Hello Community,
Per our most recent town hall, we are considering updates to STORJ tokenomics. We wanted to engage the community in this conversation to obtain input and ideas regarding what changes you would be interested in seeing to better support the stability and utility of the STORJ token.
The Storj Team
If we don’t have enough paid-used-space yet to cover market buys when the cupboards run bare… is the smart contract open in any way to mint more for the treasury? Or migrate to a new token and lock up a bunch of tranches again? We moved from SJCX: maybe hop to the Chia network? Or just NEWSTORJ or STORJ2 on Eth?
Even if the token price doubled - so the burn halved… it probably still wouldn’t be enough. But perhaps a new-token/new-treasury would be attractive to new investors?
Assuming: we have plenty of SNOs and are willing to lose some to have more STORJ locked or moving (to increase its sell price, to extend runway).
We’ll have to sleep on it and think of more! 
Being able to pay for valdi.ai with storj tokens would be nice, and probably easy for you to implement. Not even expecting the discount, just letting me redirect storj revenue there. I’m sticking to a competitor for now simply because I already have some credit there, but that would be a reason for me to move.
Requester pays mode could maybe bring some more web3 folks wanting to use the token for downloads. Dunno, I have a feeling that would be again dealing with tons of small-scale customers.
Honestly, at the scale you are expecting your customers to be, I don’t really see interest for the token.
Here we go. When the token reserves are almost empty.. new tokenomics ideas are needed.
If Storj Labs used a large % of the STORJ token reserves to fund the adquisition/creation of another Storj Labs company branches, it seems fair to use a small % of the revenues to buy STORJ token back to pay SNO’s. If Storj Labs wants to keep paying some salaries/bonus and “Other” with STORJ token, then a large % of the revenues would be needed.
Minting new tokens would devaluate the token price. A new token sale or ICO with special conditions for old SNO’s could be an option?
Now as Storj is facing the need to buy back their own token, they are requesting ideas how to increase stability of their coin? Storj should not waste time and money now to try to build an ecosystem around the STORJ token. It’s too late to do that. It has been suggested years ago to try to increase the use cases for STORJ tokens and maintain its value by building more of an ecosystem around it.
Before anything, Storj should ask themselves, why they want to stick to the STORJ token. Why do they believe it is still required and why they should invest money and resources into this and not into increasing the customer base? These are also questions any VC or any other investors would ask: Is the STORJ token still necessary to run the business or is it only a nice to have toy the company wants to stick to because they always had it?
My answer to this is clear: It is not necessary, it is obsolete. It is even a burden. Sticking to it will cost money and does not bring any value or advantage that cannot be achieved otherwise either by a different coin or dropping the coin altogether. Storj is not a blockchain or crypto currency company. The business of Storj is to provide mainly storage and not to run or maintain a crypto currency or a crypto currency ecosystem for the sole purpose of have their own crypto currency. So for me it is totally not required for the business anymore.
The STORJ token had 2 purposes: Paying SNOs with money that company did not have and transferring monetary value to its SNOs while trying to maintain low costs.
Now this has changed. The company is running out of token reserves and they will have to buy back their own token at volatile market prices. This does not only not make any sense, it also poses the huge risk that Storj will have to buy back at high prices and will lose money to those who are holding the STORJ token now or in the future. As Storj has already announced to consider to buy back tokens and therefore increasing the tokens overall demand, they will face higher token prices when doing so. In the worst case they will have to buy tokens at high prices to be able to pay their SNOs but execute payments to SNOs when the prices are lower again which could result in significant losses. It does absolutely make no sense for Storj to pay SNOs with a volatile currency and it does not make sense for SNOs to get paid in a volatile currency. And it will become completely questionable when Storj is going to use USD they have received from their customers to buy volatile tokens to pay their SNOs. Picture this:
Customer pays Storj USD for storage → Storj sells USD to buy STORJ → Storj sends STORJ to SNO → SNO sells STORJ for USD.
How does this ever make sense?
Now even worse, imagine if the demand for STORJ increases as Storj is forced to continuously buy STORJ token. In this scenario Storj will have to use more and more USD to buy back their tokens only to send them to SNOs who will control the supply together with other token holders. Furthermore if the STORJ prices fluctuate and STORJ holders expect higher market prices, they will rather not going to spend the STORJ token they have for anything else than selling it for higher prices.
This is a very bad situation, similar to a short squeeze. As it was already publically shared by Storj that they consider buy backs an increase in demand of STORJ token can be expected if Storj is going to stick to the STORJ token. Therefore nobody who is not forced to sell his STORJ assets will not sell them or use them otherwise when higher and higher prices are to be expected.
Sticking with the STORJ token will make the entire business, that has nothing to do with crypto currency, prone to market price fluctuations that can be extreme and unpredicted. The only solutions I can think of would be to peg STORJ to fiat or a stable coin, switch to a stable coin altogether or drop the crypto currency idea completely. If I was a VC company or investor in the Storj company I would NEVER give Storj money to buy volatile tokens at unpredictable market prices to pay SNOs. And as Storj has already announced a buy back of STORJ tokens, the probability that prices will rise is high. This is prone to high risk or even total failure.
