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

Node Operators
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Downloading a snapshot of a constantly changing ledger is web3 enough. And if that’s not enough, you could say that sending an email is not exactly an innovative application of the Internet as a whole, because people used to send mail in Roman times.

One of the principles of web3 is lack of centralization. Storj is closer to that than the classical web, and hence web3 applications are a good target group for Storj. Besides, web3 applications tend to be more open to trying out new technologies. It’s just that—a consumer group that is possibly easier to turn into early adopters than old-school corporations.

A https download that sits on cheap S3 with good marketing. You can’t do much business without marketing, because you won’t attract customers. I’ve worked for two startups with great products and with failing marketing—they no longer exist. Storj still does, and their consumer base grows.

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For web3 in general, everyone means the multi-node structure where such nodes communicate between them independently (without a master-node or other external entities that dictate rules) to provide a service.

Storj is NOT fully web3 (at moment) because the satellite is still an intermediator, without them the network is unusable because the entire master-book is lost.
With such consideration, is also true that having a blockchain (that is just another cool name of “decentralized database”) just to maintain a decentralized order book is an overkill task. Also, the satellite thing can be replaced with a decentralized model in the future if the technology keeps going with such development speed.

If for some reason the satellite databases and backups are compromised, they can be rebuilt from nodes. A heavy task, but possible in case of disaster. This makes storj very very veeeeeeery close to web3.

Please note that storj token itself has nothing to do with web3 structure.

So, how can we maintain such structure with a lower price model?
IMO we can’t, nor we should do it. We can optimize it, but it’s pretty impossible to maintain costs lower than a centralized counterpart.
So we should do more where we are stronger…

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For the record your statement in your first post was:

Which I understood as meaning ¨Fade out the Token Marketing and Web3 Marketing¨ - if that is not what you meant, then there was a misunderstanding. If you would like us to phase out the STORJ token altogether, please refer to the multiple threads on this forum that explain why we are using STORJ token and will not phase it out.

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@IsThisOn first of all, there is a law in nature that says something like “if you want to survive, you have to adapt”. Storj started as a project, crypto related, and like all the crypto related projects, with the big majority turning to be scams, it must proved itself to be reliable, trustworthy before demanding big investements from SNOs. You don’t jump into a new project with new and expensive hardware; you use what you have to test it first, for a while. That’s why the marketing slogan was what it was back then. Now, the evolution of the project require adaptation, and this means relying on better hardware, reduce the cost with repairs, be assured that your SNOs stay on-line longer, more free space available and so on.

Second, if you want FIAT, you can “mine” directly to an exchange and change to FIAT the moment you receive your storj payment. I don’t know how many SNOs whould agree to give to Storj team the real name and bank account details, than declare the income and pay taxes, with all the bureaucracy that is involved. I know I whouldn’t.

Third, I only joined 2 years ago, but in 2 years, all the good stats are pointing up. The data stored increased from month to month. The engress has increased slightely. The test data decreased. The clients are coming faster and bigger. The storj team comes with good news more ofted. So, I’m pretty happy how things evolve. So I don’t understand your negativism.

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Just find out this good explanation.

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In my opinion, in order for Storj to work, it needs to reach economic scale on the supply, beside the pay out model adjustment, we need to dummify the work for node operators. Think something like a windows/mac executables that allows node operator just to run in their operating system. With 1TB min. dedicated hard disk space pre-allocated. If Storj can come to easy of installation, it would have allow more node operator to adopt and reach economy of scale and really allow de-centralization of the data.

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My suggestion for improving the economics of the platform:

Allow for node operators to “bid” the price they charge for storage and egress, within a range set by storj.

This bid is used in addition to speed to determine which nodes are chosen to store or egress data (not just first come, first serve).

