The STORJ token is an integral part of the Tardigrade network. STORJ tokens provide a quick and easy way to transfer value between those who provide storage capacity and bandwidth to the network, and those who use the network to store and retrieve data. We are pleased to publish our quarterly STORJ token report for Q3 2020.
Storj Labs Inc. (Storj) began publishing token reports in 2018 (here is our first report, here is our latest report, and here is where you can find all the quarterly reports we have published). Since our initial report, we have provided quarterly updates like this, each reporting details of the prior quarter's activity on our blog. We also provide regular updates on token balances and flows in our town hall meetings which are recorded and posted online.
The information in this report can be recreated directly from the Ethereum blockchain, but we compile it here for the convenience of our community. We present the token flows in these blog posts to provide a clear and transparent resource to all. Just as we make our code and other materials publicly available, we make our token balances and flows open and accessible.
The detailed table showing token flows over the quarter that closed September 2020 appears below, but here are the highlights:
a) 245 M STORJ were in rolling time-locked contracts as of the end of Q3 '20 (see rows 1-3). As previously discussed, we initially relocked 100% of our time-locked tokens every six months. During Q1 of 2019 we divided the time-lock reserve into eight equal-sized tranches of 30.6 M tokens that unlocked in successive quarters. We announced a policy that as each tranche would unlock, it would be relocked to the same quarter two years later, unless at least 90 days advance notice was provided. For example, the tranche that unlocked in Q1 of 2019 was relocked to Q1 of 2021; the tranche that unlocked in Q2 of 2019 was relocked to Q2 of 2021; and, the tranche that unlocked in Q3 of 2019 was relocked to Q3 of 2021, and so on. As previously reported, we are not relocking the tranche that unlocked at the end of Q3 '20, but we intend to relock the tranche that unlocks at the end of Q4 '20. Each of the eight tranches has its own address, which are provided below. As previously reported, toward the end of 2019, we began examining technical solutions that would alleviate the need for time-locked tranches. We have not yet implemented a change to our regular approach to performing lockups, but will report on any change that is made in the future. As reported in our last two quarterly reports, we planned NOT to relock the tranche that unlocks in Q3 of '20 because of the difficulty of forecasting the rate of growth of our service, the general crypto markets, and the extent to which our token price would be impacted by global financial uncertainty. Our decision to not relock the tranche that unlocks in Q3 was primarily a precautionary measure to ensure sufficient operational reserves for the final quarter of the year.
b) Previous reports included lines 4-7 to report SJCX-STORJ conversions. As explained in our Q3 2019 STORJ Token Balances and Flow Report and in our Q4 2019 STORJ Token Balances and Flow Report, after providing ample notice to holders of SJCX, including via direct email messages and social media announcements, we executed on our plan to shut down the SJCX-STORJ converter at the end of 2019. Accordingly, rows 4-7, which previously reported such activity are now intentionally left blank, since there has been no conversion activity this year.
c) Of the 17.6M STORJ in operational reserves held by Storj at the end of June 2020 (row 8), 4.6M were used in Q3 of this year (rows 9-16), primarily for paying Storage Node Operators, third-party service providers, and Storj employees through the STORJ token salary program, leaving a total of 13.0M in our operational reserves (row 17).
d) There were 162.4M STORJ in circulation at the end of June 2020 (row 19). In Q3 2020, an additional 4.6M were put into circulation, making the total circulating supply approximately 167M STORJ at the end of Q3 (row 19), with another 13M in operational and non-time-locked reserves held by Storj (row 17). The bulk of the operational reserves are held in a cold wallet.
e) The total non-circulating supply held by Storj is 258M (row 18), comprised of the 13M in non-time-locked reserves (operating supply at the end of the period) plus 245M in time-locked reserves (long term lockup at the end of the period). The total supply is 167M in circulation, plus the 258M non-circulating supply, which totals 425.0 M.
In May of 2017, Storj Labs International SEZC (formerly Storj Labs (BVI) Ltd), a wholly-owned subsidiary of Storj Labs Inc., conducted a public token sale. As a reminder, we intend to provide a quarterly update on the business and network through our quarterly town hall meeting. It's our intention to produce this token report on a quarterly basis. This report has been independently verified.
