Nodes As A Service – Passive Crypto Investing

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Disclaimer: Crypto is a fast-paced economy and things change quickly. Information on this post might be outdated even if written today. Do your own due diligence and stay safe. I might get affiliate commissions for purchases made through links in this post. Read the disclosure.

Alpha Gained:

What Are Nodes In A Blockchain?

Blockchain is all about data and this data is stored in blocks. Now, each block of data is stored on a node and you can think of this node as a small data server. A server that stores data as in node that stores data.

In a blockchain, you have a chain of blocks, thus creating a chain of nodes at the same time. All linked to each other, creating a blockchain or a node chain. As each node is connected to each other they also exchange information with each other, which ensures all nodes are updated.

So in a way, a blockchain exists on nodes which in turn means that nodes are the framework of a blockchain. Nodes can be anything, while they are usually computers, they can also be laptops or servers.

Nodes store blockchain data which includes, primarily transaction history and records. There are a variety of different types of nodes:

  • Miner’s nodes
  • Light nodes a.k.a supernodes
  • Full nodes
  • Archive node
  • Listening nodes
  • RPC (Remote Procedure Call) nodes

When there are plenty of people running nodes, the Ethereum network for example becomes decentralized as there’s not one single entity running the node(s) and thus owning the blockchain.

Now as we understand what are nodes, how can we make money with this information and methodology? StrongBlock was one of the first NaaS (Nodes-as-a-service) solutions out there and to little surprise, it was developed for the Ethereum blockchain. While it’s now offering Polygon nodes too, Ethereum was the first chain it was available on.

StrongBlock

What StrongBlock offers is a simple way to create an Ethereum node in a matter of a few seconds. What is funny though is that this kind of creates the situation where StrongBlock could become the largest node operator and thus create centralization to the Ethereum blockchain.

StrongBlock creates only full nodes to the Ethereum 1.0 network and is planning on adding Ethereum “2.0” support in later stages. Currently StrongBlock rewards node creators with STRONG token rewards but in the future, these rewards are given in NFT’s.

Currently, the STRONG tokens price determines the amount of money you can make with StrongBlock, if the tokens price goes down, each node will give you less money and if the tokens price goes up, naturally you make more money per node. One thing you must take into account is that there’s a monthly fee that needs to be paid and that has to be paid manually every single month or your node expires and you lose your rewards.

What should also be noted is that the $STRONG token works Ethereum blockchain so you need to make sure you have enough ETH (money) for gas fees (transaction fees). Claiming a reward will make you pay gas fees and that is for every single node you own. Things will get very expensive very fast and as a last note, you won’t get those 10 $STRONGs back after they have been transformed into 1 node.

Example Earnings:

  • The current reward rate is roughly 0.09 $STRONG/day/node.
  • StrongBlock requires 10 $STRONG for 1 node.
  • If $STRONG costs roughly $400/token, it would take $4,000 to create 1 node.
  • To get your money back, it would take 10/0.09 = 111 days to get 1 node worth $STRONG IF the price stays the same. If the price drops, then it will take much longer to get your initial investment back.

ROI 111 days

VaporNodes

While VaporNodes also offers nodes, these nodes are not meant to secure blockchains data, but to create a DaaS (DeFi-as-a-Service) environment. When you buy VaporNode tokens (15,000 $VPND tokens required to create a node at the time of the study) and create a digital node, part of your tokens go to the VaporNodes treasury and the community decides how those tokens/funds will be allocated.

The whole goal of VaporNodes is to create a fully transparent passive income system. The more nodes you have, the more voting power you have and essentially you decide where the funds are allocated or invested in. In return for creating a digital node, you will get a 1% daily ROI, with the exception that the rewards are generated every single minute, totaling 1%/day. However, it won’t compound so you can treat it as APR instead of APY.

