two fronts currently.

  1. Withheld - so a node only gets full earnings in month 10
  2. Vetting - so until you are vetted you aren’t even allowed to get a full data flow.

Why does Storj consider it reasonable to make a node operator wait 10 months to even access the minute income stream - which even now is unsustainable for Storj? I’d be really pissed if I was an SNO with a node about to enter month 10 only to have Storj cut my earnings again.

864

The hold period is basically to build some collateral. It’s your “skin in the game” so to speak to cover repair costs if your node goes offline. The vetting process is to make sure your nodes are kept online and reliable before onboarding to much customer data… more or less. This makes for a nice easy barrier to entry for snos as other models on other projects generally require you to fund and stake tokens initially from the start.

Personally I don’t have any issue with either of these and I think they make sense.

865

I understand the purpose of them but can you imagine being an SNO and you are finally about to hit month 10 and then the earnings get cut back again - after 9 whole months of waiting for something?

866

From my understanding you would still receive payment for the current rate throughout those months and it would only be reduced at the time the “economic model” changed. I don’t think you would loose anything. However at that point you would have to reassess whether or not it’s still profitable for you to continue running the node. Although I think you have to continue until month 15 to get half the held funds back followed by a graceful exit to get the rest.

867

With respect Graceful exit is a waste of time currently.
I’d be happy with one of the above rules. It is a combination of both plus the coming economic changes combined with them that is off putting for me.

868

Since I am already running a node with a lot of data, I will not stop it, there is no point for me to do that, even if payouts go down. Hopefully traffic goes up to compensate for the lower rate.

However, with respect to the “do not buy anything” advice and similar - at least for me, there is some kind of minimum level at which it is “worth it” doing something For example, let’s say I could set up a new node that would have free electricity, internet connection and hardware, but it would be only 1TB or so. What I would get for the 1TB, while still technically profit, would not be with the effort spent in setting up and looking after the node.

4 Likes
869

I agree with most of this… but I don’t agree that this is just in favor of SNO’s. It’s at least as much in favor of customers. I fear this attitude would lead to very one sided cuts, instead of a more complete look at the entire product to make it viable on both sides. But I won’t speculate too much until we know more.

I’m not sure this would be viable for me. Energy costs are a mess at the moment. I pay 0.66EUR per kWh. And on average my HDD’s (just the HDD) uses 8.5W from the wall. This would come down to $4.26 per month. That’s significant and depending on the size of the payout drop, many of my HDD’s might not be profitable to keep running. Assuming the numbers I mentioned in the top post ($1 for storage, $5 for egress/repair) for payouts, a 4TB HDD would make roughly $5.26 for a profit of $1.00 a month (assuming 3.9TB allocated, which is already way higher than Storj recommends). And that’s when full and without held amount… Given the time it takes to fill up and get out of that held amount period, 4TB would not be viable anymore, unless already mostly filled up. And 3TB would run at a loss even if already full.

This is a really bad time for payout drops…

For me personally this applies mostly to the additional external HDD’s in a 10-bay USB enclosure. I have nodes running on unused space in the internal array for my always on NAS as well. Those will remain viable simply because I don’t have to compensate for energy costs. But yeah, I’d have to seriously consider taking half of my space offline or migrating more of it to my internal array.

3 Likes
870

Having said that, I need to quote again what @john has said during one of the Twitter Spaces:

i remember early on we had a a theory that our hypothesis was that it would be hard to find people to contribute capacity but it would be easy to find people who would use the space and we actually had it exactly backwards right it was new technology so people were very reticent to adopt it from using it to store their data perspective but anybody we found it very easy to get people to contribute space

I hope Storj will not make the same mistake again, now the other way around.

That’s really nasty.

If there are good times to increase prices to customer ever then it is now. Anyone would understand it.

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871

If you look at Store - ASUS WebStorage we get a 1Tb cloud application for $55 per year or $72 per PC.
If this is divided per month, it comes out to $4.50 to $6.25 per month.
I suppose if for the mobile version of Storj to take $ 3 for a terabyte of storage for photos and small files, it will be fine, but from a PC and for storing large files, users will also take $ 5. It turns out that the average delta per terabyte will be $4

  ...

