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. Dash has been associated with the concept of masternodes ever since the invention of this novel concept soon after the project started in 2014.
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.