Initial coin offerings are revamping crowdfunding sectors destroying the conventional funding methods such as Kickstarter. All you have to do is incorporate blockchain technology on to your project. But what happens once icos hit their peak? How can you make an ICO attractive for investors? Issuing cryptographic blockchain based tokens via ethereum technology has been the norm but what separates between an average ICO and a very successful ICO is its token utility. When speaking about talking utility we are not just talking about the exchange between users across blockchain-based networks or being traded on cryptocurrency exchanges. We are talking about the actual purpose of the token and how owners can use their tokens. Security tokens provide ownership rights of a company to the holders. Whereas utility tokens provide holders with access to the ICO company's services or products. I believe utility tokens have the greatest potential in terms of the actual use and the value of the token.
As the crypto space has exploded, the intensity of the trading space has given me a great source of adrenaline but I have always been looking out for passive income sources with an active job in hand. Mining is a traditional part of the blockchain ecosystem where you could generate passive income but setting up the hardware and software for mining is not very straightforward. Then I came across Masternodes. I have been captivated by the concept of Masternodes - a way to passively generate income through Masternode. But wait, what are Masternodes?
Masternodes are a new unique feature introduced initially by Dash. Gradually, more cryptocurrencies are adopting it. These encourage ownership of tokens rather than the frequent trading of tokens promoting the long-term value of the token. Essentially masternodes are a server on a decentralised network which verifies transactions and monitor network activity. It can be used for features such as sending tokens privately or direct transactions. You will need a sizeable investment on the token through ownership of the tokens in order to run a masternode. This will be locked in an account where rewards will be calculated and proportionately distributed for participating in the network using a master node.
Now that you understand what masternodes are, I came across an interesting ICO which will utilise masternodes. Let me introduce to you, Essentia. Its main purpose is to provide greater use of blockchain technology within individuals and businesses. Essentia offers a complete modular framework to protect privacy, data, IDs and assets. This is provided in a decentralised platform which allows users to interact with multiple decentralised services and resources. Users can have a dashboard of their preferred DApps, and interact with them. A seed which acts like a private key gives them access and control over their information with DApps.
Essentia offers a masternode system with a total block reward of 15% of the total supply of tokens to be proof of stake mined over the course of the next seven years. Transaction fees are also rewarded for users with masternodes. The main requirement for setting up a master node is you will require 100000 tokens to be locked in. 1 ethereum is 15000 essentia tokens. So you need 7 ethereum of tokens to set up a master node. These tokens which are locked will be used to calculate and proportionately distribute the number of essentia tokens. Around two thousand masternodes are expected to mine the 15% total supply of tokens. Each block reward will be 10 seconds.
Another variable which will be used to calculate the reward for masternodes is the Fuel Recycle feature. This program which will run as a background process rather than under the control of a user. It will report the quality, capacity, bandwidth and status of the shared resource to a fuel pool manager. This is a smart contract which will unload and distribute the pool reserves. So anyone who joins the network and shares the resources will stake essentia tokens and this will be locked as a security against potential misbehaviour. Hence this Fuel Recycle feature operates the reward for contributing to the network by sharing resources, providing calculation power or even running decentralised services.
Projected Reward Structure
Source: Matteo Gianpietro Zago - admin of telegram group - Essentia Masternodes chat.
Scenario A is when 42.8% of the total reward for masternodes are distributed within the first year. The rest % is given through the following years.
Scenario B is when 28.6% of the total reward for masternodes are distributed within the first year. This scenario provides more incentive to hold tokens for longer.
Scenario A
@ Year 1 = 42.8% of total reward supply
ROI = 86.53% @ ICO Price
Year 1 Allocation of Rewards = 42.8% of total block reward allocation
Year 2 = 42.8% + (X)remainder
Year 3 = 42.8% + (X)remainder + (X)remainder
Year 4 = 42.8% + (X)remainder + (X)remainder + (Y)remainder
Year 5 = 42.8% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder
Year 6 = 42.8% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder + (Z)remainder
Year 7 = 42.8% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder + (Z)remainder + (Z)remainder
Year 1 = ~42.8% of the total supply
X = 25% of the remaining supply (~57.1%)
Y = 50% of X
Z = 50% of Y
After 7 years = 0
Scenario B
@ Year 1 = 28.6% of total reward supply
ROI = 57.69% @ ICO Price
Year 1 Allocation of Rewards = 42.8% of total block reward allocation
Year 2 = 28.6% + (X)remainder
Year 3 = 28.6% + (X)remainder + (X)remainder
Year 4 = 28.6% + (X)remainder + (X)remainder + (Y)remainder
Year 5 = 28.6% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder
Year 6 = 28.6% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder + (Z)remainder
Year 7 = 28.6% + (X)remainder + (X)remainder + (Y)remainder + (Y)remainder + (Z)remainder + (Z)remainder
Year 1 = ~28.6% of the total supply
X = 25% of the remaining supply (~71.4%)
Y = 50% of X
Z = 50% of Y
After 7 years = 0
Essentia has a solid product with an experienced team. But what stands out for me is that it's implementing a masternode system. These combinations make Essentia a great ICO to invest on or just follow their progress. Check out the masternodes telegram group for more information.
Details 📋
Website: https://essentia.one/
Whitepaper: https://essentia.one/whitepaper
Facebook: https://www.facebook.com/essentiaone/
Twitter: https://twitter.com/Essentia_one
Telegram: https://t.me/essentia_one
Masternodes Group: https://t.me/essentiaonemasternodes
BT: https://bitcointalk.org/index.php?action=profile;u=1457262
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One important vector in passive income investing with masternodes is when to invest. Buying a masternode for $1,000 which yields 10% will give an ROI of $100 but if that masternode goes 5x (i.e $5000) and still gives an ROI of 10% that would be $500. Investing in the established ones is safe, but a share of your portfolio can also be focused on low cap http://nodesofvalue.com/low-cap-masternodes-with-potential/ and upcoming masternodes http://nodesofvalue.com/upcoming-masternodes/. The market might not have priced these in to their full potential. Do you own research! #DYOR