PIVX Masternode: A Complete Guide

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PIVX Masternode: A Complete Guide
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PIVX Masternode: A Complete Guide

Last Updated: 1st November 2018

PIVX is a privacy-focused decentralized open source cryptocurrency that has been designed to enable users to transact instantaneously and privately. PIVX was launched in January 30th 2016 under a name formerly known as Darknet (DNET), before it was officially re-branded to PIVX, which stands for: Private Instant Verified Transaction. The objective of PIVX is to develop a decentralized sustainable ecosystem of private and instantaneous transactions. Key features of PIVX that are designed to achieve this include: PIVX’s proof of stake consensus algorithm, second-tier PIVX Masternode network and blockchain based self-funding treasury system.

PIVX Masternode

Source: PIVX.org

PIVX Reward System: Staking and Masternode

There are two ways that an individual can help to secure the PIVX ecosystem:

Staking

Staking PIV coins for the proof of stake consensus algorithm requires nodes to put up PIV coins as collateral in order to verify a block of transactions. There is no required minimum of PIV that must be put up as collateral during the staking process, however, nodes must keep their wallets active. Nodes involved in the staking process are given PIV tokens as a reward for securing the network via the verification of transactions.

Masternode

PIVX Masternodes are nodes that are running the same wallet software on the same blockchain to provide services for the network. These services include:

  • Transactional privacy by use of coin-mixing
  • Instant transactions
  • Decentralized governance for decision making
  • A decentralized budgeting system
  • Immutable proposal and voting systems

In exchange for providing the aforementioned services, PIVX Masternode operators are rewarded with PIV coins. It is also important to note that the PIVX network requires a collateral of 10,000 PIV in order to become a Masternode. Broad technical specifications for obtaining a PIVX Masternode include:

  • 10,000 PIV/Masternode
  • Must be a wallet
  • Dedicated IP address
  • 24 hour uptime is also ideal

PIVX See-Saw Mechanism

On the PIVX network, both staking nodes and Masternode operators receive PIV tokens as a reward for helping to secure the network. The distribution of PIV tokens between staking nodes and Masternode operators are governed by PIVX’s ‘See-Saw Mechanism’.

The rationale behind the See-Saw Mechanism is to achieve fairness in the distribution of PIV coins between staking nodes and Masternodes. In other cryptocurrency systems that make use of second-tier Masternodes, block rewards are divided equally between mining/staking nodes (depending on the consensus algorithm) and Masternodes. However, this attempt at a fair reward distribution can be undermined by the monopolization of Masternodes. Masternodes that are held by just a few large investors could lead to the subsequent centralization of underlying budgeting systems. Moreover, such a disparity in the reward distribution between monopolized Masternodes and staking/mining nodes could result in a reduction in the number of users willing to secure the network. PIVX’s See-Saw Mechanism is designed to prevent this scenario, by rewarding actors critical to the operation of the PIVX ecosystem in an equitable manner.

The PIVX See-Saw Mechanism promotes an even ratio between staking nodes and Masternodes on the network by dynamically adjusting the block reward. The See-Saw Mechanism constantly adjusts the amount of rewards that go toward the two groups based on the number of staking nodes and Masternodes that are operating on the network at a given time. For example, the higher the number of Masternodes operating on the network, the smaller the reward that will be paid out to Masternode operators. Conversely, if the count of Masternodes on the network decreases, then the block reward apportioned to Masternode operators will increase. This same mechanism also applies to the count of staking nodes on the PIVX network.

PIV Coin Creation and Distribution

Currently, approximately every 60 seconds 5 PIV are created. These PIV coins are then divided into two separate pieces.

  • 10% (0.5 PIV) is entered into a pool, with pooled funds being used to fund the growth of the PIVX ecosystem. From there, the second-tier Masternode network will then vote on projects that they believe are most suitable in expanding the community.
  • 90% (4.5 PIV) is divided between staking nodes and Masternodes on the network. With PIVX’s See-Saw Mechanism dynamically adjusting the amount that each group is to receive in block rewards.

Setting Up a PIVX Masternode

Individuals interested in setting up a PIVX Masternode can choose to do so on their own or through Masternode service providers.

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