The era of crypto nodes is officially over, according to a video by a crypto investor. StrongBlock, the project that started paying rewards to investors for building infrastructure for other cryptos to run on, has tapered the rewards model and limited the amount of rewards nodes can now receive. The problem is that these node projects are heavily reliant on new investors, and fewer new investors means less income, which leads to cutting rewards. As a result, all of the StrongBlock forks or clones have also taken a hit. Furthermore, these copycat projects invested in the original StrongBlock, hoping to generate revenue to pay out temporary rewards, adding to the problems.
The era of crypto nodes is officially over
Introduction: The end of an era
Well, guys, it was fun while lasted but the era of crypto nodes is officially over. This is something that’s been talked about amongst crypto communities for some time, and I even made a video on how the node bubble was going to burst soon a couple of months ago, And I believe the day of reckoning is finally upon us.
StrongBlock tapers rewards, limiting the amount of rewards nodes can receive
This farewell party was kicked off when StrongBlock, the project that started it all, finally tapered the rewards model limiting the amount of rewards nodes can receive. And although in my previous video where I talk about how it’s mandatory For these types of projects to cut rewards if they wanted the projects to last, I think it’s just a little too late.
Nodes-as-a-Service projects and the problem of income and utility
To clarify, when I say nodes are done, I’m not talking about all nodes but service. Nodes pay rewards to investors, and if you think of nodes as a railroad track that lay down the infrastructure or backbone for a cryptocurrency to run on, In this case the crypto itself would represent the train. Nodes-as-a-Service projects though, don’t actually have their own cryptocurrency or train in the railroad analogy. Instead, they’re building an infrastructure for other cryptos to run on. But you see, this is where the problem arises. Railroads by themselves don’t just make money. Money comes from the utility of the train or the crypto itself.
Less income coming into the project, and rewards have to be cut
This means that these node projects that are paying out rewards to investors that don’t have income or utility are heavily reliant on new investors until they can start generating income, and inherently there’s nothing wrong with this. Most crypto projects at one point start in an infancy stage that relies heavily on new investors and cash flows to prop that project up until it becomes more sustainable on utilities there, but not all projects though are offering investors a 1% daily return on their money, And this is where things start to go wrong. When StrongBlock launched in December of 2020, that’s when everything started to exponentially go up in crypto. And since then there have been over 17 million new wallet addresses added into the DeFi space, which makes it easier for any protocol to grow. However, one year later starting in January of 2022, we started descend downward into a bear market.
What’s the problem and the profitability of investing in nodes
The new reward caps each StrongBlock node at 20 Strong. Each node earns 0.091 Strong per day. This means that each node will accumulate rewards for 219 days. As of the date of me recording this, this means that every node created before October 24th, 2021 will stop accruing rewards as of now. And essentially when an investor creates a StrongBlock node of 10 Strong, they’ll be able to double their tokens or get 20 Strong tokens after 210 days. But even if the price of Strong stays the same, you still won’t double your investment, and here is why. You have to pay roughly $20 per month For each node.
Conclusion: The end of StrongBlock and the clones
StrongBlock was the first project of its kinds. And when a project achieves a certain longevity in crypto, which doesn’t have to be that long at all, not only do more investors come into the project but more projects start duplicating that project itself. So there are all of these StrongBlock forks or clones out there. There are hundreds of projects inspired off of StrongBlock, and when something in a niche takes a hit, all of the other projects in that niche also take a hit as well, but it becomes even worse when these copycat Projects actually invested in StrongBlock itself, and hopes of generating revenue to pay out temporary rewards.