Types of Nodes: Light Nodes, Full Nodes, and Masternodes

Learn about the various nodes that make up a blockchain and why rewarding them, especially masternodes, is so important.


The computers and servers that support and undergird blockchain networks are known as nodes. Nodes are responsible for maintaining and verifying the public ledger of transactions on a blockchain network.

They are the cornerstones of blockchain’s decentralization, security, and transparency.

Regular (or “light”) nodes, full nodes, and masternodes are three different sorts of nodes, each with varying levels of responsibility on the networks they serve. Masternodes, the most powerful sorts of nodes, was first introduced to the Dash network in March 2014 and have since been adopted by a number of other blockchain networks.


What Is a Masternode? 

To begin discussing masternodes, it’s important to understand how they differ from their counterparts, nodes, and complete nodes.

To do so, we’ll need to go over the functions of each type of node briefly. Keep in mind that particular blockchain networks differ in structure in subtle (and sometimes large) ways, so the general sorts of nodes listed below may have slightly different functions and responsibilities depending on the networks to which they belong.

But, before we get started, it’s vital to note that all nodes have one thing in common: they all run the software, known as the protocol, that specifies a blockchain’s rules, features, and functionality.

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The most basic sort of computing device that supports a blockchain network is a node (also known as a light node or a normal node). In general, a decentralized blockchain network is made up of all the nodes that make it possible.

Miners are nodes in Proof-of-Work (PoW) systems while staking wallets are nodes in Proof-of-Stake (PoS) systems. PoW and PoS are consensus mechanisms that enable nodes to agree on transaction validity and, as a result, the state of the entire blockchain.

When one of the nodes broadcasts a fresh collection of transactions, packed in a block, to the entire network, every other node must check its legitimacy.

When that block is added to all copies of the blockchain, network consensus is reached. Because light nodes only download enough blockchain data to process and validate new transactions, they have a low computing workload. Keep in mind that entire blockchains typically contain a lot of information.

A Bitcoin full node, for example, took up more than 300 gigabytes of space as of September 2020, which is more than many desktop PCs can store.

The lower blockchain data requirements of light nodes let them to execute swiftly without bogging down their underlying systems.

A full node performs all of the functions of a standard node, but it additionally keeps a real-time copy of the blockchain ledger, which includes all of the blockchain’s transactions.

It downloads all transactions on a blockchain (not just the most recent ones) and verifies them with other nodes. In the unusual event of catastrophic failure across the network of nodes, a blockchain network may theoretically be completely restored as long as even one computer retains a full copy of the ledger.

Full nodes provide enhanced security to the network by maintaining an up-to-date copy of the blockchain ledger on multiple decentralized computers and servers throughout the world. If all full nodes were destroyed, the network would cease to exist.

Masternodes are the result of this. Masternodes validate existing blocks rather than adding new ones to the network. Depending on the blockchain technology they use, they also have unique management, governance, and regulatory responsibilities.

In March of 2014, the Dash protocol introduced masternodes as part of a Proof of Service scheme (PoSe). Although masternodes are more frequent in PoS environments, they can also be employed in PoW ecosystems.

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How Do Masternodes Work?

A crypto masternode acts as a server for the decentralized blockchain network it serves, storing a full copy of the blockchain ledger and doing extra tasks.

Masternodes can regulate voting events and conduct protocol functions depending on the blockchain on which they operate.

On the Dash network, for example, masternodes have more authority than a regular node and can be used to send private transactions (PrivateSend) or quick transactions (InstandSend). As a critical component of Dash’s PoSe ecosystem, masternodes perform these critical services.

Dash masternodes also play a part in governance, with each one receiving a single vote to approve or reject new developments and protocol revisions on the Dash network.

Crypto masternodes use a collateral-based approach that works similarly to the PoS protocol. To run a masternode, operators must have a considerable amount of the native coin. In exchange for their services, masternode operators are guaranteed annual coin profits.

As a result, the network’s most essential nodes are monetarily rewarded, which helps to maintain network stability and loyalty.

Masternodes are sometimes called bound validator systems because of this. In a PoS system, the rationale is identical to staking.

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Benefits of Using a Masternode

Almost every blockchain protocol contains a method for paying the nodes that sustain the network, create blocks, and keep it running properly, whether it employs a PoW structure, a PoS structure, or a different consensus structure entirely.

When a cryptocurrency’s protocol includes masternodes, the masternodes often receive a large share of the overall block rewards because they shoulder the burden of the network’s upkeep.

Block rewards are normally given to nodes that have successfully confirmed a block in the form of the blockchain network’s underlying cryptocurrency.

Furthermore, in PoS systems, the amount of processing required to generate new blocks is substantially lower than in PoW systems that rely on mining. As a result, in a PoS setting, a crypto masternode might theoretically generate more money with fewer expenditures than a PoW mining counterpart, offering a significant financial incentive to run a masternode.

In addition to Dash (DASH) — the originator of masternodes — cryptocurrencies that employ masternodes include Vitae (VITAE), Divi (DIVI), Pivx (PIVX), Horizen (ZEN), Energi (NRG), Zcoin (XZC), and Syscoin (SYS).

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Difficulty of Using a Masternode

The advantages of masternodes in crypto are numerous, but they are tough to set up and maintain. Masternodes consume a lot more resources than full and light nodes. Operating a masternode necessitates additional technical expertise, financial resources, and time.

Owning a considerable amount of collateral, frequently in the blockchain network’s native token, is required to run a crypto masternode. In some circumstances, masternode eligibility requirements are prohibitively high.

To run a Dash masternode, for example, you need 1,000 DASH, which was worth tens of thousands of dollars at one point and upwards of $1 million at another.

Aside from the financial barrier, a masternode operator is responsible for ensuring that their masternode performs its given responsibilities, whatever they may be (such as facilitating InstandSend and PrivateSend with Dash). Operators must also supply a dedicated server, an IP address, and continuous connectivity, which takes time and effort and might be costly due to server hosting fees.

The amount of data that is frequently transmitted and downloaded, as well as the energy expenditures to keep everything running, are enormous.

Aside from the costs, crypto masternodes are becoming more widely recognized as a valuable tool for blockchain validation and a feasible source of passive income for those who can get beyond the initial barriers.