STORJ Token Balances and Flows Report: Q3 2022

November 2, 2022

The STORJ token is an integral part of our decentralized cloud storage network. STORJ tokens are 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. Our quarterly token reports provide details on the balances and flows of STORJ tokens in the preceding quarter. We deliver a summary of these reports, along with updates on the business and network, in our quarterly town hall meetings that are all recorded and available online.

Our first token report was published in December 2018, and we have published quarterly reports ever since, all of which are available on our blog. We are pleased now to publish this quarterly STORJ token report for Q3 2022. As we previewed in our last token report, we are moving into operational reserves the tranche of tokens that unlocked at the end of Q3 2022.

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.

Long-Term Lock-Ups

As with all of our quarterly token reports, we are providing an update not just on token flows but also on the tokens we hold in long-term lock ups. As we described on our blog in December 2017, after our token sale in 2017, we had 245M STORJ tokens that we had placed in a six-month lockup. We initially divided the tokens into eight tranches of 30.625M tokens each and gave them lock expiration dates spaced one quarter apart over eight successive quarters, setting a cryptographically enforced maximum on the number of tokens that Storj could unlock and use from the tranches in any given quarter over the subsequent two years. As described in more detail below, we left a tranche (Tranche G) unlocked in 2020 and began relocking the tranches for seven quarters out. The purpose of the locking of tokens is to reduce the percentage of tokens under the effective control of any single organization, limit the ability of Storj to impact the circulating supply, and provide transparency and predictability to the ecosystem.

As previously reported, we have committed to giving sixty-days advance notice to announce if there will be any changes to our lock-up schedule. With the publication of the last token report, we announced plans to not relock the tranche that unlocked at the end of this quarter to provide additional resources as we continue to grow. Earlier this year, we announced the acquisition of CrowdStorage. Recently, we hired Mark Glasgow, Chief Revenue Officer. We recently have added to our sales team. As noted below, we also are in the process of repurchasing some company shares. Leaving the tranche unlocked at the end of Q3 was done to enable us to continue fueling our growth.

Prior instances of leaving a tranche unlocked include once earlier this year and once in 2020. In our token report for Q4 2021, we announced plans to leave a tranche unlocked in Q1 2022 and confirmed in the token report for Q1 2022 that we did so, removing Tranche D from the long-term rolling lockup (see the second table below). Before that, the last time a tranche was left unlocked was in 2020, when the STORJ tokens in the tranche that unlocked at the end of Q3 of 2020 (Tranche G) were put into operational reserves, and we began relocking tranches for seven consecutive quarters. Along with the unlocking of Tranche F, which was the tranche that unlocked at the end of September this year, there are five remaining rolling tranches (see second table below for details).

Highlights from Q3 2022

The following are some highlights from the table below that details token flows in the quarter ending September 30, 2022:

a) 183.8M STORJ were in rolling time-locked contracts as of the end of Q3 ‘22, as reflected in rows 1-3. Next quarter’s token report will reflect that 30.6M tokens from the tranche that was left unlocked at the end of Q3 ‘22 will be put into operational reserves. Each tranche has 30.625M tokens and its own address (for details see the second table below).

b) SJCX-STORJ conversions historically were reported in rows 4-7. As explained in our Q3 2019 STORJ Token Balances and Flow Report and our Q4 2019 STORJ Token Balances and Flow Report, after providing ample notice to holders of SJCX, we executed 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 was no conversion in 2021 or 2022.

c) Rows 8-17 show operating supply at the beginning of the quarter, transfers of STORJ tokens in and out of the operating supply during the quarter, and the operating supply held by Storj at the end of the quarter. At the end of Q2 ‘22, Storj held 27.9M STORJ tokens in operational reserves (row 8). During Q2, we used 18.5M STORJ tokens: 0.5M to pay Storage Node Operators (row 9), 2.1M to pay service providers (row 11), 1.9M tokens for bonuses and to pay Storj team members who elect to receive some of their pay in STORJ tokens (row 13), and 14M tokens for the repurchase of company shares and other payments including general operations and liquidity purposes not otherwise described above. This activity left a total of 9.4M STORJ in our operational reserves (row 17).

d) At the end of September 2022, there were 213.3M STORJ in circulation (row 19). In Q3 2022, 18.5M were put into circulation from Storj’s operating supply, making the total circulating supply approximately 231.8M STORJ at the end of Q3 (row 19), with another 9.3M 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 as of the end of Q3 is 193.2M (row 18), comprised of the 9.4M in non-time-locked reserves (operating supply at the end of the Q3 2022) plus 183.8M in time-locked reserves (long term lockup as of the end of the period). The total supply as of the end of Q3 is 231.8M in circulation plus the 193.2M non-circulating supply, which totals 425M STORJ tokens.

