Update Proposal for Storage Node Operators - Open for Comments

Announcements
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Hello Storage Node Operators!

Important: This is an announcement of changes to payout rates for storage nodes on three satellites: Salt Lake, europe-north-1, us2 effective May 1st. See below for details.

As we have been discussing in our forum posts (Mar. 8, 2023 post & Apr. 5, 2023 post), the time has come for us to make some adjustments to the payout rates for Storj node operators. Thank you so much for all of you that have contributed to the conversation so far. We’ve read your comments and incorporated much of your feedback as we have gone through this process. We really appreciate all of the insight and perspective we have gained through this.

Please read the following FAQ carefully as it has adjustments based on feedback from our two previous proposals and also includes more details on plans for future changes. We know that these changes might be difficult for some but we know that we need to take action in order to secure a sustainable future for the Storj project. As always we would love to hear from you and understand your thoughts and/or concerns on these changes.

The Storj Team

Q: What is the current situation regarding Storj’s storage node operator (SNO) payments?
A: Storj is stuck between a couple of facts, namely: (a) we pay SNOs more for egress than we charge, (b) The sustainability of the company requires us to make changes in these payouts so that we can continue to fund the development of the network, and, (c) we have hard-earned evidence that the market does not currently support raising prices.

Fundamentally, as we have said a number of times, SNO payments right now are being subsidized by us to grow the network, and we are currently in a position where the network is larger than it needs to be for the demand we have, and it is continuing to grow faster than we need. We have been transparent that the time would come when we would need to decrease SNO payment rates, and we feel that that time is now. We realize that dropping payment rates will slow the growth of and maybe even shrink the network, and that is precisely what we have decided we need to do.

In doing this we are targeting greater utilization of the network. This should enable SNO’s drives to fill faster and produce higher returns over time. As the network stabilizes and our customer growth increases we will slowly remove any synthetic load until the network is operating completely without subsidy from Storj.

Q: What other things have we considered to improve this situation beyond just lowering SNO payments?

A: There are a number of things we can do to improve our unit economics beyond just lowering SNO payments, such as adjust Reed-Solomon parameters, charge more for add ons (such as edge services), restructure the free plan (see this post for an update), etc. We are planning to make some of these changes, and are taking them into account as we determine where we need SNO payments to be in order for Storj to be sustainable long term. Please stay tuned for more information about these things.

Q: What is the proposed path forward with SNO payments?
A: We have decided based on the feedback from the forum and considering some of the points mentioned above that we can avoid changing the payout for data stored, so we are planning to hold that at $1.50 per TB-Mo of storage for the foreseeable future. We are, however, proposing to adjust the payouts for egress and repair. At the moment, we plan to only change payouts on non-production satellites. After this change, we will evaluate the impact on the network and use that information to determine what, if any, future changes should be made.

This is the new pricing schedule which will take effect as of May 1st, 2023:

Satellite / Payment Category **Current Payment PaymentAs of May 1st**
us2.storj.io : Storage (per TB Mo) $1.50 $1.50
us2.storj.io : Egress (per TB) $20.00 $10.00
us2.storj.io : Audit/Repair (per TB) $10.00 $10.00
europe-north-1.storj.io : Storage (per TB Mo) $1.50 $1.50
europe-north-1.storj.io : Egress (per TB) $20.00 $5.00
europe-north-1.storj.io : Audit/Repair (per TB) $10.00 $5.00
saltlake.storj.io : Storage (per TB Mo) $1.50 $1.50
saltlake.storj.io : Egress (per TB) $20.00 $2.50
saltlake.storj.io : Audit/Repair (per TB) $10.00 $2.50

Q: How will Storj minimize impacts to Storj Node Operators?

