Revolution of Masternode Projects
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The topic of Masternode has been several times on our blog. Maybe because it is trend to have masternode in your blockchain project or maybe this is one of the most effective ways to generate capital that one needs for development of a new blockchain project. Sometimes it is more effective to start masternodes than to simply have an ICO (from our conversation with developers of various projects). Why it is so? Simply, you invest in an ICO not knowing the result of the project where as the Masternode model already has a certain reward system and works to generate blocks that has use in practical life.
Anatomy of Masternode Rewards/Profits
If we look into the method of earning with masternodes, then it is pretty straight forward : one buys Masternode, then sets up special masternode server and starts to generate blocks that are needed for the transaction of others crypto coins. In other words, this is a ledger of transactions where the ownership of coin is recorded.
Usually there are collateral prices for Masternodes (MN), sometimes for the first one price is lesser, later it grows. In return for these activities, investor receives rewards or simply profit. Requirements for these VPS (virtual private servers) are high and setting up these environments are pretty complicated. Therefore we can see several options how people go about it.
The first.
Above told method, that is the most complicated for user/investor but the simplest and the easiest for project creators. Investor has to do all by himself.
The second.
The Project team sets up all needed servers or teams up with some bigger company to rent hosting with VPS and sets up structure for generation of masternodes. Investor has to buy certain number of project coins to become owner of Masternode. The rest would work the same – for each created block on this Masternode server, investors will receive reward.
The third.
Shared Masternodes. That would mean the first or second option for technical performance but one can buy lesser amount of project’s coins to start to receive rewards. Basically it would mean partial investment in a larger Masternode and getting partial rewards from it.
Masternode projects are creating not only their business model for earning rewards but also their own coin that is used for all transactions in their platform. These are two different things – Masternodes itself and projects coins. Coin can be used to own Masternode as well to trade freely on exchanges if project is succesful.
Common mistakes in Masternodes projects
Are there any problems with this kind of traditional Masternode coin? Yes and no. Everything can work perfectly but project creators might make few very significant mistakes that can crash a project.
Mistake Nr.1
In order to produce higher ROI (rate of investment) creators keep supplying coins until market is flooded with them. Over supply of a coin will drive down coin value that can lead to the projects crisis.
Mistake Nr.2
Often selling an initial batch of Masternodes, project developers push down price that later increases drastically. From one hand we can understand it as it takes time for project to prove its viability. But from point of investors it makes unfair advantage for the first investors with lower price and higher ROI at the beginning until certain number of MN are set up. The worst what can happen is that the first investors, when first period is over and they have generated huge amount of rewards, they sell ourt all their project coins and again projects coin’s value drops drastically. There is no motivation to keep longer one’s Masternode in a project as ROI drops within time mostly with traditional Masternodes coins.
Mistake Nr.3
Panic selling is the next problem for masternodes projects. Edgy investors tend to play with selling out and then rebuying coins in order to achieve larger profit. That gives them chance to increase profit a lot.
Mistake Nr.4
Poor understanding of basic economics: developers are forced to fork the coin’s blockchain in order to raise the Masternode collateral when an oversupply condition exists. Then the number of Masternodes must be reduced to raise demand for the coin.
Mistake Nr.5
Often developer team is pushed to presell coins in order to accumulate enough funds for listing in exchanges and advertisment campaigns. This is underfunded syndrome and it takes away investors confidence and trust to the project. As more project develops, it’s value grows and it is much easier to sell project coins or to sell Masternode.
Mistake Nr.6
Many projects flood market with their coins in airdrops, translations, promotions, give volunteers and more. From an economics supply-curve standpoint this is a huge mistake. These giveaways dilute the value of the coin and put more coins in circulation. Limiting coin amount in all activities prior exchange would be the best solution.
Project CatoCoin solutions
One of masternode projects, CatoCoin, offers solution for all mentioned problems.
If someone would ask my opinion on main issues with Masternode business, I would say – lack of long term investment that impacts the project’s “health”. If you offer me as investor to make quick money with super high ROI but later take it away – no reason to keep going with this project.
What CatoCoin offers is new, an innovative algorithm that is designed to increase collateral requirements for the new Masternodes when new Masternode increases. CatoCoin’s says: The Next Generation of Masternode Technology. Project team has even created so called NextGen Technology and applied for patent.
Few words about project’s NextGen Technology. It will automatically modify the rewards and collateral requirements. There is no more guessing about unknown number of Masternodes and equation of the ROI. Main bonus of this NextGen Technology is that it decouples rewards and collateral requirements from the blockchain and links them instead to the number of active Masternodes. There is automatical adjustment of rewards and collateral requirements.
This approach allows CatoCoin to be the only coin that can guarantee ROI both now and in the future.
Other changes by CatoCoin
Besides this new algorithm, there is also different structures of motivation for investors. For example, first 30 CatoCoin Masternode owners will receive a 100-coin bonus when the coin is listed on CryptoBridge. Or another new possibility is that Masternodes can be sold privately between individuals instead of shutting them down and selling their coins (look into Mistake Nr.2 in this article).
Different approach CatoCoin has taken concerning promotional activities and translations – instead of flooding market with their coins and making them lose value, they are paying in BTC. This saves CatoCoin and it is not diluted.
Roadmap of the project
As short-term plans are almost completed for this project, we should look into longer-terms plan.
Here is what team has for future of this project:
Create Mobile wallet and allow staking from wallet
Create Masternode exchange for MN owners to sell or bid on MNs
Release updated wallet that interfaces with exchanges to show real-time value of coins & replacement value of Masternode
Research viability of a ‘sharded’ block chain for CatoCoin wallets
Who are people behind this project?
Important to note that the project is certified by KYD . KYD (know-your-developer) is an excellent initiative that checks team and sees are they real, legit and with correct documents. This gives investors and enthusiasts assurance that this is no scam and there is real team working on project.
There are 4 names on their site: Jeff, Director, Berks, Lead developer, Daniel, Developer and Lauren, Social Media Director. And few advisors with also only names – Alessandro, Achie and Thomas.
Listings
Project is listed in several sites as well in a few exchanges.
Masternode Rating Services
Info sites
Coinmarketcap – https://coinmarketcap.com/currencies/catocoin/
Exchanges
CryptoBridge – https://wallet.crypto-bridge.org/market/BRIDGE.CATO_BRIDGE.BTC
Coinexchange – https://www.coinexchange.io/market/CATO/BTC
Conclusion
Real value of the project we see in a months or even years usually. We can appreciate that this team has thought through many details, analyzed common mistakes and taken steps towards positive changes. I can say that keep an eye on this project and see what it brings in a future for Masternodes technology.
