The STORJ token is an integral part of the Tardigrade network. STORJ tokens provide a quick and easy way to transfer value between Storj Labs, 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 Q4 2019. Please note that we closed the SJCX STORJ converter at the end of the year, and transferred those reserves to the operating supply, as described below.
We started publishing token reports in 2018 (see our first one here), and have provided quarterly updates like this one, which are published in the subsequent quarter 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 find it helpful to compile the information for our community and present it in these blog posts in a clear and transparent format. Just as we make our code and other materials publicly available, we strive to make our token balances and flows open and accessible.
The detailed report appears below, but here's the TLDR (please make sure to read the disclaimer below):
a) 245.0 M STORJ are in rolling timelocked contracts. As previously discussed, we initially relocked 100% of our timelocked tokens every six months. During Q1, we divided the timelock reserve into eight equal-sized tranches of 30.6 M tokens that unlock in successive quarters through Q4 2020 and relock respectively to the same quarter two years later. 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. Each of the eight tranches has its own address, which are provided below. In Q4 of 2019, however, we began examining a technical solution that would alleviate the need for time-locked tranches. Our legal and technical teams are currently at work to implement that solution. Accordingly, for Q4 of 2019, we paused unlocking and relocking a tranche just in that quarter. We anticipate full implementation of the solution will be ready some time in the first half of 2020.
b) We began the quarter with 6.8M STORJ reserved for converting the legacy SJCX token. However, as noted in our Q3 STORJ Token Balances and Flow Report, after providing ample notice to holders of SJCX, including via direct email messages, we executed on our plan to shut down the SJCX-STORJ converter. The conversion from the Counterparty asset (SJCX), on the bitcoin blockchain, to the ERC20 token (STORJ), on the Ethereum blockchain, began over two years ago, with minimal conversion in the past quarters. To effectuate the closing of the converter, 6.8M STORJ was transferred out of the converter in Q4 2019 and into the operating supply.
c) Of the 37.5M STORJ in operational reserves held by Storj Labs at the end of September 2019, 7.9M were used in Q4, primarily for paying third-party service providers, storage node operators, and Storj employees through the Storj salary and bonus programs, plus the 6.8M from the converter, leaving a total of 36.4M in our operational reserves.
d) There were 135.7M STORJ in circulation at the end of September 2019. In Q4 2019, an additional 7.9M were put into circulation, making the total circulating supply approximately 143.6M STORJ at the end of Q4, with another 36.4M in operational and non-timelocked reserves held by Storj. The bulk of the operational reserves are held in a cold wallet.
e) The total non-circulating supply held by Storj Labs is 281.4M, comprised of the 36.4M in non-time locked reserves (operating supply at the end of the period) plus 245.0M in timelocked reserves (long term lock up at the end of the period). The total supply is 143.6M in circulation, plus the 281.4M 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. While most of our focus in the past year has been on building our company and our network, we want to provide a detailed update on token flows since launching the network. 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.
The Company reports its tokens to management in two categories:
a) Long Term Lock Up\b) Operating Supply
Long Term Lock Up
245 M STORJ are held by Storj Labs for future use (lines 1-3). These tokens have been split into eight equal sized tranches, which are currently locked, with expiration dates over the eight successive quarters. As noted above, we paused locking and unlocking in Q4 2019 in anticipation of a technical solution to lock ups.
Reserved for SJCX Conversion
We have been tracking and reporting a token converter application that converted SJCX tokens to STORJ tokens at a predefined rate of 1:1. As noted in this Q4 2019 report, the converter was deprecated at the end of the year, and the tokens were transferred to our operating supply (lines 4-7). This report will be the last time these lines appear, since the converter has been shut down and the remaining STORJ returned to the 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 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). We expect this number to increase substantially with the launch of the V3 network, which occurred in Q1 2020 and will be noted in the Token Balances and Flows Report for that quarter.
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 quarterly bonus program for Storj Labs employees based on company milestones defined by management. We have also launched 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.
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 Lock Up to Operating Supply.
Line 16 is to report any transfer of STORJ from Reserved for SJCX Conversion to Operating Supply, as occurred in this quarter 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, which is the number of tokens outside of the custody of Storj Labs.
The maximum total that could 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.