A: Throughout this process we are committed to maintaining relatively stable aggregate SNO payouts through the addition of data and egress to the network. We plan to do this through our regular customer growth and also through the use of synthetic load (test data and egress that Storj does) if necessary. Given the relatively small egress and repair loads on these non-production satellites we will not be adding any additional synthetic load at this time, but will consider this option if changes are made in the future that have a more material impact on payouts. Even though these changes right now are not material, it will allow us to test our process for making changes, and solicit more feedback from the community before we decide what if any future steps we should take.

We do not yet know exactly where we will land in the long term on the payout amounts but we trust that the conversations we have, the economic signals we receive, and the corresponding network statistics will inform this process for us.

Q: If Storj wants to save costs, why would it add synthetic load?

A: While adding synthetic load to the network does add cost It is important to note that right now our main concern is our unit costs. Our objective is to get to the point where every TB of data that we sell earns us money instead of losing us money like it does now. This is why we need to make changes to the SNO payments (as well as to R/S numbers, etc.) Once we are unit profitable then as we scale we become more profitable overall instead of less. Also, we plan to increase the synthetic load in step with any payout decreases such that the total amount we pay SNOs remains relatively constant. This means that overall the addition won’t increase our costs. It will just keep them flat until customer growth catches up.

Q: How will Storj evaluate the impact of these changes?
A: We will monitor network capacity, sustainability, node churn, stability, and health at each step of the process, using this information to determine what, if any, further actions are needed.

Q: What options do SNOs have if the new payout structure doesn’t work for them?
A: If at some point in this process the payouts for a satellite do not work for you, you can of course gracefully exit the given Satellite.

Q: What future payout changes will you make & what is the final payout pricing Storj will set?

A: We do not yet know exactly where we will land in the long term on the payout amounts but we trust that the conversations we have, the economic signals we receive, and the corresponding network statistics will inform this process for us.

Q: What is the ultimate goal of these changes?
A: Ultimately, we believe we can achieve the dual goals of Storj’s long-term sustainability and that running a storage node can remain profitable in many locations.

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Thanks for the recap.

When will it be inplemented?

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It says May 1st 2023

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Hiya John, Storj team.

Thank you for this update, I think it is a great way to go, and paves for a positive outlook on the future of both my storagenodes and Storj in its entirety.

Kind regards,
Ottetal

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Why aren’t the new egress and repair payouts uniform across the 3 non production satellites ?

Also since its not mentioned, would audit payout remain the same at $10?

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Thank you for the advance notice. Unfortunately, with such traffic prices, I’m starting to GE (I’ve already managed to do about 10 GE) where there is a decent amount of held.
With such traffic prices, I would have to pay extra for that, I present my resources :slight_smile:
Now I will wait for the publication of the price change on production satellites.

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The reason for the non-uniformity is to be able to see what is the reaction from SNOs to different price points in the shortest possible time. I am looking into what will be audit payout levels for test satellites.

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As trafic from test sattelite is almost 0, so not so worry about prices, main thing that it not occupy half of node space and give more space for production.
Also I think it would be good it storj return held amount from test satellites.
1)I would suggest that Test data is occupy as low space as possible.
2) return held amount from test satellite
3)I afford tests event with low prices, because I understand they are needed to make storj better for clients and get more clients.

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I don’t understand the reason to cut prices for these satellites, which has no traffic at all.

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i think there will be when prices will be cutted.

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Also i think there is more people want that test data removed, so when you remove more test data, i have lot of nodes with lot of TB of test data, no spaces for client data.

My research shown that from 300TB of data that i have around 111TB are from Test Satellites.

on other hand, if storj delete it at once i will get 150$ less. Till new data will come.

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Changing test sats payments won’t tell much about how SNOs will react in case of production satellites payment cuts. Many of us already ignore them when doing ROI estimates and many alteady GE from those sats. But it’s good to take small steps and be transparent months ahead of any decition, so I’m OK with your strategy. I’ll just add that data from these test sats must be deleted from our nodes soon, in 2-3 months, and let just a few GB if they are nedeed for future tests. Payments for test sats should be in the end at the same levels with production sats, because from SNOs perspective, stored data is the same and egress is the same, no matter from which sats they come, in case that there will remain some traffic in the test satellites. I won’t GE any sats for now.

