Some simple questions about masternodes

darklution

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Jun 4, 2014
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Hi guys,

I registered at this forum to ask a few question which I googled and want verified here to make sure I understand correctly (as a lot of money is involved).

You can setup a masternode with 1000 DRK.

1) If I understand correct the 1000 is not a payment, it's reserved and you can get the 1000 back when you turn the masternode off. You don't loose the 1000, its retreivable, am I correct?

2) Is it really possible to setup a safe masternode server in the cloud through amazon?

The masternode payment formula is: 1x Masternode = 576 blocks * 10% of the reward = 1036DRK/day

3) Does that mean if there are 1500 masternodes with 20% reward the payment is: 1036 / 1500 * 2 = 1.38 DRK per day?

4) Just to be sure that is per DAY, correct? At a value of 15 euro, thats 1.38 * 15 * 30 = 621 euro worth of DRK per month?

5) How random is the random masternode selector?

6) Can someone with a masternode please state his actual earning per day?

7) 10% masternode reward is actually 10% of all the coins mined, correct? So instead that a miner gets 100%, 10% of every coin mined is instead given to the masternode system which randomly spreads it out.

8) As mining difficulty increases won't the amount of coins mined per day go down? If so, will this not bring down the masternode reward in absolute terms? Say 1000 masternodes exists and will only ever exist. Reward stays 1036 / 1000 * 2 = 2.072 DRK per day until the last day that all darkcoins are mined?

9) How easy is it for a group of miners to manipulate the to be introduced mastercoin selector voting system?

10) Will masternode holders get a share if their node is selected to do what its made for (to transfer coins accross for anonymity)? How much percentage do you get?

I read a guide how to secure your masternode server. If someone hacks your server and obtains accesses your masternode.. Provided the wallet is encrypted and the password not retrievable on the server..

11) Is there a way for the hacker to steal the masternode itself and profit himself without knowing the decryption password?

12) Is there a way for the hacker to steal the coins generated from the masternode?

13) Is it impossible for you to get the masternode back using a backup wallet file stored somewhere else?

14) If not, it doesnt matter if your masternode server is hacked. All you need to do is create a new masternode again on an fresh OS using the wallet file which was backed up somewhere else, correct?

15) Is the masternode payment currenty still switched off? If so when will it be switched on again?

16) How many masternodes are to be speculated to go online after this happens? Since more than halve the coins were created and traded at prices below 1 euro, and 4 million coins are in circulation, would 1/4 of the total coins = 1000 mastercoin servers be a good estimation?

Thanks :)
 
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vertoe

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Mar 28, 2014
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1) If I understand correct the 1000 is not a payment, it's reserved and you can get the 1000 back when you turn the masternode off. You don't loose the 1000, its retreivable, am I correct?
Yes. If you dont do anything stupid or someone steals your unencrypted wallet or your passphrase, you will most likely get the coins back.

2) Is it really possible to setup a safe masternode server in the cloud through amazon?
Thats what I did. It's not too hard. Follow chaeplin's guide.

The masternode payment formula is: 1x Masternode = 576 blocks * 10% of the reward = 1036DRK/day
3) Does that mean if there are 1500 masternodes with 20% reward the payment is: 1036 / 1500 * 2 = 1.38 DRK per day?
Sounds about right, yes. Keep in mind the block reward varies depending on difficulty. So probably less.

4) Just to be sure that is per DAY, correct? At a value of 15 euro, thats 1.38 * 15 * 30 = 621 euro worth of DRK per month?
Yes, per day.

5) How random is the random masternode selector?
No idea, random.

6) Can someone with a masternode please state his actual earning per day?
Null. Payments start on June 14th.

7) 10% masternode reward is actually 10% of all the coins mined, correct? So instead that a miner gets 100%, 10% of every coin mined is instead given to the masternode system which randomly spreads it out.
Correct. It should be increased to 20% though.

8) As mining difficulty increases won't the amount of coins mined per day go down? If so, will this not bring down the masternode reward in absolute terms? Say 1000 masternodes exists and will only ever exist. Reward stays 1036 / 1000 * 2 = 2.072 DRK per day until the last day that all darkcoins are mined?
Yes. Yes. No, the reward goes down along with the mining reward.

