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How do Masternode Rewards Work?

As the altcoin industry trucks along, there appears to be a growing interest in masternode currencies. As new investors come to this market, a lot of new questions emerge. Especially where the node rewards are concerned, some of the key questions always seem to come back over time. Now is a good time to alleviate some of these questions or concerns to put investors’ minds at ease.

The Concept of Masternode Rewards

On paper, it seems uncanny how one can earn currency rewards for simply running a network node. This concept is not native to all cryptocurrencies. Masternode-oriented altcoins are designed to so specifically this. Users provide privacy or anonymity services for transactions. In exchange for doing so, they receive masternode rewards.

Over time, it seems as if this concept has become a new investment trend. A lot of currencies embrace this business model as of right now. By offering masternode rewards, projects can enforce a specific coin lockup over time. As fewer coins are on the market, their individual price usually rises. Masternode rewards can be very lucrative for users to explore. Not all projects will succeed, though.

The Long Wait for the First Reward

One of the most common questions is when the first masternode reward will be visible in one’s wallet. There is a very straightforward formula to calculate the time required for this first payout. It is usually calculated as follows and seems to work for all masternode-oriented altcoins on the market today and in the future.

(The number of masternodes active on the network x 3) / the number of blocks generated per hour

As most altcoins maintain a 1  minute block time, the calculation is pretty easy. If 200 masternodes are online, the time until the first reward is 10 hours. Fewer masternodes active on the network will result in a shorter waiting time. As more networks note a healthy increase in nodes, the initial time to reward will rise. It is not uncommon for investors to wait over 30 hours for their first masternode rewards.

What is the Time Between Rewards?

As explained above, the time between masternode rewards is also variable. More active nodes result in lengthier periods between payments. Fewer nodes yield more payments, but can also lead to massive price fluctuations. It is often difficult to find the right balance for project developers. This is why some projects rely on increasing their node collateral or reducing the masternode rewards over time.


Disclaimer: All information provided in this article is for educational and entertainment purposes only. MNMMG Does not offer investment advice and is not responsible for any financial losses sustained by its readers.

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