- 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.
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.
I'll not only explain why
but what I think is going to happen
in the coming months,
and how we can make money
back on these lost projects.
I say we,
because I invested in StrongBlock last October,
and if you aren't invested in any node project,
you're still going to once pay attention
because these types of projects
are going to continually pop up.
So you're going to wanna make sure
that you know what not to invest in.
Now before we get too far,
let's get caught up with the events
that have unfolded.
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.
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.
And this means fewer investors
into riskier assets,
crypto being at the top of that list.
Fewer new investors means less income
coming into the project,
and rewards have to be cut,
which is what StrongBlock,
the leader of these types of node
ended up doing.
So what's the problem?
Well, the first problem is
if you don't hit that like button,
this video won't get pushed outward
into the YouTube algorithm.
So be sure to do that.
But in all seriousness,
the main problem is as follows.
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.
Or you can pay a one-time fee of 10 Strong
to group your nodes together,
plus an additional $20 per month.
This means that if you were to buy
five Strong notes today at $12,
it would cost you $600 for the five nodes
minus the $120 a group or entanglement fee,
and $140 in fees for the monthly fees
on those nodes.
This means at the end of the 219 days,
you'd be all-in for about $880.
And at the end of the seven months,
your 50 Strong would now be 100 Strong.
And if the price stayed at $12,
your investment would be worth $1,200.
This means you would profit $320 on $880 spend.
That's about a 36% return on your money
in seven months,
and that's amazing for traditional finance.
However, this isn't traditional finance,
this is degenerate DeFi,
and that's absolutely terrible
for the amount of risk an investor is taking.
But you see, this is really
just the tip of the iceberg.
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.
Let me explain.
Some projects act as investing funds
where a portion or sometimes
all of the funds go into other projects
to help generate revenue to pay out rewards.
But now there's a cap.
So those original Strong nodes
will be coming to an end,
which means that income stream
for those projects will come to an end as well.
Well, what about the rebuttal
that says this price decrease
in the stronger token is just attributed
to the volatile market of Bitcoin,
and that those projects just invested
into more Strong nodes,
doubling the amount of nodes that they have,
but I don't think that's happened
nor is that possible.
Those nodes were created by those projects
to help cushion those high PYs
that they're offering to their
tens of thousands of investors.
And projects with high PYs don't have
the luxury of saving now and paying later.
It would be like trying to start a cash
flow of business and live off of that income
at the same time,
and having an exorbitant amount
of monthly expenses,
your lifestyle will be cutting
into the business income,
stopping it from growing.
And if you've invested
into any type of node project,
I highly recommend that you look at
that project's treasury,
and see have they invested
in the StrongBlock itself
because those rewards are coming to an end.
And if there's a way you can see
if they've reinvested back into other nodes,
I'd look into that as well,
but regardless,
those rewards are coming to an end in 210 days
unless they make more nodes,
which means that the project
has a chance of caving in on itself,
which is what I think we're going to see happen
across the board,
and that's if the bear market
hasn't done it already.
Now can StrongBlock survive from this?
I think there's a scenario
that has a small probability
of happening.
When I created my node in October,
there were 110,000 nodes
created at that time,
which means that out of the 550,000 nodes
that are created on StrongBlock right now,
there's only going to be 440,000
that they're going to be paying rewards out on.
And in another six months,
there's going to be another 400,000
that fall off.
I think this combined with,
if we break out of a bear market,
then maybe the release and sell pressure,
and the wave of new buyers
could revive the project
but I'm not counting on it.
I personally don't agree with
what the StrongBlock team did
by backdating the cap on rewards
but given the current state of the market,
had they waited any longer,
I think the project probably would've folded.
The only way this could have been avoided
was if they would've capped the reward sooner,
which is what many members
in the community wanted.
But at the end of the day,
I'm taking responsibility as an investor,
which leads me into,
what can we do from here?
And if you're an investor,
you have a few options.
You can accumulate the tokens from your node
If you believe in the project.
Or just hold onto them in hopes
when StrongBlock
or whatever project you're invested in
ends up creating utility and recovering
come the next bull run.
And from there,
you can sell your tokens when it does,
but sometimes there isn't anything to do
but to take a loss and that's okay.
I always try to find value
in my failures and I've learned more
in my failures than I have my successes.
My takeaway from these types of projects
is that during the peak of a bull run,
everyone is going to have
rose-colored glasses on,
but it's these scenarios
that leaves a sour taste in your mouth
that are hard to forget,
and I will definitely not forget that next time.
And yes, there are people who've made millions
from these types of projects,
but it's all hinge on the fact
of getting in early and getting out early.
And that weighs me into the last thing we can do,
which is just find other projects to invest in,
and other ways to make money online.
So if you are interested
in what I'm investing in
or other ways I'm making money online,
check out some of the videos on the screen.
One video a day will go
much farther than you think.
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Thanks for watching,
and I'll see you next time.