Example Earnings:

  • 15,000 $VPND, you would receive 150 $VPND/day.
  • If the price for $VPND would be $1 that would mean $150/day in rewards.
  • If you won’t withdraw the rewards in 15 days or more, you will get a $VPND boost of 1.4x, meaning that you would get 150 $VPND x 1.4 boost = 150 x 15 (days) x 1.4 = 3,150 $VPND

ROI 100 days or with boosted, the ROI is 4,7 days

THOR Nodes

THOR nodes have pretty much the same concept as VaporNodes. You buy $THOR tokens, create a node with those tokens, and then the protocol uses the funds received to invest in different DeFi protocols to deliver you rewards from the investments. The appeal comes in the form that you don’t have to use your time to investigate different DeFi protocols or do some multi-chain DeFi yield investing. THOR financial does this for you, with your money that is.

When thinking about these nodes-as-a-service and other DaaS offerings, they do come with one clear benefit and that is the ease of filing taxes and tax calculation. If you are invested in 10-20 different yield farms, filing taxes might become a bit of a job. With these services, it could be a bit easier.

Example Rewards:

  • HEIMDALL 1.250 $THOR/node, rewards: 0.008 $THOR/day: ROI 156,3 days
  • FREYA 6.250 $THOR/node, rewards: 0.05 $THOR/day: ROI 125 days
  • THOR 12.500 $THOR/node, rewards: 0.144 $THOR/day: ROI 86,8 days
  • ODIN 78.125 $THOR/node, rewards: 1.02 $THOR/day: ROI 76,6 days

Pokt Network

The Pokt Network is aiming to enhance the RPC node part of the NaaS market. An RPC is simply said a call between a client and a server (node in the case of Ethereum for example). So this being said, we need a node to use RPCs when we are in the blockchain world.

In a sense, there is no such thing as RPC nodes, but this kind of term is used to simplify the concept of using RPC in the blockchain ecosystem. RPCs allow to read blockchain data and send transactions to different networks.

It is stated that RPC nodes can be a hindrance to Web3 development if used incorrectly. RPC nodes are needed, but the way they are used is the main topic here. While Pokt Network is one protocol aiming to solve this RPC usage problem, Moralis is another one offering the creation of a node (Speedy Nodes).

While Pokt Network is one way to generate passive income, I would say that it’s not the easiest one to set up. But for someone seasoned enough and wanting to go down the super long rabbit hole, Pokt Network could offer a pretty solid way to make passive income by running a $POKT node.

Flux Network (FLUX Nodes)

FluxNodes feels like a different beast altogether. Flux offers a decentralized computational network, Blockchain-as-a-service (BaaS) built on the blockchain. Flux aims to offer AWS-like (Amazon Web Services) development environment. And when you become a node operator, you are participating as an entity that creates a decentralized development environment.

Flux is aiming to offer critical infrastructure, development tools, and industry experience to speed up the blockchain solution rollouts. While many blockchains focus on solving one or three different problems (like speed, gas fees, and UX for example), Flux seems to be more about the suite of decentralized computing services and BaaS solutions.

While Ethereum is seen as decentralized, the nodes on the other hand are run by services like AWS, Flux is tapping into this part of the market, by offering a way to run nodes away from centralized cloud services. Even though anyone can run a Flux node, it feels like this project/product is meant for enterprises and smaller companies. Shelling $200,000 ($2/FLUX coin) for Stratus level node rewards feels a bit too pricey for us small crypto players. The only question left is, why blockchains don’t use Flux? Well, Kadena seems to be getting services from Flux, so maybe the latest and newest blockchains see the value in Flux.

Example rewards:

Flux rewards (image source)

Conclusion

There are many NaaS out there and as we can clearly see some services are more noteworthy and trustworthy than others. It’s also very evident that the smaller protocols are there to offer some services to us smaller players, whereas the bigger players (Pokt, Flux) are there to offer services for true blockchain developers.

So we can kind of see two different routes here. The tokens that are meant for playing with your money and the coins that are there to bring true innovation and value for the whole crypto industry. It’s also evident that we smaller players in the field are more “comfortable” with investing in these smaller protocols that are easier to understand and manage. A bit more like in-and-out scenarios.

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Written By Juha Ekman

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