Some additional points/critiques:

  1. Operators able to scale can do so in a way that makes storj more competitive, and are given more data to do so. Currently they have to resort to hack-ish ways to make sure all their devices are behind different /24 networks.
  2. The network economics could automatically adapt to the way storj is being used (low bandwidth usage? Lower prices would incentivize customers to add more high egress data. High disk usage? High storage prices give operators capital necessary to expand)
  3. This idea is essentially sacrificing some decentralization and performance (of which you could argue, Storj has “surplus” amounts, more than most customers really need) for economic competitiveness. Algorithms/price ranges would have to be carefully tuned to maintain intended decentralization.
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I generally agree with all of your posts. My main argument is just a opinion, not a fact. It is impossible to get numbers on my claim. I just think that the money is in the old boring world and not some trendy startups. I can’t proof that. But I can ask myself the question, why is STORJ so small compared to Backblaze, even though we are cheaper?
Did they just get a heads start and are we steadily catching up with them? Are we growing at a higher rate than Backblaze?

No. Mail is different from email. It is even in the name. Mail takes time and is expensive. Email is cheap and fast. They are not the same and have some clear pros and cons. So yeah, email is an innovation.

A ledger https download is no different than downloading a funny cat picture.
It is just a https download and nothing more. You should not compare what is “in” the download but how a “ledger https download” differs from a “cat picture https” download. They don’t.

The same is even true for mail. USPS does not care if put a cat picture or a ledger into an envelope.

And putting a ledger into a envelop does not make the act of sending a mail any way “innovative” nor does it make USPS a web3 company :wink:

The only thing that is different between these https downloads from a customer perspective is that one host is cheaper. That is currently true for STORJ, but only because of subsidies. So @BrightSilence is right when he wants to talk about that elephant in the room. No matter how cool or innovative a product is, no matter how good the marketing is, sooner or later it has to make economical sense.

Second, if you want FIAT, you can “mine” directly to an exchange and change to FIAT the moment you receive your storj payment.

That is exactly what I am doing. But they wont let me withdraw for free :slight_smile: And that is why I say, that traditional FIAT world wide money transfers is not really that much more expensive. Plus I have to trust the exchange to not go bust (FTX today?) and I am sitting on a speculative asset. Don’t get me wrong, I don’t dislike speculative assets, I just wanna decide for myself if I wanna gamble or not. Maybe not all node operators are into that?

So I don’t understand your negativism.

Hmmmm… did I came off negative to you? I don’t feel like that what I wrote was negative but just realistic. But maybe that is because I deeply believe that critical questions are neither negative nor insults.

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These are nice buzzwords, but I fail to see where the connection to STORJ is.

I hope we get a decentralized and privacy focus web. But what actually is there after we cut through the hype? We have a decentralized web3 that (for some reason I don’t understand or I don’t think is “decentralised”) still relies on (boring old web2) S3 storage?

As a customer or developer, because I failed to make my dApp to be so decentralised, that it does not have to rely on S3, I pay the central instance STORJ to host, instead of Backblaze, because STORJ storage is more decentralised than Backblaze? That is a pretty hard sell in my opinion :grin: Selling S3 based on price, redundancy or reliability is a lot easier.

That is exactly what I mean when I say ditch the web3 buzzword bingo in your PR.

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Backblaze is listed on all cloud storage comparison lists. They are a much broader known name. They also don’t ask their customers to trust in a whole new kind of storage network and have more certifications because they operate in an environment these certifications are made for. Storj DCS in its current form has only been around for 2 years, backblaze has been around since 2007.

There are barriers of entry that won’t just disappear. You need to break those down slowly as they are mostly barriers in perception. It takes time. It takes more and bigger customers trusting their data to Storj. And public trust growing from that.

It doesn’t, sure the S3 gateway is there as an option, but you do realize you can use uplink to pull data directly from nodes or libuplink to integrate that functionality directly into your app?

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There seems to be a misconception here that Storj Labs only markets to web3 customers. This is far from what is actually happening. In fact, most of Storj´s customers are web2 companies who are not interested in the blockchain space at all but like the resilience, performance and security that Storj DCS offers (besides the attractive price point).