9) How easy is it for a group of miners to manipulate the to be introduced mastercoin selector voting system?
As difficult as a double spend attack. You need to modify 6 blocks to manipulate voting.

10) Will masternode holders get a share if their node is selected to do what its made for (to transfer coins accross for anonymity)? How much percentage do you get?
No. All you get is the 20% if you are elected.

I read a guide how to secure your masternode server. If someone hacks your server and obtains accesses your masternode.. Provided the wallet is encrypted and the password not retrievable on the server..
11) Is there a way for the hacker to steal the masternode itself and profit himself without knowing the decryption password?
No. The funds are going straigth to the masternode. You need to unlock the wallet for both - accessing the masternode funds and the masternode rewards. They are both stored on the same address.

12) Is there a way for the hacker to steal the coins generated from the masternode?
Only if you do not encrypt your wallet, or leave your passphrase in history (or /proc or ps) or do anything really stupid you should not do with coins in general. An encrypted masternode is as safe as an encrypted bitcoin wallet.

13) Is it impossible for you to get the masternode back using a backup wallet file stored somewhere else?
No, you can have a local copy of the wallet or the private key and instantly access the masternode funds. (Doing so will disable the masternode.)

14) If not, it doesnt matter if your masternode server is hacked. All you need to do is create a new masternode again on an fresh OS using the wallet file which was backed up somewhere else, correct?
Yes.

15) Is the masternode payment currenty still switched off? If so when will it be switched on again?
Yes. Starts June 14th.

16) How many masternodes are to be speculated to go online after this happens? Since more than halve the coins were created and traded at prices below 1 euro, and 4 million coins are in circulation, would 1/4 of the total coins = 1000 mastercoin servers be a good estimation?
I expect 400-500 masternodes in the beginning. 1000 is pretty much possible. We will see.
 
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Minotaur

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1) If I understand correct the 1000 is not a payment, it's reserved and you can get the 1000 back when you turn the masternode off. You don't loose the 1000, its retreivable, am I correct?
Correct. The 1K drk are only reserved and you can use them at any time if you stop your masternode.

2) Is it really possible to setup a safe masternode server in the cloud through amazon?
Yes. It is possible to setup a safe masternode with Amazon as it is possible to setup a safe masternode server with any good provider. What is going to make it safe is you as an operator taking all the measures to secure your server.

The masternode payment formula is: 1x Masternode = 576 blocks * 10% of the reward = 1036DRK/day This is incorrect.

3) Does that mean if there are 1500 masternodes with 20% reward the payment is: 1036 / 1500 * 2 = 1.38 DRK per day? This is incorrect.

4) Just to be sure that is per DAY, correct? At a value of 15 euro, thats 1.38 * 15 * 30 = 621 euro worth of DRK per month? This is incorrect.

Here is the right way to estimate masternode profitability
MASTERNODE PROFITABILITY FORMULA


Assuming the minimum block reward of 5DRK, to have a worst case scenario. If difficulty goes down then adjust accordingly.
Masternodes take 20% of the block rewards.
Masternode payments start mid June
Need to divide between the total number of masternodes, I am assuming 500 MN for the example, but adjust accordingly for your projections.
Finally, Masternodes are randomly selected so this is just an indicator, some masternodes may be more lucky than others, you get the idea but it should even out over a year.


(5 drk/block x 576 blocks/day x 0.2 = 576 DRK / 500 MN = 1.152 DRK/day x 365 = 420.48 DRK/year x 15USD = 6307.2 USD/Year

Now notice this is a variable formula it changes with two factors, # masternodes and price (difficulty is the other factor this is a worst case scenario assuming minimum rewards of 5drk per block). I used 500 masternodes for the example is just my guesstimate of how many masternodes will start on the first week of payments. Now there may be more masternodes as the year progresses but price should adjust accordingly because of the lower supply. I dont know exactly what is going to happen but my estimation is a masternode should bring in from 7K to 15K a year.


