What are Master Node pools?
A master node pool actually represents the so-called Shared Master node. They are just like the standard master nodes but instead of the crypto coins of a single user, the wallet address contains currency from several users. This way a shared node is created, and people who don’t have enough coins for the full investment necessary to participate, can buy shares and receive part of the winnings of the node.
Usually, its organized through a 3rd party that is hosting the master node and gathering the coins from the users while charging a fee for everything. Being hosted by someone else makes the Shared Master Nodes an easy target for any malicious actions.
How does it all work?
Some cryptocurrencies have a very high initial investment required for a Master Node. For example, Dash requires 1000 coins which currently cost over 180 000$. Not everyone can spare such a sum for just one crypto investment. From there the idea of sharing the resources with other users came to mind. Third parties saw the potential and decided to start offering hosting and share services where people could invest any amount of coins over the set minimum and be a part of a master node. They would receive rewards based on the size of their share.
Since the shared master nodes are hosted by 3rd parties, there are users not willing to take the risk and trust someone else with their currency. Alternatively, a shared node is an amazing idea if you have friends that are into crypto as well. You could combine your funds and host a node. This way you trust them more and you don’t pay fees to someone else which can be from 1% way up to 10% of rewards.
Another alternative is when you have the necessary coins for a master node, but don’t want to deal with hosting it and doing the necessary maintenance. You could pay someone else to host the master node for you. How that works is that you create a new wallet for the node, transfer the funds, register and create the node, then send the public address to the hosting provider. In this case you do not trust them with your coins, as they stay in your wallet.
Shared Master Node Currencies
There are thousands of cryptocurrencies on the market today and a relatively large portion of them offer the opportunity to have Master Nodes. There is not only a risk of the so-called “scam coins” emerging but also there can be providers of shared nodes that have malicious intent. For that reason, we have listed the most popular cryptocurrencies that already have trusted providers with respect from the community.
Dash (DASH)
It is the most popular master node cryptocurrency on the market right now. In order to hold a master node, you would need at least 1000 DASH coins which currently cost over 180 000 USD. As you see, this can be a very big investment and it might close the doors for most users that are really into DASH but don’t have the funds for it. This opportunity was noticed by some members of the community and with the trust of their peers, have created a sharing service where anyone could join a master node with a share of minimum 25 dash. The rewards are calculated automatically depending on the size of your share and are distributed regularly.
There are currently two trusted master node sharing and hosting providers:
MASTERNODE.ME
One of the most trusted DASH community members under the alias “moocowmoo” created this service. What the provider offers is either hosting a master node in the case that you have the 1000 DASH but don’t want to deal with a server machine or hosting Shared master nodes where you can invest a minimum of 25 DASH. Unfortunately, as of this time, the creator is not offering any new master node shares and just keeps the already created nodes online.
DASHMASTERNODE.IO
This is the second trusted option that you have if you would like for someone else to host your master node. It was made by another very trusted member of the community under the name of “splawik”. It used to offer master node shares but as of July 2018, splawik stopped the shared node service and returned the funds to their initial owners concentrating only on hosting.
Horizen (ZEN)
Also known as ZenCash before its rebranding, it is one of the most popular and large currencies to offer master nodes. Well, they are not called like that in the Horizen network. They are actually two types called Secure Nodes and Super nodes. They are both validating nodes and require an investment of ZEN coins, the native crypto currency, in their wallets to operate. For Secure nodes the minimum is 42 ZEN and for Super Nodes, you would need 500 ZEN. While there are no shared node providers as of now, you can still grab your friends and combine your resources and create a shared node. Alternatively, there are providers such as thesecurenodes.com that offer hosting for both secure and super nodes for a fee but do not offer shared nodes.
Zcoin
As a popular master node coin, Zcoin is steadily getting more and more popular among users due to providing both anonymity and scalability. While there are still no fully operational providers for hosting and offering shares for master nodes, there is one provider 2masternodes by the famous mining pool 2miners which is in a beta test. It would cost you 1000 Zcoin to fully have a master node which totals at over 9000$. They offer both shared and hosted nodes and are growing constantly. 2mastenodes also offer a wide variety of other coins that you can invest in such as PIVX, SmartCash, VIVO, Bitcoin Green etc.
