Changing Masternode Collateral. Is it ever a good idea?

  • administrators

    I am curious what does the community think of a recent trend that is developing in MN coins of changing the required collateral for hosting a MN. 

    I am struggling to find any good reason for it.

    For some reason I am more open to the reduction of a collateral. I can see some valid reasons for a reduction in collateral. For example, the introduction of Tiered masternodes (ala CROWN) in order to enable more people to join the network with a MN.
    Or reducing the collateral in order to enable more people to participate in governance.
    (If anyone can tell me what are the cons of reducing a collateral I'd be grateful. Does it increases security risk? One could argue that if MNs are cheaper then it is easier to 51%, but Im not sure that is a valid concern as if MN price decrease, MN number on the network will increase)

    However, it seems to me that increasing a collateral is usually a short-term play based on price concerns. I'd love to hear any good reason for it.

    For reference, here is a list of coins that recently increased (or announced an increase) in collateral: 

    - Send
    - Btc incognito
    - Highland
    - Ultranatum
    - Gali
    - Pizdec
    - Pushi
    - elbrus
    - n2o 

    Let me know if there are others...

  • @kelnel I agree with you that many nodes are changing collateral. If it is being changed to give !let rewards for node holders its a bad thing in my view. In some cases its good, I am a node holder with $h2o and we recently voted on a collateral change but not rewards just the amount needed for a node. The coin was taking over by the community. I think this is an example of a good way to be using these kind of changes. Check out the discord for updates and a better idea of how it will be worked

  • administrators

    @cryptowayne thanks for your input. What was the reason for the collateral change at n2o if you know? Im just curious because so far I havnt seen any practical reason for such a change in the coins that I do hold that are changing collateral (I have not looked at n2o)

  • I'd say it has something to do with inflation one thinks. But that's just my opinion.

  • In my opinion, increasing the collateral is a bad sign from a project. The only reasons why they increase it are :

    • The reward structure or the ROI has been poorly designed. Then the MN holders have to much coins and dump it. Collateral increase will keep the MN holders involved without flooding the market. If the reward structure or ROI doesn't change, then the increase will happen again and again. And then MN holders are prisonners.
    • The dev team wants to create artificial volume. If someone bought a MN, it's likely that they want to keep it, and if they don't have enough coins they will buy again, creating volume that will mislead investors. Again, MN holders are prisonners.
    • Dev team wants to dump coins without crashing the price. Same thinking as above.

    If the collateral increase is coupled with a swap to reduce the supply, it's a clear sign of scam. Run away !!!!

  • Interesting discussion ... I would like to add that what I find really shameful is that some projects (for example Feirm) decide to increase the collateral with a ridiculous and illegitimate vote on Discord denying the legitimate right to vote of owners of masternodes. It is an abuse, not to make the masternodes vote means to step on a legitimate right and to give this right to Discord users that we do not even know if they are fake users. How disgusting!

  • Bitcoin tanks, asics are out, and it may take a year for a market recovery, what do you do with your once great master node losing now? It is barely covering the vps cost.

    You don't want to change the algo because the network is more efficient now, especially for the coming smart contracts that will be on the blockchain. The project is still solid with active developers, but the number of masternodes start to crumble from 9.3k down to 7k, 6k, 5k.. taking the price with it, what do you do to support your community so they will still have a reason to keep their nodes or multiple nodes. Especially from an ath of 0.00053 btc down to 0.000058 btc. This is an opportunity for your community to buy cheap and have a profitable node again. Increasing the collateral from 1k to 4k, the additional 3k is bought at almost 1 tenth of the max price. While offering new functions to the coin, such as smart contracts ( and crypto/fiat wallets on iOS and android and exchange that will host smart contract coins for free. This will also let new comers to invest a little more to get a share of the pie. Especially, when other coins are now requiring 10k, 20k, and even more for a node. The Economy can change, and sibcoin will change accordingly to always keep the benefit of mn holders as a priority.

    SibCoin is a very unique cryptocurrency. It offers a very special package including, privacy, smart contracts, masternodes, business tools. and crypto/fiat wallets. Our online services, mobile apps, and partnership programs make SIBCoin a real spendable cryptocurrency and not an object of speculative trading.

  • @vayrak good sell for sibcoin

  • @kelnel I have been holding/buying THC since last year, and they upped the MN collateral from 10k, to 20k, and they settled at 50k with the chain swap.  This was primarily due to the THC-BTC pairing, as the coin value dropped. 
    As for increasing the MN requirements for an ACTIVE MN chain, there was one that went from 1k to 10k, which was very annoying for the miners like myself, that worked hard to get that 1k.

    Ideally, the MN collateral would be able to justify the reward, and the monthly reward should at least be able to pay for the VPS service.