5) How random is the random masternode selector? Not sure what you mean, but basically over a longer period of time masternodes rewards should be approximately the same.

6) Can someone with a masternode please state his actual earning per day? Masternode payments are not yet active, this will be part of an update that should happen mid June.

7) 10% masternode reward is actually 10% of all the coins mined, correct? So instead that a miner gets 100%, 10% of every coin mined is instead given to the masternode system which randomly spreads it out. More or less, masternodes are granted 20% of the block rewards, each block rewards depends on a formula that takes account difficulty as a factor. Giving the popularity of Darkcoin we are currently at the minimum reward which is 5DRK per block, you can refer to the profitability formula above. Masternodes take 1DRK for each block at this difficulty levels.

8) As mining difficulty increases won't the amount of coins mined per day go down? If so, will this not bring down the masternode reward in absolute terms? Say 1000 masternodes exists and will only ever exist. Reward stays 1036 / 1000 * 2 = 2.072 DRK per day until the last day that all darkcoins are mined? This is wrong it has been explained above.

9) How easy is it for a group of miners to manipulate the to be introduced mastercoin selector voting system? Impossible the voting system and payment system will be embedded in the blockchain. I am not a programmer but as I understand it is hard coded and out of reach of the miners or pool operators.

10) Will masternode holders get a share if their node is selected to do what its made for (to transfer coins accross for anonymity)? How much percentage do you get? You get part of the mining rewards, masternodes dont get transaction fees.

I read a guide how to secure your masternode server. If someone hacks your server and obtains accesses your masternode.. Provided the wallet is encrypted and the password not retrievable on the server..

11) Is there a way for the hacker to steal the masternode itself and profit himself without knowing the decryption password? No. As long as he doesnt have you passphrase it should be impossible for the hacker to use your coins. That is why you need to be sure to erase the bash_history of your server every time you input the passphrase.

12) Is there a way for the hacker to steal the coins generated from the masternode? No. The masternode payments just add to your masternode wallet balance so same as above.

13) Is it impossible for you to get the masternode back using a backup wallet file stored somewhere else? Again. If your wallet is compromised but the hacker does not have the pass phrase and you are actually aware that the wallet was compromised you would just send the coins to a new wallet.

14) If not, it doesnt matter if your masternode server is hacked. All you need to do is create a new masternode again on an fresh OS using the wallet file which was backed up somewhere else, correct? More or less, yes. But you wouldnt use the same one just send the coins to a new address on a fresh wallet.

15) Is the masternode payment currenty still switched off? If so when will it be switched on again? Mid June

16) How many masternodes are to be speculated to go online after this happens? Since more than halve the coins were created and traded at prices below 1 euro, and 4 million coins are in circulation, would 1/4 of the total coins = 1000 mastercoin servers be a good estimation? Maybe, we wont know until we know my estimation is 500MN in the first few days.
 
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darklution

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Jun 4, 2014
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Wow that about sums up the technical aspects I was unsure of, thanks guys, great support!

Now on masternode economics..

The thing is, I have +1,000 coins enough to setup a node. Spend 750 euro for it back in the day. Worth some 10.000 now.. But I made a big loss with other cryptos. Selling now would cover all + profit. And get rid of a lot of stress. I aint made for this crypto speculation game. Wastes time and energy lol. Best get out. On the other hand.. If I have a generating masternode, well.. Steady income generated is nice. So was just looking at risks etc. Good to hear its hackproof when encrypted with passphrase etc.

I personally expect +600 nodes in the beginning to 1,000 or so. Thats about 5 euro/day 170 euro/month at this price. Which is still dropping atm.. Later 2,000 nodes maybe at this price for quite some time I think. Time will tell what the future does price wise. The price of drk depends on implementation. It has a good shot at it, being the first anonymous coin I guess. When mass is gained, more follows. Like ubuntu vs other distros. Anyway.. For me 170 euro/month is not worth the risk of obtaining 10,000 now I think. Need the price to increase to at least 40 eur/drk = 345 euro/month per masternode at 2000 masternodes. Thats sufficient..

