Horizen Masternode Explained

Horizen Masternode Explained

Last Updated: 12th March 2019

Horizen is a peer-to-peer privacy orientated cryptocurrency that is premised on zero-knowledge cryptography. The objective of the Horizen project is to act as a secure platform that allows the sending of money, messages and media to be performed privately. The achievement of this goal is facilitated by the existence of the Horizen Masternode, which can be further subdivided into the Secure Node and Super Node, which are designed to bring about a truly private and decentralized ecosystem.

Satoshi Nakamoto, the creator of Bitcoin, designed a consensus process that both solved the double-spend problem and created digital scarcity. However, a limitation that is levied against Bitcoin’s underlying architecture is that it does not economically incentivize nodes (full nodes) to operate on the network. Node operators, who are responsible for securing the Bitcoin network by verifying that transactions and blocks are formed correctly, are not rewarded for this task. As a result, the argument can be made that the number of nodes operating on the Bitcoin network may decrease as more users begin to transact using bitcoin. The reasoning behind this is that the increase in network usage (due to an increase in users), will likely also mean an increase in bandwidth costs, which will lead to some node operators being priced out of the network.

The Horizen Masternode network is designed to act as a solution to this problem, by adequately rewarding Secure Node and Super Node operators who invest computational resources that help to secure the Horizen network.

Horizen Secure Node

The Horizen Secure Node is equipped with specific functionalities that are intended to bring about a secure and private node network:

  • Security: Communication between Secure Nodes are end-to-end encrypted, which means that communication between nodes on the network can not be observed by third parties.
  • Censorship Resistance: As communication between Secure Nodes are encrypted, this results in the entire network experiencing an increased level of censorship resistance.
  • Resilience: Because Secure Node operators are financially incentivized to help secure the Horizen network, the number of Secure Nodes is likely to increase, which produces a more decentralized and resilient network.

This Horizen Masternode (the Secure Node), support the Horizen network in numerous ways, for example:

  • Accepting transactions from wallets
  • Employing encrypted communication to other nodes and wallets
  • Validating miner solutions
  • Serving as a decentralized computing and communications system for users on the network

Individuals seeking to become a Secure Node and receive rewards must meet requirements such as:

Balances and Challenges

– Maintain a balance of at least 42 ZEN within a transparent address, which serves as collateral for the Secure Node.

– Able to perform a ‘challenge’ in under 300 seconds. A challenge, in the Horizen protocol, is designed to prove the capability of a node. A challenge consists of a random block being chosen from the blockchain by the Horizen server, the node will then look up specific information pertaining to the chosen block, and then create a private transaction to send the results back to the server through the blockchain. The server will then determine if the information received matches the block.

– Maintain a balance greater than 0.001 ZEN in a private address on the Secure Node (executing a challenge consumes 0.0002 ZEN).

– Ability to perform a challenge in under 300 seconds.

– Must be able to successfully perform a challenge within the defined challenge interval, which is currently 72 hours.

Ability and Exceptions

– Must be able to achieve minimal downtime, achieving an availability target of 92% within a reward period.

– Not fall behind the current block height by more than 4 blocks.

Network and Security

– A unique dedicated IP address is required for each Secure Node.

In exchange for dedicating the computing resources that are required to protect the network as a Secure Node, 10% of the block reward is awarded to Secure Nodes.

Horizen Super Node

The Horizen Super Node is another class of nodes on the Horizen network that have been designed to be more powerful than Secure Nodes. This class of Horizen Masternode also possesses end-to-end encryption, as well as supporting key network functions such as:

  • Hosting services on sidechains
  • Tracking and measuring Secure Node uptime
  • Queuing the node payment schedule for miners

By implementing Super Nodes, tracking and payment services can be done on-chain, which is a significant change from the existing system, where these functions are being executed on external servers. Furthermore, the introduction of sidechains into Horizen diversifies the value offering of the entire network. Horizen transitions from being simply a cryptocurrency, to a platform upon which various services can be built.

In order for individuals to become a Super Node operator, they must meet requirements such as:

Balances and Challenges

– Maintain a balance of at least 500 ZEN, which serves as collateral, within a transparent address that has not been used prior for staking a Secure Node or another Super Node.

– Maintain a balance greater than 0.001 ZEN in a private address (a challenge consumes 0.0002 ZEN).

– Must be able to perform a challenge in under 150 seconds.

– Be able to successfully perform a challenge within a defined challenge interval, which is currently set at 72 hours.

Availability and Exceptions

– Satisfy an availability target of 96%.

– Not fall behind the current block height by more than 4 blocks.

– Individuals must also meet the following eligibility criteria, which is a minimum of:

  • 4 CPU Cores
  • 8GB of RAM
  • 100GB of storage space

Network and Security

– A unique dedicated IP address is required for each Super Node.

Horizen Super Nodes are awarded 10% of the block reward as compensation for investing computational resources to help secure the network.

Despite the fact that both Secure Nodes and Super Nodes receive 10% of a block reward, the return on investment for operating a Super Node is expected to be higher. This is because the Horizen team targets a Secure Node count of 20,000 – 25,000 and Super Node count of 2,000 – 2,500. Thus, a reward distribution of 10% will generate more return for Super Nodes than Secure Nodes, as there are significantly less Super Node operators. Thus, this serves as an economic incentive to operate a Super Node rather than a Secure Node.

Setting Up a Horizen Masternode: Secure Node and Super Node

A guide detailing how to set-up and maintain a Horizen Secure Node and Super Node can be found below: