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Updated on | Posted in Bitcoin, Blockchain Technology, Cryptocurrency

What is Masternode two layer verification

A Masternode is a crypto full node (computer wallet) that supports the network by hosting an entire copy of the coin’s ledger in real time. In return, the Masternode will receive crypto coins as a reward. It is a great alternative to mining.

Dash is best known as the first digital currency with a focus on ease of use, anonymity and transaction speed. What many people do not know is that these features are implemented on top of a network of dedicated servers known as masternodes, which gives rise to many exciting features not available on conventional blockchains.

How Masternodes Work

Masternodes are powerful servers backed by collateral held in Dash, and are designed to provide advanced services and governance on the blockchain.

Masternodes host full copies of the blockchain and provide a unique second layer of services to the network, facilitating advanced functions such as InstantSend, PrivateSend and usernames on the blockchain.

Masternodes must be backed by collateral denominated in Dash, and in return their operators receive regular payment for the services they provide to the network. As highly committed custodians of the project, masternode operators are given the opportunity to vote each month on up to 10% of the block reward to fund community projects supporting the Dash ecosystem. Masternodes (MNs) provide certain services (InstantSend and PrivateSend) to users, receive 45% of the block reward

Governance Proposals and Concepts

The system works as a decentralized voting mechanism set up in the rules governing the blockchain, where budgets for specific projects are proposed, then the masternodes as a whole vote on them. Each project, if it passes, is added to the total budget and paid directly from the blockchain to the person doing the work. This allows Dash to hire core developers and pay them directly after approval of the work in a decentralized fashion.

A masternode votes on a proposal (technically a governance object on the blockchain) using the example command “masternode vote yes”, “masternode vote no” or “masternode vote abstain”. The votes then propagate across the network, and are tallied according to instructions followed by the network itself. Budgets under discussion and voting progress can be viewed using the example command “masternode budget show”.

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