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My answer to this is clear: It is not necessary, it is obsolete.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”?
- Drop the STORJ token
- Use a stable coin
- Don’t waste time, resources and investors or customers money to try to find a use case for the STORJ token. It is obsolete.
- The business of Storj company is not running a crypto currency, a blockchain or a crypto currency ecosystem.
- Use crypto currencies only as form of payment from customers.
- Use solid, reliable and renowned worldwide small payment solution to pay SNOs in their favorite currency to their bank accounts if they request that
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.