Background: I also work as a Toptal engineer. I had similar questions like you have, and I did have years of experience before joining Toptal. I was a Head of Development in an amazing software development company and I loved it. I became a freelancer because of personal and health issues, and it was the best decision I ever made.
Joining Toptal does not cost anything but few hours of your time. I think that you will probably spend a lot of time reading these comments and thinking about them anyway. My suggestion to you, just try it. It will give you an answer better that anyone here can.
As for your questions:
1. You saw it already, but 3% is just a matter of statistics that show facts about applied vs accepted. Screening process is structured to make sure that only developers that are on top of their game can go through it. And yes, I'm one of those that support the thought that even front-end developers should understand basic algorithms and data structures, which is the first technical step in Toptal screening process.
2. Toptal is far more than just a sweatshop. To me, it as a standard software development shop that is just distributed. No different than any other company I worked with. It has a great culture, and I actually became friends with many people I met that work through Toptal. There is a whole team of people that is actually spending Toptals money organizing events and gathering developers so that they can meet for real, and not just know each other by their nicknames. There is always someone from the company that can help with any issue that might arise while you work with a client.
3. As for the rate, you set your own rate in Toptal! However, it is your job to make it competitive. Toptal people can just help you with a suggestion that will get you more work. Eventually, it is your choice to take their advice or not.
Yes, you set your own rate - but if you live in a larger western Europe/North America city, you will never be able to receive anything approaching the normal daily rate or salary that you could find locally.
For the (automated) tests - I've never had need to do anything like them at work in over 20 years of professional software development. Unsurprisingly to me, I utterly failed them - but told them I've that, and so went through anyway. Other parts of the testing were better - the 'live coding' (ie, having someone keep an eye on you as you wrote code on screen) was fun and relatively simple, but a lot more like reality of a day to day role.
The final step took me a full two weeks to learn a whole new framework for a 'single page application' - again, something that I do not specialise in at all, or have ever done before. They appeared to simply see it running, and that was the final pass to allow me to create a profile on the Toptal site.
Half the roles listed are still unfilled after a couple of weeks. I suspect that a number of them end up just wanting someone really cheap - but Toptal doesn't do cheap - not with a ~50% markup over the developer cost. I've had a number of jobs applied for simply never come back with any status and they eventually time out. Only very rarely do I recognise any company names for the new jobs they list - certainly none of the ones they promote that are their current clients show up.
So, if you are a NodeJS, Laravel, Rails, Wordpress, IOS, or Android developer - and don't expect to be paid well, compared to the 'top 3% in the world' - then it might be worthwhile taking a few weeks to apply. Otherwise, it will not pay what you're worth.
Hey, they don't always get it right. I mean Shakespeare in Love somehow beat Saving Private Ryan, The Thin Red Line and The Truman Show in various categories.
Apologies if this was another mistake. It's just a little suspect when things get as glowing a review from people who don't otherwise comment.
A bit off topic, but Saving Private Ryan wins it all :)
I get your point, and it is true that I'm not active on HN. However, that has nothing to do with the credibility of what I wrote. That is exactly why I made sure to share my background in advance.
If you take a look at my submissions you can see that I'm actually working with a lot of Toptal developers that are producing some great technical tutorials, tips, etc. Which is another great thing Toptal has. We share for free a lot of valuable technical knowledge and we spend a lot of effort making it.
Joining Toptal does not cost anything but few hours of your time. I think that you will probably spend a lot of time reading these comments and thinking about them anyway. My suggestion to you, just try it. It will give you an answer better that anyone here can.
As for your questions:
1. You saw it already, but 3% is just a matter of statistics that show facts about applied vs accepted. Screening process is structured to make sure that only developers that are on top of their game can go through it. And yes, I'm one of those that support the thought that even front-end developers should understand basic algorithms and data structures, which is the first technical step in Toptal screening process.
2. Toptal is far more than just a sweatshop. To me, it as a standard software development shop that is just distributed. No different than any other company I worked with. It has a great culture, and I actually became friends with many people I met that work through Toptal. There is a whole team of people that is actually spending Toptals money organizing events and gathering developers so that they can meet for real, and not just know each other by their nicknames. There is always someone from the company that can help with any issue that might arise while you work with a client.
3. As for the rate, you set your own rate in Toptal! However, it is your job to make it competitive. Toptal people can just help you with a suggestion that will get you more work. Eventually, it is your choice to take their advice or not.