For purposes of our quarterly reports, the figures in the table are rounded.

Overview

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 regular town hall meeting. It’s our intention to continue producing this token report on a quarterly basis. This report has been independently verified.

Background

The Company reports its tokens to management in two categories:

  a) Long Term Lockup

  b) Operating Supply

 

Long Term Lockup

Our approach to using time locked tokens to support long-term sustainability was first described in a blog post in December 2018. While the specifics have changed slightly since then, including reducing our notice period from ninety days to sixty days for any decision to remove a tranche from the lock ups, the approach remains the same: cryptographically locked tokens in a rolling time lock that we report on quarterly to ensure transparency and predictability in our ecosystem. This also furthers our decentralization goals by reducing the ability of Storj to change the supply in the short to medium term.

Reserved for SJCX Conversion

At the time of the token sale in 2017, we established a reserve and conversion mechanism for converting 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.

Operating Supply

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 pays Storage Node Operators using the STORJ token, based on the current spot price on Coinmarketcap. 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.

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 bonus program for Storj team members 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, non-routine payments to service providers and carbon offset program payments.  As noted above, in Q3 ‘22, 14M STORJ tokens were used in payments that included the repurchase of company shares, and general operations and liquidity purposes. To provide additional liquidity for general operations during uncertain economic times and in periods of growth, we also are liquidating a portion of our reserves on non-US exchanges through a partnership, and these flows are disclosed in this line item.

Line 15 is to report a decision to transfer STORJ from Long Term Lockup to Operating Supply.

Line 16 is to report any transfer of STORJ from Reserved for SJCX Conversion to Operating Supply.

Totals

Line 18 is the non-circulating supply of STORJ, which is the number of tokens in Storj’s custody.

Line 19 is the total circulating supply of STORJ tokens, which is the number of tokens not in Storj’s custody. The source of circulating supply are SJCX conversions (43.2M tokens), the May 2017 token sale (75.1M tokens), and any tokens put into circulation in a given period, as represented in rows 9-16.

The maximum total that can be in circulation is 425.0M STORJ tokens (line 20).

Confirmation

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!

The table below shows all the STORJ token held by Storj including our operating reserve in the top row, followed by the tranches of long-term lockups and schedule for unlocking them (see “Freeze Ends” column).  Each of the tranches has been assigned alphabetical letters (A-F, and H, with G representing the tranche that was removed in 2020 and D representing the tranche transferred into operational reserves after the close of Q1). With the removal of tranche G in 2020 and now tranche D, there are six remaining tranches represented by tranches A-C and E-F). The links below show the contracts on Etherscan; the unlock dates are viewable on epochconverter.com by pressing the “Read contract” button under the “Contract” tab and entering the release time into Epochconverter or a similar timestamp conversion tool.


*Prior to 2021, we used numbers to label the time locked tranches but switched to letters to make it easier to track the tranches if any particular tranche is not relocked.  As reported in the quarterly token reports from 2020, Tranche G was not relocked, and therefore the number of tranches was reduced from 8 to 7. As reported in the Q1 2022 report, Tranche D was not relocked, consistent with the notice provided in the Q4 2021 report.  Accordingly, that tranche is no longer included in the total reported STORJ tokens in long-term lockups. Likewise, as previewed in our last token report and confirmed here, Tranche F is not being relocked and will be removed from the list of tranches reported in our quarterly reports starting with the next report.

Carbon Intensity

In February, Storj announced that the estimated carbon equivalent emissions of STORJ token usage would be offset by Storj for both past history and going forward. This is our third reporting of this data. Storj worked with Native for our first carbon offset transaction (see “Offsets” below). As described in our Q1 2022 report, in addition to Native, there are other companies we expect to work with for more carbon offset transactions.

Please reference our original announcement post to see how we are calculating carbon intensity of CO2e, or “effective” mass of Carbon Dioxide. No additional offsets have been purchased since our Q2 2022 token report. We expect to have more offsets to report in our next quarterly report although they should be much smaller since the last set of purchases represented a catch-up for several years’ worth of activity and ethereum is now proof of stake rather than proof of work, resulting in less carbon impact to offset.

DISCLAIMER

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’s 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 refines its plans. Changes to the network, the STORJ tokens, and other information referenced in this post are entirely within the discretion of Storj, 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.

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