Node sales: the latest investor trap

A handful of crypto projects are turning to a relatively new fundraising model called Node Sales.

In a node sale, buyers purchase the right to run a node for the network in question. They buy a license to participate in validating network transactions and governance. Crucially, they also gain staking rewards for running infrastructure.

Several high-profile node sales happened in 2024:

• Aethir, a distributed cloud computing network, sold 5,000 Checker Node licenses, valued at over 29,000 ETH and consolidated 20,000 buyers
• XAI, a gaming rollup, sold 50,000 sold in December 2023, priced at $300 per node
• Sophon, an entertainment-focused chain (not sure what they do exactly) sold about 121,000 nodes sold, netting some 20,391 ETH ($62.7 million)

In the case of Sophon, one of the founders shared on X that 20% of the token supply would be emitted to node license holders over the first 36 months after mainnet launch. Let’s assume a 12-month cliff and a 24-month lockup.

Node sales feel like the latest overhyped fundraising scheme targeting retail investors and opportunistic players. While the promise of staking rewards may appeal to buyers, the reality is that most will need to run infrastructure, which many aren’t equipped to handle. While node-as-a-service options exist, commissions will likely be high, eating into potential returns and leaving little profits on initial investments.

Unlike VC funds, which can offload positions OTC, there will be little demand for node operator licenses. Node sale buyers will likely hold the bag while larger investors take profit.

Exactly. If it looks like a duck and quacks like one, it’s probably a duck—just like ICOs and IDOs, the retail crowd may end up paying the price.