A masternode is a high-power, highly reliable node in the Dash p2p network.

The network of masternodes is what enables of all the “beyond Bitcoin” features offered by Dash and similar coins forked from Dash.

As a Dash holder/investor, a masternode is like a savings account, which offers rewards (around 6.9% p.a.), but which requires a large deposit of 1000 Dash. This reward is derived from 45% of the Dash block reward – i.e. 45% of the newly created Dash in every new block.