But the token is also no longer required for paying SNOs. There are plenty of other companies which have the same problem like Storj which is to pay small amounts to providers worldwide and none of them require the use of crypto currency. Why? Because there are plenty of companies which offer exactly such a service: Worldwide payment distribution at a click of mouse button. It was already suggested to make use of such providers here: About supply and future planning - #35 by jammerdan
I am not saying Storj should not accept payment by crypto currency from customers. But this should be the only purpose. This way, Storj could also open up for payment by crypto currency other than STORJ.
It is a serious business decision whether to keep riding a dead horse or putting Storj onto new tracks. The main question is, why does Storj believe they have to stick to the STORJ token in that way that they put time, resources and potentially money into a venture that has already served its purpose. Additionally it has the potential to impose new risks in terms of market price fluctuations onto the business that has nothing to do with blockchain or crypto currency. The STORJ token is no longer required to run the business and Storj should realize that better sooner than later.
So my suggestions for Storj “tokenomics”?
This:
Storj should not waste time and money with that token any longer. Let’s face it: The customers Storj is targeting have no use for STORJ token. The SNOs have no use for STORJ token. And without token reserves, Storj has no use for STORJ token. Without a use case there is no need for a STORJ token.
I’m not invested in the StorJ coin - I trade to stable coins when I can.
I’d much prefer to be paid in TrueEUR if possible.
Switching to a stablecoin or fiat-related payouts can’t be done until they have enough paying customers to be profitable (and even then: global payouts would still be cheapest if they stayed with a crypto token of some sort). But there would be nothing wrong with continuing with STORJ: that cycle could continue forever if they were in the black.
Paid used-space is still increasing: I understand why they’re brainstorming on how to make the remaining treasury tokens last a bit longer.
You could offer to not pay operators every month and pay “interest” on their “account” therefore "reward"ing them.
You could also offer rewards for extra deposits and use the reserves to pay operators
The amount paid to SNOs isn’t really the problem - it’s not very much and the actual cash from paying customers easily covers it. It just doesn’t also cover the rest of the business: like salaries.
They could change SNO payouts to zero. And even if every SNO stayed for free… I bet it still wouldn’t work. If token sales fill gaps in payroll: then the more we can make each of those tokens worth the less they have to sell. Until paid-used-space grows enough to cover all their costs.
But maybe the idea of banking/staking payouts like Andrew mentioned could help? I’m just not sure how to convince SNOs to do that… without just pushing worse financial burdens into their future?
If all ideas are on the table: maybe dropping SNO payouts again could buy the company another year?
@Bryanm ,
Add a parallel investment stable asset/staking coin; one that’s formulated to emulate and pay commercial note grade grade % ROI, as a mechanism to raise capital - in respect to/of the amount representing your accepted future/probable modeled profitability. Consider offering a floating profitability % of annual earnings (or prime rate +), rather than seeking VC capital. This supports an efficient roll out of capital needs, by simply offering/exchanging SNO’s earnings to roll their STORJ earnings into a non-volatile investment, returning market rate. IE: SNO earnings can roll into newly minted parallel coin. Additionally such a token will have ongoing definitive value: can be formulate to expire annually, or every 2/3/4/5 years, with option to renew. So Storj or any future VC can pay it out, extend or leverage it further, adjust ROI terms annually, etc. All the while reducing monthly market sell pressure on the STORJ token itself, ensuring long term stability.
This should solve the majority of your 100k+ monthly burn rate, by leveraging your ~30% GM on storage sales; ie: 60% ongoing expense to capital raise, dependant upon adoption, of course. An associated token reduces barrier to entry, nullifies exchange costs, etc., and would be attractive to all SNO’s who immediately exchange earnings to USD.
Do not consider dilution or reverse split, etc. You are born of this, there are financial, regulatory & ethical considerations at play, as you well know.
STORJ’s future success as invested by us SNO’s is your future continuing primary capital needs. I’d bet that alone extends runway to profitability; with an acceptance rate by SNO’s of 70%, who would still want to be a part of Storj’s ongoing autonomy via their investment help, and would reduce your vendor costs (us SNO’s) by >~42% (just math). Back of my mental envelope, saving ~$40k+/mo. right now, and be directly scalable with ongoing revenue acceleration in the future.
10 cents,
Julio
I think I can remember that every time in the past when somebody came up with the question of investing in the STORJ token in terms of making profits of price increases, those questions have been silenced with the stance that Storj is about storage and not about the STORJ token prices.
So are we talking now about the question how we can increase the STORJ token prices so that the company has to use less of their STORJ token reserves and can last longer with it?
Didn’t we have such a discussion just recently multiple times?
So Storj will transform from a storage business into a bank?
As I understand it Storj is looking for VC money. I just don’t understand how is it better to buy volatile tokens for that money to pay salaries instead of directly pay Salaries in USD?