LUXCoin
It is one of the few cryptocurrencies to have both static Proof of Stake and Proof of Work consensus methods in the world. They have implemented a new technology called Parallel nodes which runs a private and public network working at the same time. LUXCoin has also been called the most underappreciated coin of 2018 but with its recent momentary peak of over 1000% users have their crosshairs on it since. In order to run a LUXcoin master node you would need 16120 coins setting you back a cool 28 693$. Currently, most shared master nodes are community driven and hosted. There is only one other website to provide hosting and shares for LUX master nodes - luxmasternode.com
Payday Coin (PDX)
One of the few cryptocurrencies in the world that is addressing the absence of banking in a lot of countries. You can use the Payday Coin network and dapps to withdraw microloans where there are no banks, or the banking system is not adequate enough. The consensus method used within its network is Proof of Stake and it makes a lot of sense. When you invest and stake your coins, in a way, you become a creditor to your peers needing a loan. The minimum investment in order to run a master node is 20 000PDX at a price of over 26 000$. Even if it’s a relatively new coin and network, PDX already boasts over 200 master nodes being operational. As of the time of writing this article there are no confirmed or official providers of master node sharing or hosting for Payday Coin. Of course, the option of community-run nodes still exists if you are okay with trusting other users.
What to consider
Master nodes and in general all Fully Validating nodes are a great way to support the network, community and incentivize the user to be a part of the whole system. Before deciding which coin you would like to support with a master node, there are some things we think are worth considering before making a choice:
Trust and security
Let's talk about how you can protect yourself and your funds. As we mentioned before there is ample ground for malicious users to run scams and trick their peers into losing their funds. You should always make sure that the provider is trusted. Look at their portfolio and what the community opinion is about them. In the case of a 3rd party hosting your master node, be aware that they do not need your funds and private keys to host the node. Regarding the Shared nodes, there is more risk involved. Here are a few key points that we regard as important:
- Make sure that the rewards are automatically calculated and distributed. Avoid providers that use sheets or other means to manually write down information and calculate everything by hand. This doesn’t mean that they will scam you, it just is a risky way of keeping data as it can be easily lost, modified or copied. Cold storage would be the best pick for any provider.
- Freedom of deposit and withdrawal should be present. You need to make sure that you can withdraw or deposit your funds and rewards at any time. If the provider limits you in any way, look for someone else.
- The Deadman Switch - This is implemented in the case when the provider is inactive for a set amount of time or something else happens. When this Deadman switch activates, it shuts down the master node and returns the funds back to their owners according the shares they bought. It will also distribute rewards that are not yet given out to the community and are waiting for the next payout cycle. If this is absent from as a function, then it is probably a scam site.
Different return of investment values
One of the primary ways users decide in which coin to invest to run a master node is looking at the ROI coefficient. Some networks bring 9-10% annually while others return up to 50-60% annually. Of course, there are coins like PDX that return over 1000% each year, but the main reasons behind such high ROI stats is either the crypto currency being fairly new or a direct scam. Make sure to always check what and how much you will receive per day, month or year.
Scam coins, nodes and providers
There are numerous instances when fake coins and nodes have been created in order to fool people and take their money. What we could recommend is read more about the said coin. Does it do something new or improve on other functions, are the developers active, what is community opinion etc are great things to look out for in both cases of hosting and sharing.
Conclusion
With the growth of interest towards master nodes more and more people are searching for ways to be a part of them hence shared master nodes as an idea came to be. They are a great way to invest a smaller amount of coins into a node when you don’t have the funds to have your own or just don’t want to take the risk initially. Even if there are no official sources of shared master nodes for most coins, the community still organizes itself to trust each other. Of course, this creates the perfect environment for scammers. We would strongly recommend to always research the coin and master nodes of the network before you invest. The more you know, the better protected you are. Another good approach can be to just contact the community for an opinion, as when a certain coin or node is a scam, they will most certainly be aware of that. On the other hand, if you have the necessary funds to run your own master node, but don’t want to deal with maintenance of the hardware, for most coins there are providers just for that.
Master nodes will continue to grow as they are part of the building blocks of a blockchain network. Without them, there is nothing to validate transactions. People will be constantly interested in shared nodes as an easier entrance into the world of crypto.