If we assume that NAS consumes about 45W in working condition with a disk / disks, then for a month at a cost of 0.66 Euro per sq. we will get = 0.045 * 24 * 30 = 32.4 Kw * 0.66 = about 22 Euro.
(The simplest US consumes 25W which will be about 12 euros per month for electricity at the rate of 0.66)

If we assume that the storage operator receives $ 2 for 1Tb per month (this is both storage and traffic), then it turns out that the self-sufficiency of the outlet is only on a fully occupied 12Tb drive.

  • Internet cost
  • Depreciation (at least save on buying a new one every 3 years)
  • Earning\Profit?
    This is not taking into account the battery for the uninterruptible power supply, time and so on.

I’m all about the fact that you need to focus on large storage operators who cost a lot of disks, then it will be profitable for them to work and users will be able to get, in addition to being cost-effective, also a reliable service.
There is nothing for small and homely people to do here: It’s time to understand this is a project about making money or just for fun!

872

Where are you at that you’re paying 0.66 eur per kwh? That seems very high. I did some cursory searches for top energy prices in Europe. Eurostat has the highest in Greece at 0.30 (Eur) per kwh, and the lowest is Finland at 0.08 per kwh.

At 0.30 I calculate 9.86 per month.

873

I’m in the Netherlands… I didn’t have a fixed term contract when this mess began. So my variable tariffs went up a LOT.

Btw, I think I found your quote:

image
image733×57 8.94 KB

It isn’t the first half of 2022 anymore. Back then I paid 0.17 EUR.

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874

Gotcha, so the war and other external factors is putting your prices up. Makes sense.

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875

I can’t say if this is 100% accurate. But at least for Germany it seems plausible.

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876

How about the 150 GB free tier goes down?

Does not matter, nobody uses it

Or the price per TB goes UP?

STORJ is already to expensive!

It already isn’t very profitable to begin with and everyone has been waiting and hoping for it to become MORE profitable, not less.

Haha where did you get that idea? Do you think that S3 will become more expensive?

Unless… the plan is to cut out the little guys and go with “commercial” node operators since at scale Storj WOULD be profitable enough to cut costs especially if done on already existing infrastructure.

To plan was and has always been to use only unused resources and because of that have a better TCO than traditional S3 providers. Some people just did not believe it because of the hype.

Storj advertises itself as being 80% less than existing storage options.

Which is so far from the truth, it is borderline a lie. It compares itself with the most expensive S3 storage there is. It does not compare itself with Backblaze S3 nor with Amazon Glacier (even cheaper than STORJ). It is like Ford claiming to be 80% cheaper than Mercedes. Sure in theory, a Ford Focus is 80% cheaper than a Mercedes S class, but nobody sane would compare the two.

Storj is new tech, superior to the existing storage platforms in many ways.

STORJ is almost nothing new tech. STORJ has a new economical model.

Seems like theres PLENTY of “wiggle room” there… but instead let’s punish our dedicated node operators that have made this all possible in the first place!

I hope you now understand why there is no “wiggle room”. Quiet to the contrary.

The fact that they’ve always told us from the beginning not to buy hardware specifically for Storj should be a red flag at this point.

That is the only difference between STORJ and its competitors! The economic model “use only unused resources”. If that model fails, STORJ fails!

This will NEVER happen with average everyday people sharing “unused disk space”.

Not with the current complicated ways to set up a node.

Only the people with stupid money will be able to make anything and everyone else get’s the short end of the stick.

Only people with very low TCO will be able to make money. If that is a medium business with solar on the roof, your average Joe or something else, I don’t know. Let the market take care of it.

Oh, and for those who will respond to remind me about the /24 limitations, I’m fully aware… but you have to remember Storj can change that if it’s financially beneficial to them.

They /24 is only a problem, because there is no data.

877

Seems a little low for NL, but they might be excluding taxes. Which are relatively high here, compared to other countries. I did just notice my costs would drop to 0.43 EUR in April. But I doubt it’ll ever be close to 0.17 EUR again…