TOP 5 Masternode projects 2020
By Inkarias - 2020-06-27
During the year 2017 and during the bull-run known to cryptocurrencies, a large number of projects based on a system of masternodes was born, generating a strong increase in possibilities in this area in order to develop passive income, but nevertheless with a fairly significant technical barrier inherent in this type of consensus. Today, in 2020, the craze for these systems is now slightly exceeded, but many serious projects are still well anchored in the crypto sphere and continue to innovate to constantly improve the user experience and associated income. We present today in this article the details of the Top 5 masternode projects, classified by marketcap as well as the associated statistics and metrics.
For a reminder, a masternode is a server connected to the internet which has a range of software necessary for its proper functioning. When everything is installed and the configuration is effective, it is important to keep a certain amount of tokens called collateral in a wallet which is controlled by the masternode. Interest will thus be paid regularly to the owner of the masternode. This is what we call rewards. Technically, a MasterNode is a complete node that holds a full copy of the blockchain. It performs, validates and transmits all transactions on the networks.
The lower level nodes only have a partial copy of the blockchain and will take turns verifying the transactions. To do so, a random selection system is at work. Masternodes still offer a major interest as these structures allow to earn money simply and for long-run. However, as stated above, setting up a MasterNode is not necessarily accessible to everyone. In fact, investors will need to have a minimum number of tokens or coins in their possession. The more popular the project is, the greater the investment will have to be. It also seems important to remind that it is necessary to have sufficient equipment and a particularly good connection to the Internet to set up one at home. Therefore, paying a VPS is often the best solution to avoid any extra fees or security issues to keep it at home.If you are still interested in setting up one in the close future, you can follow our complete guide to safely and quickly do the task: https://mastersofnodes.com/complete-masternode-setup-guide/
Dash - $675,155,000 Market Cap
Dash, for digital cash, is a technical system based on blockchain and hosting its own decentralized autonomous organization. The native unit of account is the dash, whose market symbol is DASH, which serve the major goal of the team; become a currency as fast, anonymous and easy to use as the traditional currencies. Dash has unique features that allow it to distinguish itself from other financial blockchain systems, in particular Bitcoin. The first is InstantSend, which allows to completely finalize transactions in a matter of seconds. This functionality guarantees the instantaneous nature of the currency and the stability of the network as a wide payment network. The second, PrivateSend, gives the user the ability to send confidential payments. This functionality guarantees the specific fungibility of cash and allows anyone to keep its privacy. This is quite important in a world where privacy is an important criteria for many services.
A hybrid consensus
Dash's consensus protocol is a hybrid model that is based both on proof of work and on proof of stake (masternodes). In addition, Dash has a budget system allocated to projects useful by the vote of masternodes. Money creation is thus divided between three types of actors; 45% of the new coins go to miners, 45% go to masternodes and the remaining 10% is reserved for the budget system also called treasury. The hash algorithm used for POW is called X11 and is made up of 11 different hash functions (BLAKE, BMW, Grøstl, JH, Keccak, Skein, Luffa, CubeHash, SHAvite, SIMD, ECHO). Furthermore, the difficulty is adjusted by the Dark Gravity Wave algorithm.
Governance rights and Masternodes role
Masternodes are network nodes with several special tasks to perform, which requires additional equipment and preparation to perform. They therefore receive remuneration for their service, representing 45% of the block awards. Nevertheless, to function, a node must have locked 1000 DASH at the address as a deposit. This makes Dash's consensus protocol a hybrid model also involving proof of stake with a long-term vision. Among the tasks delegated to masternodes, we can find:
- Locking InstantSend transactions to ensure they are not subject to double spending before they are included in a block.
- Managing the fund mix behind the PrivateSend functionality to make transactions entirely private.
- Maintaining the governance and treasury system.
In addition to their remuneration, the masternodes each have a right to vote in the DAO , or Decentralized Autonomous Organization, led by the masternodes which decide on the allocation of the monthly budget representing 10% of monetary creation, and the evolution of the protocol.
