Satoshi • Fund: Storj ICO Report

Storj is an open source platform allowing users to rent storage provided by other users. It is soon migrating from Bitcoin to Ethereum. Storj is three years old and has a working product backed by a big team already. The details on ICO and the upcoming token distribution are scarce, there are already a few competing players in the market, but the interest in the renewed Storj can nevertheless be high.

About

Storj is a distributed encrypted cloud storage network where users called farmers provide their spare hard drive space and bandwidth to other users, called renters. Launched in 2014, Storj has already developed a working product. This summer Storj will migrate from Bitcoin to Ethereum and they are holding their second ICO prior to that

Use-cases

• Object storage platform for developers and businesses where users rent extra object storage, or earn money by providing their storage to other renters (implemented); no minimum network fees; renters pay $0.015 per GB per month for storage and $0.05 per GB for bandwidth (downloads).
• Marketplace for diverse applications that allow users to own their data (planned)

Competitors

Storj consider centralized cloud storage providers (Amazon Web Services, Microsoft Azure and Google Cloud Platform) as its main competitors. Opposed to them, Storj wants to provide more security through encryption while being fast and relatively inexpensive. Among blockchain-based alternatives, there are a few that could compete with Storj:

Versus Sia

Sia is an established product that offers blockchain-based cloud storage, which is in general similar to Storj. However, Sia runs on its own blockchain instead of Ethereum, and is fully decentralized. Storj is usually considered faster and more user-friendly. Sia is cheaper (2$ on Sia against 15$ on Storj per monthly storage of 1TB; $1 versus 50$ per download bandwidth for 1TB), but has an entry barrier as one needs to put up collateral first to become a farmer.

Versus MaidSafe

MaidSafe serves as a distributed data management service and is therefore more than just object storage. MaidSafe relies on its own network instead of an existing blockchain, and is currently available in Alpha only. In terms of pricing, a comparison is difficult as the storage costs on MaidSafe depend on how much resource is available on the network and how much demand there is to store data.

It is also worth noting that the native protocol for Ethereum called Swarm is being developed. Also, the Filecoin project is announced to be built on top of Ethereum in a while by IPFS creator Huan Benet. So the market for decentralized storage is becoming hotter and more competitive.

Main features

MIGRATION

• Storj is now run on Bitcoin’s Counterparty, but will start migrating to Ethereum no later than July 19 this year
• The existing SJCX token will be converted to ERC20 standard STORJ token
• Token migration will go via a web app, at 1:1 exchange rate
• Storj Labs’ tokens will be verifiably burned, and the total converted will be written directly into the new ERC20 smart contract

ARCHITECTURE

• A distributed network for the formation and execution of storage contracts between peers
• Files are encrypted and sharded, that is divided into portions and stored this way
• Built on Kademlia message routing + several additional message types
• Farmers issue proofs of retrievability to data owners via a challenge-response interaction called an audit
• Agreements between farmers and data owners are negotiated via contracts
• Publish/subscribe system Quasar is to facilitate the negotiation process
• Payment-agnostic, no specific payment system is required
• Bridge is used as a dedicated server providing easy network access to a wide array of applications; the amount of trust delegated to Bridge is defined by data owners

FUTURE PLANS

• A graphical user interface
• Multiple file storage tools and app
• Integration of smart contracts (e.g. for audit verification)
• Federated file management system: users can use any Bridge instead of relying on a specific one
• Payment channels, e.g. for micropayments to pay farmers

Team

Storj Labs, the legal entity behind Storj, is based in Atlanta, US. The team includes 16 people. Twelve of them are developers with active Github repositories. The four founders are Shawn Wilkinson, Tome Boshevski, James Prestwich and John Quinn. All of them are primarily associated with Storj which has developed into a network with nearly 20,000 farmers and 20,000+ API users in three years. Shawn Wilkinson, the creator of the codebase (check him out on Github), just stepped down as CEO to focus on its CTO functions. The CEO responsibilities are temporarily shared among other three co-founders.

The team is also supported by a large group of community leaders. Storj is advised by economist Warren Weber, a former Senior Research Officer at the Federal Reserve Bank of Minneapolis, and Anand Babu Periasamy, head of Minio cloud storage server. Argon Group advises Storj on the token sale; TokenMarket assists with the conversion of tokens; CoinFund is helping to find a fair solution to the large volume of tokens held by Storj Labs.

ICO

• Buyers are offered a new ERC20 STORJ token that will allow to pay for cloud-based storage on the network
• Existing SJCX tokens will be converted as described in Migration section above
• Pre-sale is now ongoing: for +$50k purchases only, with 10–20% discounts
• Up to $15M already received as early commitments
• ICO starts on May 19, 3:00 PM UTC and ends on June 19, 3:00 PM UTC, or when the target of $30M is reached
• BTC and ETH are accepted
• ICO price is $0.50 per token, with no lock-up period
• Unconfirmed: $1M+ buyers will get an extra discount
• 15–25% of outstanding tokens will be sold during the launch
• Storj Labs’ tokens will be burned on a 1:1 basis with issued tokens as part of ICO, which will reduce the current total supply of $500mln
• STORJ token will be supported by Poloniex, Bittrex and ShapeShift
• Funds raised at ICO will be used for further development of the Storj network and related tools and services
• Token contract and sale contract are not yet available
• Terms of sale are not yet available
• ICO website can be found here

Token distribution

No exact figures are available; official figures are expected at the start of or during the ICO.The most detailed estimate is given by Smith+Crown based on the interview with the team and their own calculations, except the scheme does not reflect the planned reduction of the total supply. What we officially know so far:

• Total supply of 500M tokens will be reduced depending on how many tokens will be sold at ICO; as a result, the Storj Labs’ share is expected to decrease
• 51,173,144 SJCX are currently in circulation including 35,039,704 tokens sold during the first ICO + tokens distributed as farmer rewards, community bounties and rewards, etc. during previous years + tokens held by Storj Labs
• Storj Labs say to retain the 20% — 25% of tokens for protocol and ecosystem development

Summary

• Storj already has a viable product based on open code, and a lot of network users
• Is backed by a large team working full-time
• The competitive advantage is not clear, especially in terms of pricing; but Storj’s planned migration to Ethereum is likely to draw extra attention to their ICO
• Investors’ interest is high with early contributions exceeding $10M; at the same time the information on ICO is scarce (no Terms of Sale and no contract code published yet)
• Exact post-ICO distribution of tokens is unknown, while it is an issue for Storj as the team currently holds the overall majority of tokens
• Satoshi•Fund was with Storj project almost since their first ICO and now has about 0.6% of its AUM

“Storj has a great team of developers, and it was the first that created a token for the decentralized storage market, — underlines Konstantin Lomashuk, CEO of Satoshi Fund. -Its transition to the Ethereum protocol and distribution of the most part of the token supply are strategically right.“

Useful links

For more details on the project, check their website, blog, or join their Telegram channel. For all useful links, check the project’s profile on Cyber•Fund.

Satoshi•Fund — blockchain investment company that invests only in blockchain assets since 2014.

The report is prepared by Satoshi•Fund.

You can read it on Medium.