575 blocks * 5 coin reward = 2,880 new coins/day. If 20% goes into creating new masternodes thats +- 2,300 new coins. What will the price do in the theoretical situation when the market is saturated with long term speculators /bag holders? And all the miners and masternode holder are selling all gains for instant profit? Unlike now... Bitcoin price increased massively, but that purely on speculation to me doesn't mean much (long term wise)..

Real world demand for 2,300 new darkcoins needs to exist daily for the price to keep steady, right? If so, more for it to go up. At 20 eur/drk thats 46,000 euro of daily new real world demand. For 40 euro thats nearing 100,000 euro new demand per day.. Unfortunately I have no sense of economics to be able to see how realistic that is. But my feeling said its quite a lot. And most might be using it as follows: people exchange fiat for drk, buy goods with drk, seller trades drk back to fiat = no increase in demand. For a real sustainable increase in demand, people need to stay out of fiat after they exchange to crypto. Is that time near? I guess when the steam of speculation runs out true price comes to to how much does it cost to actually produce something + some profit. In this case, how much does it cost to mine darkcoin? So, how much electricity does it cost if mined most efficiently, in pools etc? And does price go up when more people mine, as reward per miner decreased, therfor raising mining price, and true value?

Hmm, now that I wrote this, it makes me think.. Shouldn't money in the perfect world be a fixed amount of volume instead of an increasing one (as with crypto mining or fiat printing)? Increasing in value when demand increases, which pushes down demand and neutralise's buying, saving the earth from an exponentially growing economy, instead of an dependency of growth, just like our current based on interest by privatized central banks system is today? Hmm..

I guess cryptos have a max when all are mined.. But won't something new take there place before time comes? Why is difficulty usually so extremly easy for miners in the beginning anyway? Isn't there a better way to spread them evenly while max volume is reached faster? I'm drifting off..

Anyway, forget the last bit. Does my price rise theory sound right? Or am I missing something? The effect of darkcoin being asic miner etc proof.. What does that do it the price? I suspect it helps it to stay high as no one can mine it for profit if there are many small miners. Miners wont sell for lower than a certain price, correct? But litecoin supporters are saying the asic miners will help them, as did the miners for bitcoin. What to make of this?

Also, now we will have an upwards spiral of new coins being put in masternodes and therefore decreasing the supply. Up to when it becomes too expensive. But what will the opposite effect be if people start selling out their masternodes when the price goes down?

And.. 10% changed to 20%. Can it change again? Back to 10%? What else can change..

These are the risks I'm worried about atm. Any wise words?

Thanks again! You guys are awesome and darkcoin is an awesome coin!!! What ever I do, sell or not, I'm sure I will be using it for actual use in the future heheh.

Peace
 
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Minotaur

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I promise a longer answer tomorrow is late where I am, but If I were you I would keep my coins until open source at least, not a good idea to sell right now. You were lucky to get them at those prices, it actually would be really sad for you to sell right now. Dark still has a long way to go and passive income is the best with your masternode.
 

vertoe

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The answer is quite short. Darkcoin will hit $100 faster than you can imagine.
Let's compare it with Bitcoin and Litecoin.

Bitcoin
  • All time high ~ $1200
  • 150 BTC generated per hour
  • 21M total coins
Litecoin
  • All time high ~ $50
  • 600 LTC generated per hour
  • 84M total coins
Darkcoin
  • All time high ~ $15
  • 120 DRK generated per hour
  • 21M total coins
Do you see the potential? DRK is more rare than Bitcoin. I'm not saying DRK will bypass BTC in per-coin-value soon, but looking at the numbers this might be possible in distant future. The only difference is that Bitcoin is widely accepted, Darkcoin not (yet).

If Litecoin can hit $50, Darkcoin can go much further...
 
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darklution

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Thats good to know thanks.