Divi - $79,386,084 Market Cap
The Divi project, or DIVX from its original name, was launched in mid- 2017 on the Ethereum blockchain as an ERC-20 token in order to prepare the main launch of the Divi blockchain. At the end of 2018, on September, the team publicly launched the chain. The transition was ensured smoothly with a swap at the rate of 1 DIVX for 100 DIVI to prepare for the new start and the new rewards. In short, the DIVI technology is an innovative set of services also known as a “Smart Wallet”. This solution allows individuals to make private and instant transactions with usernames instead of difficult to-recall crypto addresses while building a passive income directly from built-in masternode solutions integrated in the wallet. The wallet has been fully designed for convenience and practical uses.
A multi consensus-oriented for passive income
Unlike the Dash currency exposed above, DIVI crypto has no POW but a hybrid POS system with a network of masternodes. One of the most innovative solutions of the project is MOCCI, or Masternode One-Click Cloud Installer, a solution provided for users who don’t want to run a masternode at home or with external third-party services. In order to satisfy the demand, the Divi team purchases servers’ space and set up the back end of this in advance, to make a fast and seamless user experience when choosing this project. Payments for the service are made by the users with the native currency DIVI directly inside the wallets. In that way, the masternodes solutions have been divided in multiple tiers to allow everyone to build a new masternode and benefits from Divi. These nodes are quite important in the network and are complete part of the Divi ecosystem, communicating between each other to maintain a copy of the blockchain and process transactions safely. Masternode owners choose their level of commitment to support this network and are paid based on that effort with different ROI.
In the same way as most of the consensuses with masternodes, the holders of these have the right to see the decisions and the future of the project. DIVI nodes owners can bring their vision and ideas for the good of the community.
Depending on tier
Depending on tier
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Standard Staking (Recommended Minimum)
Energi - $65,551,304 Market Cap
Energi is a decentralized and blockchain-based system that was launched during summer 2017 as a fork of the Dash blockchain that we introduced at the beginning of this article. The project was launched with the main focus on decentralized applications and smart contracts, including a groundbreaking method of governance along with a self-funding treasury model intended to assist in making it the largest, most popular blockchain platform in the world. The planned network of dApps in the future will give the Energi network usability that will help it realize its goal of global adoption across the world both for individuals and companies. And the addition of smart contracts will increase trustlessness, security, speed, efficiency and transparency for the entire Energi ecosystem. Smart contracts will also help promote development, which in turn will bring in new users and investors to increase the value of NRG as it becomes increasingly valuable as a currency for developing and powering dApps.
A POS/MN ecosystem
When it was initially launched, the project was working with a proof-of-work consensus mechanism, with an ASIC resistant algorithm called Energi hash, similar to Ethereum’s Ethash. Energi has then fully transitioned to a Proof-of-Stake consensus with a network of masternodes. The masternodes provide several of Energi’s features, including the Private Send and Instant Send functionalities (inherited from Dash codebase), as well as self-funding and self-governance and increased scalability and security for the network. To set up a masternode , investors must lock a total amount of 1000 NRG in a wallet to be eligible to receive daily rewards from the total pool. The allocation of rewards is split into four categories:
- 10% for stakers
- 10% to Energi Backbone
- 40% to masternodes
- 40% to treasury
Self-Funding treasury and Built-In Governance system
Energi project has one of the largest percentage allocations to the treasury of any existing masternode project in the cryptosphere as 40% of the released NRG goes to the treasury directly. This amount is used for marketing campaigns, influencer reach-out , new recruitment and development costs across the years including common expenses. Furthermore, Energi has included a community-based governance model. In the Energi model, any stakeholder can submit a proposal for open consideration by the community. Then masternode owners then vote on the proposals to determine whether they will be implemented or not. This governance model was chosen because it not only encourages adoption by giving users a voice, it also helps with scalability and increases the stability of the network for the long run.
