Masternode

A masternode is a specialized, always-on server that performs a fixed set of higher-level jobs for a blockchain network beyond the basic transaction relay every node handles: things like instant transaction locking, coin-mixing for privacy, or acting as a voting seat in the project's governance system. Operators typically must lock up a minimum amount of the network's coin as collateral before their server is allowed to register, which filters out low-commitment participants and gives the network a way to hold operators accountable.

Dash popularized the model in 2014 under the name "Proof of Service": its network requires 1,000 DASH collateral, and masternode operators vote on how a share of each block reward is spent and receive payouts for keeping their node online and responsive. The collateral itself is never spent or handed to anyone; it simply sits in the operator's own wallet as a bond, and moving it removes the node from active service. Other projects, such as PIVX, Horizen and Zcoin, adopted similar designs with their own collateral thresholds, hardware requirements and reward splits, often layering masternodes on top of a Proof of Stake consensus mechanism rather than mining.

Running a masternode carries real costs and risks: the collateral is exposed to price volatility, uptime failures can forfeit rewards, and centralizing large amounts of coins in relatively few high-collateral nodes can weaken decentralization. It differs from ordinary staking in that it demands dedicated infrastructure and active service, not just locked coins.