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Intro to CrowdNode trustless masternodes
Intro to CrowdNode trustless masternodes

Interested in our trustless masternode feature? This article gives a good overview of the different steps in the process.

Thomas Orloff avatar
Written by Thomas Orloff
Updated over a week ago

In a nutshell

  • CrowdNode offers it's members to pool their DASH into masternodes where the collateral sits on a multisig DASH address with pre-signed transactions for taking down the masternode and repaying all participants.

  • DASH staked this way has no counterparty risk whatsoever.

Why go trustless?

Since 2018 CrowdNode has offered a DASH masternode pool service where CrowdNode aggregates deposits into 1000 DASH collaterals and operates masternodes generating rewards for members and offering governance participation. The downside has been that this requires that members transfer their DASH to CrowdNode which inherently requires trust.

CrowdNode's trustless masternode implementation allows members to upgrade their balance to a trustless masternode which eliminates all counterparty risk while still offering the same benefits of frequent rewards and governance participation. A win-win for all, at the cost of a little extra work setting up the trustless masternode.

How to go trustless?

You cannot transfer DASH directly to a trustless masternode so you will have to trust CrowdNode, but only during the setup process. Once the masternode is running, no trust is needed.

So, unless you already have one, you will need to first set up a CrowdNode account (remember to store the private key for your associated DASH address carefully!) and deposit sufficient DASH to participate in a trustless, masternode. (At time of writing that means at least 100 DASH, but this is subject to change.).

Once you are ready to go trust follow these three simple steps.

First step: Pledge and prepare

  • Navigate to the "Trustless" tab and make a pledge. Here you must decide how many DASH to stake and for how long.

  • Once you have made your pledge you must use the dash-core software to generate a signing address for the next steps. This is just a regular DASH address which you can make using the getnewaddress command.

  • In case you don't have a synced dash-core there is no need to wait for the whole blockchain to download - in fact dash-core doesn't even have to be online for what we need to do.

  • Once you have your signing address, you extract the associated public key using the getaddressinfo command and then use the signmessage command to confirm that you are ready.

After this, you have to wait for other participants to join to complete a 1000 DASH pool. Once other participants join in, the pool is locked (meaning that you cannot withdraw your pledge).

  • You will get an email once the pool is complete and you can go on to the second step.

Second step: Signing the return transactions.

Every pool participant will ultimately get two transactions.

  1. The normal refund transaction, where you get your full deposit back (minus a trivial amount for tx-fee), but only after a certain time has passed - namely the time you pledged in the first step.

  2. An emergency refund transaction where you get your deposit back minus a 2.5 DASH penalty (which is divided between the other participants and CrowdNode for their trouble). The emergency refund transaction is only intended for a situation where you urgently need your deposit back (minus the fee), and you can use it at any time after the masternode has launched. This implies that with a pool of e.g. 4 participants you 'll have to sign 1+4 = 5 different return transactions. No problem - just some copy-paste gymnastics.

Once you have signed all the return transactions, you must await the remaining participants do the same.

  • You will get an email once all signing is done and you are ready for the final step.

Third step: Sign that you have received the refund transactions.

  • In the third step you will have to sign a message stating that you have received the raw refund transactions, just like is done in the first step.

Now you are done!

  • Once the all pool participants accept their respective return transactions CrowdNode will transfer the 1000 DASH collateral to the multisig address launching the masternode.

  • From this point onwards, the masternode will run until a pool participant to uses the sendrawtransaction command to execute either of his/her two pre-signed return transactions which takes down the masternode and returns the DASH to all participants. If you want to use the return transaction, here is a guide for that.

The governance voting rights, and the rewards generated by the masternode are treated exactly like the non-trustless masternodes, and with all the same benefits (i.e. compounding rewards, frequent rewards, API control, voting, etc.).

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