How does held back amount work?

The held back amount (staked) component provides a preferred way for Node Operators to exit the network. This model optimizes liveliness by deterring Nodes to exit the network without transferring their pieces (thus limiting repair costs). Importantly, this strikes an equilibrium between a very low cost of entry for Nodes while also way to insulate against the cost of data repair.

Nodes don't need to provide any up-front stake to start earning STORJ tokens as a Storage Node Operator. Rather, during the first nine months of Storage Node Operation, a percentage of earnings are placed in a holding account. These funds are held until a Storage Node Operator chooses to leave the network. At 15 months, a portion of the balance is returned to the Storage Node Operator, while the remainder is held indefinitely.

If the Storage Node Operator uses the graceful exit function when leaving the network, the funds will be returned in full after the exit is complete. If the Storage Node Operator exits the network abruptly without completing the graceful exit, the funds will be forfeited to offset the cost of data repair.

The withholding function is structured with a tiered reduction in withholdings as the amount of time the Node is on the network increases. The withholding model is as follows:

  • Months 1-3: 75% of Storage Node revenue is withheld, 25% is paid to the Storage Node Operator

  • Months 4-6: 50% of Storage Node revenue is withheld, 50% is paid to the Storage Node Operator

  • Months 7-9: 25% of Storage Node revenue is withheld, 75% is paid to the Storage Node Operator

  • Months 10-15: 100% of Storage Node revenue is paid to the storage node operator

  • Month 15: 50% of total withholdings are returned to Storage Node Operator, with the remaining 50% held until the node gracefully exits the network

The withholding model is designed to incentivize and reward both-long term reliable Storage Nodes as well as Nodes that, when they do choose to leave the network, exit in a way that is least damaging to the network.