Web3 companies only make up a small part of the total customer base, and they are certainly not the main focus in our marketing and sales team´s efforts to sign new customers. However, there is nothing wrong with diversifying the mix of clients and not exclusively marketing to web2 customers, when there are good use cases for Storj in the web3 space, too.

I would be interested to see what ¨web3 buzzword PR¨ you have specifically encountered and where, that may have brought you to the conclusion that web3 was Storj´s only focus when hunting for customers?

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I can say that as a European customer (more specifically Germany) my hard drive alone costs me 4€/month when spinning. I am dedicating 5TB of my 10TB hard drive for storj. If I start earning less than 4€/month from Storj, I will definitely immediately stop my node since I can then spin down my drive more often.

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Why don’t we price egress the same like storage?

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We have nodes in 100+ countries, each have own regulations regarding fiat and also more strict regulations regarding foreign currencies. In some countries it even illegal. So, fiat is not an option. Just imagine to support 100+ regulations formulars multiplied to number of operators, it requires a lot of paperwork and related problems, even if we do not include different tax requirements for each of them and regulations between organization and natural persons (in some cases you cannot be a natural person to receive a foreign currency and must be at least IE or LLC).
Even in USA you need to conclude a contract, verified and signed and also provide your tax report for IRS. And by the way, it’s required for token payments too. New Guidelines for Storage Node Operators in the United States

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@BrightSilence
You are right, “relies on” is wrong, it is just the only “web3 use case” connected to STORJ the paper mentioned.

@heunland I go to the homepage and see this:
grafik

And the blog posts are similar. If Web3 companies only make up a small part of total customers base like you say, why scare away serious companies with a term buzzword that mostly fraudsters use?

@Alexey That is why you pay a company to handle that stuff for you. And like you said, tokens are not different in many countries. It is just that more operators will commit tax fraud when they get paid in tokens instead of FIAT. Sooner or later, the regulations towards tokens will be no different to FIAT in most countries.

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Do you have any evidence that this scares people away? Especially in the context of the screenshot you posted, the promise is enterprise performance, durability and security.

I think web3 in itself is a term that is ill defined to begin with. The term may not be as useful. But customers should be aware of the decentralized nature of Storj. I don’t know that the web3 term scares people away who wouldn’t be scared away by knowing data is stored decentralized.

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I will answer that by quoting myself :slight_smile:

You are thinking way too far. First impression is important. If I am a serious business, I look at that and immediately close the page because I think it is a scam. I will never get far enough to understand how STORJ works and that it is an actual S3 product and not some shady startup.

By the way, if I click on the learn more button there, because as a serious customer I wanna learn more on why this supposedly is not only enterprise-grade but beyond enterprise-grade, what do I see next? A lot of web3 PR.

Web3 innovation meets enterprise performance, durability, and security.

Web2 reliability meets Web3 innovation.

S3-compatibility combined with a globally decentralized infrastructure means Storj DCS is the perfect bridge from Web2 to Web3.

Don’t get me wrong, there are valid and very good points on the same page! Like how STORJ is greener than AWS (if nodes use only unused resources) but it gets drowned in the other bs.

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I understand your position. I myself considered Storj as a web3 fad before accidentally stumbling on an actually good in-depth explanation on Reddit. One note though,

Funny cat pictures aren’t in tens or hundreds of gigabytes and don’t change every few seconds, especially not in a way where a simple HTTP Range request would just fetch some new bytes at the end of the file. The closest is probably game updates distributed as large patches all over game content, and these are tailored to specific types of content as well.

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You may be interested to see this webinar we recently held with participation of three of our web2 partners explaining why they are excited to use Storj DCS, a web3 company, to store their data rather than one of the big established web2 companies.

Having said that, we would really appreciate it if we could get back to the original discussion subject of this thread (the Storj economic model).

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