- In 2017 masternodes were all the rage, with one masternode in particular creating a stir
- By mid-December, people were actually shelling out $1 million for a Dash masternode
- The Dash masternode story encapsulates the fever of 2017
Bitcoin may have eclipsed its 2017 highs by a factor of 3.5 last year, but there are many out there who still won’t have outperformed their performance of the prior bull run. Some of these will be holders of DASH, a 2014 Bitcoin fork with a focus on privacy and speed. Dash was one of the first crypto projects to run masternodes in addition to miners and, like many coins, it enjoyed an incredible 2015-2017 bull run. The real story with Dash however relates to its masternodes, which, for a brief spell in January 2018, were changing hands for over a cool million dollars. We remember why, and what happened.
Dash Masternodes Made Millionaires in 2017
Masternodes are a way of helping the network come to consensus over transactions, with anyone willing to buy and stake 1,000 DASH coins able to run a Dash masternode. Like miners, masternode operators are rewarded with coins, but this combination of masternodes and miners allows Dash transactions to be much faster and cheaper than Bitcoin.
At the start of 2017, each DASH token was worth around $11, meaning that a masternode would have set you back around $11,000, with some 1.75 DASH tokens generated per week. In 2017 of course the entire market enjoyed an explosion, with the price of DASH coins rocketing with the rest of the market. The price topped out at just shy of $1,500 per token at the December peak, with masternodes therefore coming in at an astonishing $1.5 million at the very top:
Between December 15, 2017 and January 16, 2018 the price of DASH remained over $1,000, keeping the cost of a masternode over $1 million. And people were buying. Why? Because of the passive income.
$20,500 Per Month in Passive Income
By January 2, 2018, Dash masternode operators were raking in the equivalent of nearly 17 DASH per month, worth over $25,000, and all they had to do was keep a computer running. This reward was too tempting for those with deep pockets to resist, and some actually bought themselves Dash masternodes around this time. They assumed that they would be on easy street once the outlay has been recovered, which would take less than a year if prices remained:
This assumption that the passive income would be too tempting for Dash masternode holders to sell was quickly expunged in December:
The number of Dash masternodes collapsed by 57% in December alone as masternode holders chose to cash out, sensing a top was near. As we can see, many took the opportunity of a 50% price haircut to pick up a Dash masternode in January 2018 for just $500,000. Bargain.
Sellers Proved Right
The sellers were proved right however – the price of DASH collapsed with the market in 2018, alongside the ROI, meaning anyone who had picked up a masternode from November onwards and not sold it quickly regretted their largesse:
The drop was a particularly harsh lesson in market cycles for newcomers – the monthly rewards crashed from 194 DASH per year to just 77 the day that those $500,000 buyers stepped in. Talk about timing.
2017 Will Never be Repeated
The Dash masternode ROI has never got anywhere near the crazy highs of 2017. A Dash masternode currently costs around $150,000 and brings in some 4.5 DASH per month, around $675 dollars in value. Not a tempting proposition.
Given that the 2020-21 rally saw DASH top out at less than a third of its 2017 top, it’s pretty clear that these incredible numbers will never be reached again, and the Dash masternode story acts as another example of the hype and ridiculousness of the cryptocurrency market in 2017.