Are Masternodes Still Worth it in 2025?

Back in 2017, masternodes were the talk of the town. It was such a big deal back then that every new crypto project had masternodes enabled. It’s 2025, the hype has died down, and you are probably wondering whether hosting a masternode is still worth it.

In this article, I’ll break down what a masternode investment looks like using PIVX as a case study. I’ll walk you through what masternodes are, their pros and cons, and whether owning one is still profitable.

What is a Masternode?

Masternodes are network nodes with specialized functions. While these functions vary across different blockchains, they are vital for network maintenance, transaction processing, and governance implementation. For example, in the PIVX network, masternodes form the backbone of decentralized governance.

Masternodes are required to lock up an amount of the project’s native coin as collateral. They are rewarded with a pre-defined share of each new block reward.

The Masternode Investment Landscape in 2025

There is no denying that the masternode market has changed drastically over the years. While the early days were associated with high risk/high ROI (often triple digits), there is a more sustainable real yield tied to network utility in 2025.

Running a masternode is still an inherently high-risk investment given the extreme volatility of crypto assets. But I think the focus has shifted towards mitigating risk by demanding established project fundamentals and sustained development.

Perhaps the most significant change is the intensified competitive landscape. Masternodes no longer operate in a vacuum. They must compete directly with sophisticated alternatives across the decentralized finance (DeFi) space, including high-yield Yield Farming protocols, convenient Liquid Staking solutions, and simpler delegated PoS mechanisms.

Pros

• Passive Income: Masternodes offer a consistent flow of passive income through regular block rewards, paid in the project’s native cryptocurrency.

• Governance Power: Operators gain influence by participating in the project’s Decentralized Autonomous Organization (DAO), allowing them to vote on crucial decisions and budget proposals.

• HODLing Incentive: The requirement to lock a substantial amount of collateral enforces a long-term holding strategy, which can be highly beneficial to investors during sustained bull markets.

• High Barrier-to-Entry: The high collateral cost restricts the number of participants, which can potentially lead to more lucrative rewards and foster a community of highly committed, long-term investors.

Cons

• Price Swings: The most substantial risk is the dramatic fluctuation in the market value of the collateral coin. A sharp price drop can easily negate the value of the rewards earned.

• Impermanent Loss: The locked collateral is constantly exposed to market volatility, and a significant devaluation of the coin can result in a net loss that outweighs the cumulative rewards.

• Technical Difficulty: Running a masternode requires a moderate level of technical skill, including the setup and constant maintenance of a Virtual Private Server (VPS) and diligence in applying software updates, although hosting services can simplify this.

• Reward Dilution: As the network grows and more masternodes are established, the total block reward is split among an increasing number of operators, leading to a decrease in the individual masternode’s Annual Percentage Yield (APY).

Let’s Talk Numbers

PIVX is a privacy-centric Proof-of-Stake (PoS) coin that has used a masternode system since its inception. Deploying a masternode on the network requires a collateral of 10,000 PIV (around $1,700 at current market prices). This collateral must be locked for the node to be active.

The estimated APY for hosting a PIVX masternode is currently between 15% and 16%, paid in PIVX. And as of press time, there were over 2,000 active masternodes, representing approximately 20% of the total supply locked.

Assuming there are no price fluctuations, which is never the case, a $1,700 investment in a PIVX masternode today will generate an extra $255 in a year’s time. Comparatively, a $1,700 investment in a traditional fixed asset deposit will yield around $76.5, given that the interest rate in many banks is between 4% and 5%.

More realistically, there are two possible scenarios: an increase or a decrease in the value of PIVX within the year. Profits, as well as capital, can be quickly wiped out if prices crash, and vice versa.

Worth it or Not?

Bullish Scenario

• Strong Fundamentals: PIVX provides clear utility as a privacy coin. Its SHIELD (zk-SNARKs) protocol enhances anonymity, a feature that is highly valued in an environment of increasing financial surveillance. Meanwhile, there are both in-house and external integrations that allow you to spend your PIV coins on things like gift cards, hotel bookings, flights, and even coffee.

• Decentralized Governance: Masternode operators hold significant power within the DAO, allowing them to directly vote on the project’s future and budget allocation.

• Sustainable Yield and Supply Lock: An estimated 15% — 16% APY (paid in PIVX) is a competitive return, and the fact that approximately 20% of the total supply is locked signals a strong, committed investor base and reduces immediate selling pressure.

Bearish Scenario

• Regulatory Scrutiny: Privacy coins like PIVX face an ongoing risk of regulatory action, which could lead to delisting from exchanges, thereby severely limiting liquidity and price stability.

• Market Competition: PIVX must continually compete with other dominant privacy coins (e.g., Monero and Zcash) and increasingly popular, more accessible staking alternatives across the crypto ecosystem.

• Price History Concern: Similar to many older altcoins, PIVX’s price has struggled to reach previous all-time highs, meaning the investment’s ultimate success relies heavily on future coin appreciation rather than just the fixed reward rate.

Conclusion

For an investor in 2025, a masternode is worth it if two conditions are met. Firstly, you must believe in the long-term potential of the project. Secondly, you must be prepared for notable price swings. A masternode investment should be viewed as a way to accumulate a valuable asset over time, rather than a fixed fiat income stream.

Written by Clement Saudu

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