The STORJ token is an integral part of our decentralized cloud storage 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 it to store and retrieve data. We are pleased to publish our quarterly STORJ token report for Q4 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 on our blog, each reporting details of the prior quarter's activity. 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 following are some highlights from the table below that details token flows in the quarter ending December 31, 2020:
a) 214.4M STORJ were in rolling time-locked contracts as of the end of Q4 '20, as reflected in 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 (Tranche 1) was relocked to Q1 of 2021 and, after it unlocks, will be relocked to Q1 '23; the tranche that unlocked in Q2 of 2019 (Tranche 2) was relocked to Q2 of 2021; and, the tranche that unlocked in Q3 of 2019 (Tranche 3) was relocked to Q3 of 2021, and so on. As previously reported, we did not relock [tranche 7]. However, relocking will resume with the tranche that unlocked at the end of Q4 '20 being relocked to the end of Q4 '22. Each of the tranches has its own address, as provided in the second table below. As reported in our last three quarterly reports, we planned NOT to relock Tranche 7 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 which we became aware of earlier in the year. The decision not to relock that tranche was a precautionary measure to ensure sufficient operational reserves for the year's final quarter.
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 has been no conversion activity this year.
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. 13M STORJ tokens were held in operational reserves by Storj at the end of September 2020 (row 8). STORJ moved 30.6M into its operating supply from the tranche that unlocked at the end of Q3, as we previously announced we would do (row 15). During Q4, we used 18.1M STORJ tokens, 1.2M of which were used to pay service providers (row 11) and 15.1M to pay early investors who were involved with the company prior to the 2017 token sale as reported in December (row 14). We expect a much smaller entry in this row for Q1 '20, as we finish off the remaining such payments. Another 1.8M tokens were used to pay Storage Node Operators and Storj team members (rows 9 and 13). This activity left a total of 25.6M STORJ in our operational reserves (row 17).
d) There were 167M STORJ in circulation at the end of September 2020 (row 19). In Q4 2020, an additional 12.56M were put into circulation, making the total circulating supply approximately 185M STORJ at the end of Q4 (row 19), with another 25.6M 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 240M (row 18), comprised of the 25.6M in non-time-locked reserves (operating supply at the end of the period) plus 214.4M in time-locked reserves (long term lockup at the end of the period). The total supply is 185M in circulation plus the 240M non-circulating supply, which totals 425M STORJ tokens.
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 continue producing 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 Q4 '20, 214.4 M STORJ were held by Storj Labs for future use (line 3). These tokens have been split into seven equal-sized tranches of 30.625M tokens each. Seven of the tranches are currently locked, with expiration dates over the seven successive quarters. As described above, the Q3 '20 tranche was not relocked but instead was transferred to operational reserves, leaving 214,375,000 tokens in long-term lockup going forward.
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.
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 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. There were no repurchases in Q4 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 team 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 previously announced our intention NOT to relock the tranche that unlocked at the end of Q3 '20, and those 30.6M tokens are reported here in this Q4 '20 token report. As explained in our Q3 '20 token report, our Q1 and Q2 '20 token reports mistakenly noted that the 30.6M tokens would be reported here (line 15) in the Q3 '20 token report; however, since the tokens were not available for transfer in Q3 since the tranche unlocked only at the end of Q3, they are reported now on this line in this Q4 token report since they were transferred in Q4, not Q3.
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 Q3, activity during Q4, and at the end of Q4), 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.