But isn't current demand is based on speculation only (yet)? Speculators cause prices to fall just as hard as they make them rise so far. LTCs 50 usd all time highs say something about the Chinees gambling culture and panic buying.. Trying not to use the world bubble, but all time highs up to now don't mean much.. Also, looking at darkcoins 4 hr graph on bitcoinwisdom, looks awefully similar to ltc & btc 1d graph.. Not saying it will keep decreasing, if any alt will succeed its darkcoin! But for now I will leave the demand side be what it is: unknown territory. Though I see your point it having the same supply as btc and I'm sure people will start using darkcoin as its anonymous.

What about the supply side? Does mining influence price? X11 different influence? If you know how to calculate the current cost per DRK mined per miner at the current difficulty rate.. Will this give an indication of minimum price based on supply?

According to http://cointweak.com/calculator/coin/drk
Hash Rate (KH/s): 2058
Power (Watts): 190
Power Cost ($/kWh): 0.2
Difficulty: 4555
Block Reward: 5
Exchange Rate (USD): 12.28
=
Coins per day: 0.0629305229762
Power cost per day: $0.91
=
0.91 / 0.06 = 15.17 usd/drk

Is this calculation correct? If total amount of miners go up, electricity for mining 1 DRK per miner goes up, correct? Will this lead to an increase in market prices as miners have higher energy costs and wont sell for less? Is this a proper way to look at it? What if value drops, will more miners quite as well? All I know is that difficulty is recalculated every so often to compensate for the amount of miners to keep the rate of coin creation constant. But if anyone could give a quick 101 if and how mining effects the supply side of the coins market value, you have answered all my questions.. Or am I over complicating and should supply be seen as a steady flow of 120 DRK per hour and what happens behind the mining door is not relevant to market price? In that case only demand matters.

Don't mean to spread fear to others, just trying to resolve insecurities of my own. If it wasn't for my other losses and me not liking the trading stress, I would have hold easily. As that's not the case and I don't have anyone else to talk to with sufficient knowledge in the real world, I'm posting here.

Thanks
 
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Minotaur

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You are over thinking this, let me give you a business analogy to try an see if I can make it more clear as to why Darkcoin is so valuable. When you think about miners, difficulty, etc, you are thinking too hi in the supply chain. In my mind the miners are part of the "manufacturing" of the product(the coin), so by solving the problems of the miners you are solving manufacturing issues, which is good but in this times is not the key factor, then you have the exchanges and traders which in my mind are one level below in the supply chain they are part of the "distribution channels" the mission of the "distributors" is to spread the coin and promote adoption, buy for x / sell for y and keep a profit, facilitate the exchange and keep a commission in the case of exchanges. And then you have the "consumer" the end user and modern business dictates that we should focus on the need of the end user of the product. Other coins like Vertcoin focuses on the miners, in my mind a coin like Blackcoin is self-contained and focuses on the investors (PoS), same with most coins, they really don’t offer anything to the consumer that Bitcoin (the market leader) does not offer, they don’t have good differentiators or added value from the perspective of the consumer. Now what is something that Bitcoin does not have but people desperately want? Privacy! And that is where Darkcoin comes in, it offers something valuable to the consumer and they will use it. Merchant adoption will take time for Darkcoin, but that doesn’t matter, Darkcoin offers new things unrelated to retail: store of value, a way for other coins to anonymize transactions e.g. you have Bitcoins you change for Darkcoins send to a different address then buy Bitcoins again you are done. So Darkcoin is private banking for cryptos.

The coin is of really good quality all around, new algorithm X11 for which Asics will come a lot later in the coins life allowing it to develop as opposed to killing it in the crib. Scarcity and a very nice deflation model making it ideal for long term investment and as a store of value. Added value for the end users beyond what Bitcoin offers through its privacy features, and most importantly a world class development team that has shown transparency, creativity and competence that will continue developing new features and strengthening the coin. So in my mind, if Cryptocurrencies don’t disappear (and I don’t think they will disappear) Darkcoin will be a high value product with private banking applications. AlexGR made a nice metal analogy where Darkcoin would be platinum. So keep your coins safe as they will be worth a lot more in the future.
 
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jpr

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The answer is quite short. Darkcoin will hit $100 faster than you can imagine.
Let's compare it with Bitcoin and Litecoin.

