There’s good news out there for Dash hodlers—you no longer need to be a zillionaire to make money from crypto. Neptune Dash has announced the launch of its first pooled Masternodes, allowing low-budget hodlers to make a small passive income from supporting the blockchain network.
Masternodes, as Crypto Briefing has already reported, are a second-tier network of high-end servers which facilitate Dash’s InstantSend and PrivateSend transactions. In exchange for their work in upholding the network, masternode owners are given voting rights in the Dash DAO and 45 percent of all block rewards, which are randomly allocated in the same way as mining rewards.
However, it’s not quite as simple as running a mining rig. In order to prevent mischief in the network, all masternode hodlers must stake at least 1000 DASH in cold storage—making it prohibitively expensive to attack the blockchain, as well as giving them a strong incentive to maintain the coin’s value. At the time of writing, a full masternode costs around $160,000 in addition to equipment costs.
That puts them outside the reach of all but the best-funded crypto users or the least risk-averse. It also proves a point about proof-of-stake (PoS) systems: with 6% annual returns, the rich get richer and the poor stay where they are.
Pooled Masternodes: Democratizing The Network
By “pooling” Dash for a masternode, Neptune Dash says that even low-budget players will be able to receive a fair share of masternode returns. “When Dash owners participate in a Neptune Dash Pooled Masternode, they essentially own a percentage of the masternode,” the company said. “This allows them to gain revenue on their percentage ownership basis.”
“Today marks the inception of our first Pooled Masternode, where any Dash holder can now benefit by earning Dash interest paid on almost any amount of Dash holdings,” said CEO Cale Moodie. “This is an extremely compelling argument for investing in Dash and reiterates why we believe Dash is a top contender digital currency.”
This is the 19th masternode launched by Neptune Dash, a company which has previously specialized in full masternodes. In exchange for maintaining Masternodes for their clients, Neptune Dash takes an 18 percent cut of all rewards.
Neptune Dash isn’t the only company seeking to open the masternode system to low-budget hodlers. CrowdNode, a Danish company which launched earlier this year, allows anyone to participate in a shared masternode for as little as one DASH, in exchange for a 15 percent cut of the rewards. The company currently runs three masternodes, according to its website, and is well on its way to number four.
Not Quite Trustless… Yet.
While pooling for a master node might seem like an attractive idea, it has an obvious downside: anyone sending DASH to CrowdNode or Neptune Dash runs a very high risk of never seeing it again.
Both companies go out of their way to reassure potential investors of their trustworthiness. CrowdNode’s website goes into great detail about its status as a publicly-registered and regularly-audited company, with all funds stored in multi-signature wallets. Neptune Dash is even more straightforward: “We are very nice Canadians,” the Website says in the “Trust” section.
And there are also other shortcomings–you can’t stay totally anonymous,* and it’s not clear what kind of legal roadblocks they might face in the future.
Stranger danger will always be a factor as long as pooled masternodes rely on third-party operators….but those days may be numbered. Evolution, the monumental wallet-come-exchange-come-dApp for the thirteenth-largest cryptocurrency, includes “trustless masternode shares” as part of its lengthy roadmap. These shares would allow users to pool their dashes on-chain for shared masternodes, with no counterparty risk—if Evolution ever comes out, that is.
The author has investments in Dash.
*An earlier version of this article incorrectly stated that both companies require KYC. In fact, Neptune Dash requires minimal signup information, and CrowdNode has removed its KYC requirements.