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Horizen - $61,567,557 Market Cap
Horizen, formerly Zencash, was created following a fork from the known Zclassic currency. Horizen is a blockchain platform with cutting-edge privacy protection technology that allows everyone to maintain confidentiality and full control of their digital identity. The system allows completely anonymous exchanges (or not if the user wishes) thanks to cryptographic processes and advanced zero-knowledge proof technology. This project was born with the aim of bridging the weaknesses of some already existing cryptocurrencies which do not guarantee the anonymity of their transactions. The Horizen platform allows real uses in addition to the exchange of ZEN corners, in particular the possibility of talking in private with other people. Horizen pursues the objectives inherited from Zcash and aims to protect the privacy of its users. Horizen incorporates, for example, secure messaging and protected transaction functionalities.
A hybrid POW/MN consensus
Horizen uses a hybrid POW/MN consensus using hashing algorithm called Equihash, used in particular by Zcash with a maximum supply set at 21 million. At this date, the allocation is divided into the different actors of the network. About 20% will go to the people running supernodes and secure nodes (10% for each around, but this number is subject to changes), treasury will get 20% and miners 60%. This change was made to encourage people to run more super nodes and secure nodes, which increases network security.
Horizen nodes are rewarded when they participate in several actions within Zen network:
- Check that all network communications are encrypted between nodes and wallets.
- Operate and stabilize the Horizen blockchain.
- Provide encryption-based trusted certificates for connections to the storage wallet.
- Horizen nodes maintain a certain level of security and performance. This allows the system to remain distributed and resist computer attacks such as DDoS.
In order to run a Horizen node, investors need to provide either 42 ZEN or 500 ZEN depending on the chosen node. This will allow a large number of people to own a node, despite the different financial capabilities.Governance and treasury
As stated above, for each block mined, a little percentage goes to the treasury for future funding and decisions. The ZenCash Treasury Model is an inclusive, provably fair, and transparent economic system with incentives to participate where all masternode owners can share their thoughts and voices for the success of the project and submit proposals.
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Zcoin - $46,852,671 marketcap
ZCoin (XZC) is a cryptocurrency completely focused on privacy. It was founded by Poranim Insom who the main developer of the project is also. ZCoin is based on the ZeroCoin protocol which guarantees the anonymity of financial exchanges thanks to ZK-Snarks technology. The objective of this crypto is to compensate for the security flaws and shortcomings of Bitcoin on the anonymization of transactions by improving data encryption. The XZC token is based on a protocol called Zero-Knowledge proof, making it possible to anonymize the transactions and tokens exchanged. The token history is deleted at the time of the transaction, making it untraceable. The user proves that he has an XZC token at the time of the transaction, this token is then burned and gives way to a new token with a blank history which will be used during the transaction. There is no link between the burned token and the newly struck token, so it is impossible to link a token to a user. ZCoin has similarities to another cryptocurrency called ZCash (ZEC), their cryptographic properties are quite close and complement each other.
POW and Masternodes
Zcoin, originally based on Lyra2z algorithm, switched moved to the Merkle Tree Proof of Work algorithm (MTP) to address several problems, including verification issues, security reinforcement and more. MTP is known as a memory hard algorithm and it has several benefits, one of which is the prevention of the development of ASIC chips which could lead to centralization of mining.
Znodes are similar to master nodes in that they are computers on the ZCoin network that are running a full copy of the blockchain and are working to process transactions. The Znodes are incentivized by receiving 30% of newly minted ZCoins.
Those running Znodes are required to stake 1,000 ZCoins however, as a way to prove that they are highly invested in the ZCoin network, commonly called the collateral. The stake is an incentive to keep the network running honestly and with consistent uptime.
Funding development via treasury
The treasury, or the founder’s reward is a system that was implemented to fund the development of ZCoin, and it specifies that for the first four years 14% of mined ZCoins will go to the Founder’s Reward pool. This pool is divided into several categories:
- 6% for the Zcoin team
- 6% for seed investors
- 2% for Founder Poramin Insom
However, it is quite important to note that the four years are coming to expiration in September 2020 and the block rewards will then revert to go entirely to miners and Znodes.