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In the current world of high inflation, cost of living wage rises and high interest rates and continual price rises, this must be the only company lowering payments. I would have thought a payout increase would have been due after all these years. I am quite amazed. This must be a fundamentally flawed model if prices are going backwards in the current environment.

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Thank you for considering our feedback on pricing. Especially by keeping the $1.5 for storage.

I also don’t really care about the payouts from the test satellites as there is not really traffic to feel a difference.

May I suggest that you lower the egress price for all satellites to $7. We all know that we can’t get more because we only charge customers that much. Then lower it little by little and watch the feedback and statistics on the remaining free space.

For me, the $1.5 for storage is really important. Egress is not that important for me, but should not be below $2-3.

I’d like to get feedback if you think you’ve found a good balance and keep the prices that way for a while, because currently it’s impossible to invest in another hdd when one is full.

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Exactly. Therefore, as i pointed in various other posts, STORJ should RISE payment for “Storage (per TB Mo)” for example: from $1.50 to $2 (1/4 rise). Because now You are slashing egress from $20 to $10. And egress is roughly 50% of a node payout, as on attached images of my node example:

Storj_egress_to_storage_payment_is_50_50
Storj_egress_to_storage_payment_is_50_501139×728 47.6 KB

So if You slashes real egress from $20 to $10, its ~1/4 of whole node payout.

That way, there will be no need for STORJ to pay for additional cost of surge or any other synthetic load to compensate SNOs “that the total amount we pay SNOs remains relatively constant.” - like You phrased it. So STORJ can save on synthetic load. Moreover, the synthetic load could be completely eliminated, due to the lack of need! - If You just change the center of gravity of the payout to data storage.

It’s also more reliable for SNOs, to maintain their operation, because egress isn’t guaranteed. And stable SNOs, is stable STORJ, this takes out of equation any threat or topic associated with the sudden disconnection of nodes dissatisfied with too low payout. I would say, once for all!

Just now, from $1.50 to $2, and then even up to $3/TB stored, so You can keep almost all egress money then! (for STORJ inc. expenses other that SNOs)

Edit:
@Alexey
If it’s in fact $1.5 * 2,75 = $4.13, what STORJ pays SNOs for storage of 1TB
then really something need to be done with that 2,75 part (i know its redundancy of file factor) … or price for customers should be $6 or $7 for storage of 1TB. (not $4 like now)
And from $2/TB to somewhere $4/TB for egress (not $7 like now)

The goal is to pay a node $2-3 for Storage, and money from egress to keep in STORJ inc. as much as possible.

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With your proposal we would still take $4 from the customers for each stored TB/mo, but accordingly your proposal should pay 1TB * $2/TB * 80 / 29 = $5.52 to SNO, so $1.52 loss from each stored 1TB.
It would not work.

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For me, the egress traffic was the main revenue source (about 80% of my total StorJ revenue comes from egress traffic), presumably because it has a high-speed, low latency internet connection in a central location.

Reducing pay for egress traffic decreases the importance of having a stable and responsive internet connection - active nodes will lose the majority of their revenue while slow/inactive nodes will see little difference…

Why not adjust the prices proportionally (including repair and storage) instead of decreasing the egress payout so drastically?

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because of drastically difference between income and payouts - $7/TB from the customers, while paying $20/TB to SNO.

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This is the fundamental failure point of the “sharing” economy–see Lyft/Uber.

Subsidize unprofitable taxi rides with venture capital money, claw for market share, and eventually figure something out that will make such taxi rides profitable

Basic solution, pay less for your project (aka pay drivers less) and charge more for your product (aka charge more for rides).

Storj is following the same path.

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because it turns out if people in urban areas are price-sensitive and willing to share a vehicle with strangers they will take a bus.

What? How dare they?? :right_anger_bubble:

:joy: :rofl: :joy: