Masternodes — the blockchain innovation that rose to fame during the 2018 bear market, have been in sharp decline ever since. What was first promised as a passive income solution to reward holders and create positive coin economics through “locking” node collaterals has fallen drastically short. Now in late 2019, as the market has experienced some recovery, the Masternode niche of the market has continued to decay, with failed and abandoned projects, exit scams, a lack of new investors, and exchange closures all contributing to the mess.
The list of projects that fall into this category is too long to count. These projects all follow a similar model, offering an unrealistically high ROI and going live on an exchange with a price that far exceeded the true value. The prices of these coins quickly plummeted, and the developers of these coins said to wait for the “platform.” Inevitably, delays and excuses were put forth, and if a platform ever was released, it did almost nothing to help the project recover its value. The truth is that without a large community, continuing demand and a real purpose for the tokens, Masternode coins amount to little more than a cleverly disguised ponzi scheme. Investors buy their coins at various prices not for the purpose of using them on a platform, but rather to earn money. The reality is, very few people make money investing in masternode coins because very few people know how to distinguish the successful coins from the ones destined to fail.
Lack Of New Investors
This leads into the next problem with the market: the lack of new investors. The Masternode market is shrinking in its popularity due to these ongoing issues. Instead of attracting new investors, people are actively leaving the market (or crypto in general). Can you blame them? It’s understandable after someone is scammed or an investment loses 90% or more of its value to feel disillusioned. And while some investors adapt, stay invested, and learn from their mistakes — others cut their losses and leave, vowing never to return again. Not only does this make it increasingly difficult for existing projects to recover, it makes it nearly impossible for new, legitimate projects to launch due to the lack of presale buyers.
Exchange Closures and Lack of Liquidity
It’s no secret that this area of the industry is hurting badly. After Crypto Bridge (arguably the most frequently used Masternode and PoS exchange) betrayed their users through their unexpected and sudden implementation of mandatory KYC, they then announced a mass delisting of the majority of the coins on their platform. Many of the coins facing delisting were legitimate and longstanding projects that have continued development despite less than ideal market conditions.
Apart from Crypto Bridge, other exchanges such as Coin Exchange, Nova Exchange, and Escodex have all recently closed down — all staples of the Masternode market. This has only deepened the liquidity problem that many projects already faced.
Where Do We Go From Here?
While the problems that the Masternode industry faces are severe, they are not uncommon. Every technology has gone through periods of growth and decline, only to be made stronger when they emerge. The Masternode market is not on its deathbed, but rather is experiencing an extreme winnowing process that will sift out all of the scammers, bad projects and platforms, and of course — weak hands. The strong projects with legitimate use cases will stand the test of time, and that is exactly what we are seeing. New exchanges will be created, the market will adapt, and come the next Masternode bull run, investors who adapted and stuck out the process will be rewarded. This only sets the stage for the next round of innovation.