The Real Cost of Running a Blockchain Project

By Fushuma | Callistonians | 4 May 2024

When Information You Shouldn’t Know Are Revealed

Some secrets in the crypto space are not supposed to be revealed and stay hidden behind off-chain transactions, OTC deals, and non-disclosure agreements.

But sometimes, things don’t go as planned, and these hidden details come to light. This is precisely what happened with Callisto Network, a project that, at its launch in 2018, attracted significant enthusiasm and optimism. Initially, it seemed poised to redefine the crypto landscape, but over time, the initial excitement waned, and while many shifted their focus, a group of us — the original Callistonians — remained. It’s from this perspective that I bring you this story.

So What Exactly Happened?

Since its inception, Callisto Network has prominently featured two main initiatives:

  • Callisto Security Department: This department is responsible for auditing over 300 smart contracts. While this effort aimed to enhance the ecosystem’s security, it paradoxically drained financial resources. Callisto Network’s treasury compensated the auditors, who in turn sold their CLO coins, impacting the coin’s value.
  • Cold Staking: An innovative concept on paper that never caught on with any Proof of Work (PoW) chain for a pivotal reason: it shifts incentives from active miners to passive holders. Consequently, as cold staking rewards increased, the network’s hash rate steadily decreased.

Three years ago, Yohan Graterol, co-founder of Callisto Network, introduced a new figure — Vladimir Vencalek.

The Leak Story

With Vladimir Vencalek’s arrival at Callisto Network, prominent investors like Dušan Palcr and Petr Otava of the MTX group soon followed, fueling significant financial and operational enhancements. This influx of capital catapulted the price of CLO, the native network’s assets by an astounding 6,000% within six months of their involvement.

Was Callisto Network rescued? Many of us OG Callistonians initially believed so. However, the realities faced by major stakeholders diverged sharply from ours, and the situation escalated when Petr Otava filed a lawsuit against Vencalek after allegations that Vencalek misused the company’s funds. In a counterclaim, Vencalek asserted that Otava’s company owed his enterprise €1.6 million.

This legal battle led the courts to examine the financial transactions of Vencalek and Callisto Enterprise and, thanks to the rare transparency of the Czech Republic’s legal system, the documents provided by Vencalek to justify the expenditure were leaked during this process, documents we will now delve into.

The Financial Realities of Blockchain Operations

Managing and expanding a blockchain project like Callisto Network involves substantial costs. The legal case between Vencalek vs. Otava, with the publicly accessible court document, has provided a clearer view of these financial commitments.

As detailed on page 149, Callisto Enterprise (CLOE) invested a total of $2.3 million USD in Callisto Network for 2022. Here is a breakdown of the info available:

  • Listing Fee: Listing a blockchain on costs $350,000 in 2022, as detailed across pages 80 & 81.
  • Market Making Expenses: The budget for market making is $8,000 per month, noted on page 99.
  • Development and Operational Costs: The costs for blockchain developers average around $7,000 (pages 91 and 150), while designers ask $1,500 for concept arts (pages 90 and 107).
  • Servers and infrastructure: Annual expenses for servers, network explorers, and boot node RPCs totaled $22,000, according to this document.

While the disclosed documents reveal only a portion of Vencalek’s team, they still shed significant light on the investments necessary to sustain a blockchain platform, even though if the information related to marketing activities is not accessible.

What’s Next?

It’s always hard to predict the outcome of legal actions, however, the court is expected to continue updating the status of Vencalek’s case.

The implications are stark: a victory could significantly strengthen Vencalek’s financial resources, while a defeat could compromise its future in blockchain development.

Nonetheless, Vencalek’s involvement in the blockchain industry is far from concluded. Following his experience with Callisto Network and a subsequent rift with Dexaran, co-founder and former employee, Vencalek has announced the launch of a new venture, Fushuma. This initiative, launched with the original members of Callisto Enterprise, seeks to capitalize on the lessons learned from past experiences to build a “fully transparent system for proposal submissions, applications, and funding” where ”Fuma holders (…) are consistently rewarded as the Fushuma ecosystem grows.

Disclaimer: I’m not affiliated with any project, and the views and opinions expressed in this piece are only mine.

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Fushuma is a community-driven blockchain ecosystem with ZK-Rollup technology, low fees, and on-chain governance. FUMA holders decide on upgrades, funding, and are rewarded as the ecosystem grows.


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