Can you make money by running a node? How to choose a public chain? We talked to a node operator.

Can you profit from running a node? How to choose a public chain? Insights from a node operator.

Amidst the volatile market situation, there are still people “lying and earning” [translator’s note: a term used to describe making passive income].

Author: Fu Ruhao

From the earliest Bitcoin to Litecoin, early Ethereum, etc., the hardware mining (computing power) of that time was based on the PoW consensus mechanism, which also made miners the “upstream” role in obtaining tokens.

In 2011, QuantumMechanic first proposed Proof of Stake (PoS) on the Bitcointalk forum. It replaces computing power weight with the amount of currency held and has attracted the attention of many early participants. Subsequently, different public chain teams have successively developed PoW+PoS hybrid consensus mechanisms, DPoS, BFT+PoS, and other PoS mechanisms, gradually evolving into well-known projects such as ETH 2.0, Cosmos, Solana, Sui, Aptos, etc. Some public chain infrastructure builders have also gradually shifted from PoW mining to node operators mainly based on PoS.

A more popular explanation for node operators is that they are responsible for maintaining the integrity and correctness of the blockchain ledger. This is equivalent to the development team creating a new public chain at birth, and later node operators are needed to maintain it.

Whether it is a miner or a node operator, they are both public chain infrastructure service providers, maintaining network stability and obtaining stable “coin-based” income.

The specific work content and process of node operators are often covered by a layer of mysterious veil, and my personal understanding of the population engaged in node service providers is relatively limited. In the current market environment, whether newcomers still have the opportunity to participate in node operation, which chain’s income/cost ratio is more attractive, and what are the risks of participation? With these questions in mind, Odaily Planet Daily and MJ (a pseudonym) who has been in the industry for many years conducted a discussion on the above issues, and the content is organized as follows:

Odaily Planet Daily: What do you think are the abilities needed to be a node service provider?

MJ: First of all, your investment philosophy should be based on long-term value investment, and your judgment should not be affected by short-term fluctuations. Secondly, you need to constantly improve your own understanding of the public chain, understand the consensus mechanism of the public chain, and understand the technical updates of the target public chain (especially new public chains). Finally, if you have technical ability, that is the best. If you don’t, try to cooperate with people who have technical ability.

Odaily Star Daily: What hardware is required for node deployment and what is the cost?

MJ: Each project has different requirements, and detailed configuration requirements can usually be found on each project’s official website. I can give a rough outline of the cost and requirements of some well-known projects.

1. Bitcoin: Using professional mining machines, the starting price is generally around $100,000 and is suitable for institutions to operate.

2. The entry threshold for Ethereum is relatively easy. If you build your own node, you need to stake at least 32 ETH; you can also use Lido and other options, which have lower barriers to entry. The corresponding income will also decrease.

3. Solana and Avalanche have higher hardware requirements, with monthly bandwidth costs of more than $10,000.

4. The hardware cost of Sui and Aptos is high, the number of nodes is relatively small, and the cost of deployment is around 10,000 to 50,000 yuan.

5. The threshold for the new public chain (TFSC) we are currently participating in is relatively low. You can use an 8-core 16G CPU, 16G RAM, 500G hard drive, and 50M uplink and downlink bandwidth with deployment costs between $150-200.

Odaily Star Daily: As far as I know, you have experience in deploying nodes on multiple public chains. What are your considerations for the target public chain?

MJ: Obviously, the core point of concern is the income, but the income is results-oriented and depends on your judgment of the project. I have the following considerations:

1. I think it should be permissionless, which means that the node deployment access and exit threshold should be relatively low.

2. The token should have a wide audience and a relatively low single price, which helps to increase the number of participants, such as meme coins.

3. The project party’s support for the ecology, such as incentive DeFi, GameFi, cross-chain and other applications through foundations.

4. Is the underlying technology of the public chain innovative, and how to optimize TPS and gas fees, which is conducive to subsequent ecological development.

5. It is best to be compatible with EVM, which is conducive to the influx of developers.

Finally, income depends on the price when selling new coins obtained at ordinary times, which requires an improved understanding of the project or the scale effect of having a large amount of capital.

Odaily Star Daily: As a node service provider, besides obtaining income through block packaging, are there other ways to increase income?

MJ: Most mainstream public chains now adopt PoS. In addition to the income generated by the daily work of the nodes, there are also mechanisms such as Ethereum’s token issuance dividends, testing airdrops, and delegate income (for individuals who don’t have the operational ability to run a node) for some new public chains.

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