The Company reports its tokens to management in two categories:
a) Long Term Lockup
b) Operating Supply
Long Term Lockup
As of the end of Q3 '20, 245 M STORJ were held by Storj Labs for future use (lines 1-3). These tokens have been split into eight equal-sized tranches, seven of which are currently locked, with expiration dates over the eight successive quarters. As previously reported, we paused locking and unlocking in Q4 2019 in anticipation of a technical solution to lockups but there was no preferred technical solution to our current approach identified and implemented, and so the Q1 2020 tranche and Q2 2020 tranches were relocked to Q1 2022 and Q2 2022 respectively. As previously announced, the Q3 '20 tranche will not be relocked, but will instead be transferred to operational reserves, leaving 214,375,000 tokens in long-term lockup going forward, which will be reflected in the STORJ Token Balances and Flows Report: Q4 2020.
Reserved for SJCX Conversion
At the time of the token sale in 2017, we established a reserve and conversion mechanism for the conversion of SJCX tokens to STORJ tokens at a predefined rate of 1:1. We initially set aside approximately 51M SJCX tokens for conversion, and announced a deadline of October 2017 to convert SJCX to STORJ token. We extended the deadline to accommodate requests for conversion. Ultimately, we saw no material conversions in Q2, Q3, and Q4 of '19. So, as previously reported, we deprecated the converter on January 1, 2020, and returned the remaining tokens to the operational reserve.
We track the operating supply of STORJ tokens (lines 8-17). These tokens are held by Storj Labs, Inc. or Storj Labs International SEZC and are intended to be used for operations as described below.
While we quote payment rates to Storage Node Operators in dollars, Storj Labs pays Storage Node Operators using the STORJ token, based on the current spot price on the major exchanges. If in any given month, the amount to be paid to Storage Node Operators exceeds the amount of STORJ tokens received from customers, there is a net outflow of STORJ tokens (line 9).
Line 10 is to report any repurchases of STORJ from the open market. There were no repurchases in Q3 of 2020.
In addition to Storage Node Operator payments, we make payments to certain service providers (e.g., community leaders who monitor our various forums, respond to questions from users, and perform other community-related tasks; bug bounty participants; consultants; contractors) in STORJ token (line 11).
Line 12 is for any SJCX conversion made outside of the token converter referred to above.
We have a quarterly bonus program for Storj Labs employees based on company milestones defined by management. We also have a voluntary program to allow employees to take a portion of their salary in STORJ token. Finally, we have various spot bonus programs from time to time. We track all of these programs in line 13, along with payments to international team members engaged through employers of record.
Line 14, "Other," is reserved to report activity that doesn't fall into any of the other categories including, for example, payments to service providers paid out in a quarterly timelock.
Line 15 is to report a decision to transfer STORJ from Long Term Lockup to Operating Supply. We have announced our intention NOT to relock the tranche that will unlock at the end of Q3 '20, and those 30.6M tokens will be reported here in the Q4 '20 token report. Please note that in our Q1 and Q2 '20 token reports, we mistakenly reported that the 30.6M tokens that are not relocked will be reported here (line 15) in the Q3 '20 token report; however, since they were not available for transfer in Q3 since they were still locked, they will be reported on this line in the Q4 '20 token report since that is when they will be transferred.
Line 16 is to report any transfer of STORJ from Reserved for SJCX Conversion to Operating Supply, as occurred previously due to the scheduled deprecation of the converter.
Line 18 is the non-circulating supply of STORJ, which is the number of tokens in Storj Labs' custody.
Line 19 is the total circulating supply of STORJ tokens (at the end of Q2, activity during Q3, and at the end of Q3), which is the number of tokens outside the custody of Storj Labs.
The maximum total that can be in circulation is 425.0 M (line 20).
We've provided addresses for our major reserves below so that totals can be easily verified.
If you have questions, clarifications, or suggestions on how we can better present this information in the future, please let us know!
This report is provided to the many individuals in the Storj ecosystem, concerning the circulating supply and flows of the STORJ token.
STORJ tokens are intended to facilitate the provision and receipt of data storage and related services through Storj Labs' software application, which serves as a user interface and development platform on the network. STORJ tokens are not intended to be a digital currency, security, commodity or any other kind of financial instrument.
The contents of this publication contain a high-level overview of the network and the STORJ token, and are subject to change as Storj Labs refines its plans. Changes to the network, the STORJ tokens, and other information referenced in this post are entirely within the discretion of Storj Labs, and could result from commercial, technical or legal issues, among others. We believe that greater transparency around the STORJ token will contribute to the willingness of users, Storage Node Operators, and other service providers to participate in the network. While we have made every attempt to be accurate and thorough in the production of this report, it is provided as is, and you should not rely on this report for any decisions regarding the use, acquisition, or disposition of STORJ tokens.