Other start-ups issue stock options to their staff. I don’t know if this is an option and the required transformations can be conducted with VC money if it is required to get rid of the token.
Well… while I like the thinking into such a direction, it comes out as creating a new coin to solve the problems of the old coin. It is what other projects have done and it does not really create confidence in that project.
That’s the problem. Despite all transparency, there is zero known about current or future probability. Everything is extremely vague. They don’t even disclose if a customer has chosen the public or the Select network.
I would not invest at this current state. More transparency would be needed to prove that profitability can be achieved at all.
I would even find this better, cause there would be no confusion for others. Just use the Token that has the same name as the Company.
But what exactly are the company expenses vs the income? Did they ever put real numbers on the table? (I never saw numbers on expenses other than the token report)
How much do we have to save to be profitable?
To be clear, the goal of this brainstorm is not to come up with ideas for how we can increase the value of the token in order to extend the runway of the company. Instead it is intended to discuss ideas for how we can adjust the tokenomics to better facilitate the use of the token to support the long term growth and stability of the network.
The key bottleneck for me is liquidity, and you apparently cannot work on that. So the only option is trying to make the token more desirable, like growing in value, to attract 3rd party liquidity providers. As such, it really feels like the same discussion.
I don’t expect stats on how many paying-customers use STORJ for the 10%-discount… but I’m guessing it’s low. Regular companies looking for a value alternative to Amazon S3 probably don’t want to touch crypto to shave a couple more bucks off their bill. So what would make a company want to touch the token?
Perhaps it’s just risk/reward. To get them to accept the perceived-risk (or change-in-bill-payment-workflow) they need more reward. Like a 20% discount instead of 10? But even then… their average storage bills may not be large enough for them to deal with the hassle.
So are there other corporate benefits they could see: other than straight cash? I have a glimmer of an idea: but it’s hard to type it out without appearing as another vanilla shill…
Storj already has a reduced-waste/carbon-emissions message. Maybe that can be pushed. Maybe it could mean Storj also touching the Chia network. Hear me out:
So, what could that mean?
Storj doesn’t have to move STORJ to the Chia network: but they could dual-launch the token (many tokens are multi-network). That opens the opportunity to neatly create another batch of fresh treasury tokens “as a strategic reserve to fund expansion” (or however you want to spin it). Storj gets a marketing push as the now-even-greener S3 alternative (on the network powering carbon markets, partnered with the industry storage-recycling org). They may pick up Silicon.net as a reseller (or a corporate combo of Valdi+Silicon may work very well). CNI gets Storj as a reference technology partnership (when attracting new customers to their chain: as an example enterprise company that chose them). And the existing token can stay as it is on the ETH side: there are already bridges between the Chia and Eth networks.
This is leaning a bit away from pumping space sales directly. And leaning more towards US-companies-are-getting-more-comfortable-with-crypto indirect sales. And blending in the “green” messaging of a low-powered blockchain. And gaining a dev partner with customers who could be yours too.
I hope that didn’t sound generic: like someone saying you should jump on Solana with STORJ and try to pump. I think a dual-launch on Chia has real corporate benefits and many alignments (and could let you refill the treasury)
The storj token has served its purpose: bootstrapping the network, so it should be retired.
Since the vast majority of customers are paying for storage in fiat, I don’t see any valid reason (at all) to not pay the SNOs with something that is widely accepted and pegged to the same fiat value (ie a stablecoins). SNOs should signal what they want to be paid in using the same mechanism that we used to use for polygon: ie change a configuration value in the node’s config file. There isn’t any overhead since the same transaction for sending out a storj payment, can also be used to send another token (ie stablecoin).
A valid way to retire the storj token could be a burn-to-run-a-node mechanism: burn X amount of storj, you get a tag on your node that says it’s now part of the network. Nodes not complying with this, get suspended until they either drop off the network, or decide to burn X amount of tokens. This should limit the number of drive-by SNOs that expect to see 1PB of used space in a week, and also makes the remaining SNOs become more “serious” in their node maintenance. Of course this should be communicated with plenty of advanced notice, not on a Friday afternoon with immediate effect.
The network isn’t profitable, yet (but they’re working towards profitability). They need to keep covering expenses with the existing STORJ token because they can’t do it with fiat.
So you are telling me that a 0.20% fee (ie take the customer’s deposit, send it to an exchange, swap it) + $1 per withdrawal (based on the volume, that’s not even worth calculating), is “a vast business expense” that is going to drive the company into bankruptcy? I’m quite positive that isn’t the case.
If you are getting paid less than you pay to provide a service, then something else is wrong.
I’m not sure what you’re talking about? Storj has customers that pay them fiat every month. It’s less money than they need to cover running the business, such as the large cost of salaries, or the small cost for SNOs. STORJ reserves have been helping fill the gap: as they chase more and more paid-space. That’s expected, and common for startups with their own token: everybody knows it: they published token reports for years.
It’s not that the increased cost of using a fiat-based payment services is what would make them unprofitable. It would just make things more expensive when they’re already in the red. And if it means they stop using any STORJ they have left… they’d be leaving money on the table.