What is Masternode

Masternodes emerged as a solution to the diminishing number of full nodes. This can be attributed to the fact that running a full node entails no pecuniary rewards but consumes resources. Full nodes, however, are crucial for the overall safety of the network. If there aren’t any full nodes, bad actors can exploit this to attack the network, generating blocks with greater rewards.

Full nodes download, retain, and verify fully all the transactions of the blockchain, in contrast to lightweight nodes which, to accelerate the verification process, only confirm the block headers.

It is imperative to have enough full nodes during congested periods.

To fill the gap caused by the decreasing number of full nodes, masternodes were introduced. The concept was born thanks to Dash, a Bitcoin fork, in 2014. Masternodes serve essentially the same functions as full nodes but are remunerated like the proof-of-work system. Their rewards are collateral-based.

Masternodes are also sometimes called “bonded validator systems” because they play a key role in the blockchain network.