Crypto’s latest cash grab — node sales — is the all the buzz with venture capital and retail investors alike. The pitch is simple: node sales provide blockchain projects with immediate funding by selling investors the rights to operate nodes.
Okay… maybe not so simple. Especially if you’re a crypto fence sitter.
So let’s dive deeper. Nodes are physical devices, like computers, that validate transactions, store data, and maintain a blockchain’s network integrity. Together, these nodes collectively form the backbone of a blockchain.
Increasingly, fledgling blockchain projects are selling the rights to operate these nodes to investors as a way to secure $$. Projects get the necessary cash to survive and thrive while allowing investors to earn rewards for participating in the network.
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Bridging the gap
The timing is perfect — or desperate, depending on how you see it. Crypto VC deals have declined, raising just over $10 billion in 2023, down from three times that figure a year earlier, according to data from global capital market firm PitchBook.
But funding raised from these node sales are not meme material. Aethir, a decentralized cloud computing infrastructure provider, has so far sold more than 74,000 nodes for over 41,000 Ether. That’s more than $120 million.
Blockchain projects like Sophon, XAI Games and CARV have also raked in shedloads of money this way.
Node sales look all well and good for budding crypto firms. But for investors? It’s a new and passive way to get “into” crypto outside of trading or DeFi avenues like staking and lending.
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The setup
Here’s the play: buy a node license (usually sold as an NFT) and earn rewards for validating transactions. Licenses are tiered, with early birds getting lower prices, while some projects have limits on how many of these NFTs are up for grabs.
Once you’ve snagged a license, you either set up the node yourself (think installing new software or upgrading your tech) or outsource it for a fee. The latter works best for those less tech-savvy, or less likely to invest in heavy hardware.
Running a node isn’t plug and play. On platforms like Aethir, for instance, you will need a beefy computer with 64GB RAM, 10GB disk space per node and a steady internet connectivity to operate a node.
Once live, though, you’ll earn tokens or a slice of transaction fees, which can be cashed in for future gains.
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Can you bank $$?
“100%,” Han Jin, CEO of Web3 firm Bluwhale, tells MONIIFY, explaining that daily rewards can provide a steady income of tokens, even if the final ROI ultimately depends on the eventual price of the project’s token.
Early birds in a bull market, especially, could see some serious returns, he says. One Reddit user calculated more than $5K potential profits from operating a single node from one project in the course of four years.
Robby Yung, CEO of investments at Animoca Brands, tells MONIIFY that when the traffic is high, transaction fees can be huge. But when it’s quiet? Not so much, he adds.
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The catch
Crypto is speculative by nature, and node sales are no exception. Success hinges on token demand and network activity, meaning the risk is real.
This isn’t a quick flip, says Jin, adding that getting in on node sales is you making a “long-term commitment” to a project.
Yung’s advice? Do your homework. Know the risks. Understand the traffic potential and be sure of being in it for the long haul.
Node sales are a way to play in crypto without the grind of trading. But like everything in this space, it’s a gamble. Tech-savvy and willing to be committed? It might be worth a shot. Otherwise maybe stick to what you know.