Bitcoin
  • All time high ~ $1200
  • 150 BTC generated per hour
  • 21M total coins
Litecoin
  • All time high ~ $50
  • 600 LTC generated per hour
  • 84M total coins
Darkcoin
  • All time high ~ $15
  • 120 DRK generated per hour
  • 21M total coins
Do you see the potential? DRK is more rare than Bitcoin. I'm not saying DRK will bypass BTC in per-coin-value soon, but looking at the numbers this might be possible in distant future. The only difference is that Bitcoin is widely accepted, Darkcoin not (yet).

If Litecoin can hit $50, Darkcoin can go much further...
Reading how confident you are about that $100 make me feel much better. Still the price keeps dropping. I was hoping there would be more bitfinex trading.
Everytime I start thinking about selling my coins I just read posts like yours and that stops me from dumping.
If you guys ever start loosing your faith this is not going to end well.
 

vertoe

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Reading how confident you are about that $100 make me feel much better. Still the price keeps dropping. I was hoping there would be more bitfinex trading.
Everytime I start thinking about selling my coins I just read posts like yours and that stops me from dumping.
If you guys ever start loosing your faith this is not going to end well.
Well, keep in mind this coin was created not even half a year ago and is still in beta testing and under heavy development.

And then again. People tend to sell low and buy high. Don't sell now, you will regret it.
 
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anonymous4545

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I just want to clarify something. I can see now there are 3480 masternodes. So if I use this calculation : (5 DSH/block x 576 blocks/day x 0.2 = 576 DSH / 3480 MN = 0.1655 DSH/day x 365 = 60.41 DSH/year x 6 EUR = 362.46 EUR/Year. It seems this is not profitable at all to setup a masternode if the minmum amount is 1000 DSH to setup the node ?
 

fible1

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May 11, 2014
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I just want to clarify something. I can see now there are 3480 masternodes. So if I use this calculation : (5 DSH/block x 576 blocks/day x 0.2 = 576 DSH / 3480 MN = 0.1655 DSH/day x 365 = 60.41 DSH/year x 6 EUR = 362.46 EUR/Year. It seems this is not profitable at all to setup a masternode if the minmum amount is 1000 DSH to setup the node ?
Currently payment is about 2 Dash every six days.

Pablo.
 

Otaci

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You dont lose the 1000 DASH. You can get it back whenever you like, the masternode will just stop functioning. Your calculations are a bit off, but even if they werent, you're making 362 EUR/year on a 6000 EUR investment = 6% annual interest rate.
 

Solarminer

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Here is the proper calculation with the 3496 active masternodes today.

3496 masternodes / 576 blocks/day = payment every 6.07 days.
Payment is 45% of the block rewards which is about 5 dash. = 2.25 Dash. (this is a little high, but close)
This is about 0.37 Dash/Day or 11.1 Dash/mo or 135.29 Dash/yr
- server cost of 10.29 Dash(Using a high $6/mo) = profit of 125 Dash/yr
Annual Return is 125 Dash/1000 Dash invested = 12.5%
 
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TanteStefana

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Also, when people say "you can get them back any time" this isn't exactly true. It sounds like you gave them to someone or something.

The truth is the 1000 coins are secure in your wallet, in your control at all times. In fact, a proper masternode setup has you keeping your wallet safely in cold storage (on a jump drive or somesuch. You simply need to show you have control of a single deposit of exactly 1000 coins.

The thing that isn't as smooth as everyone would like it to be is that you actually have to put it online to activate your "remote" MN wallet (preferably being run on a server). For a few seconds you will have your wallet exposed to the internet, so make sure you're on a secure line and that your machine is safe. Then keep your wallet.dat on a jump drive (or multiple jump drives for safety) the physically secure those jump drives. As long as your MN on the remote server is never down more than ~70 minutes max, or you don't have to upgrade the wallet software, you won't need to expose it again.

Or, if you want to take your MN payouts and use them for something, you'll have to expose the wallets online again. Some day, hopefully, this will be made a little easier.
 
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