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!

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