## Pricing and payments

The main reason for reduction of complete nodes on Bitcoin Network is the lack of incentive to run one. With the time, the cost of executing a full node increases to the as the network is used more, creating more bandwidth and costing the operator more money. As the cost increases, operators consolidate their services to be cheaper to rotate, or run a lightweight customer that doesn’t help the network.

To run a masternode, the operator must demonstrate control about 10000 LQX. When active, masternodes provide services to clients in the network and, in contrast, receive a payment block reward. Like the miners, all masternodes are paid from the reward in block, of which 40% are devoted to this program.

Due to the fact that the Masternode rewards program it’s a fixed percentage and the Masternode network nodes are floating, the Masternode rewards expected will vary according to current total count of active masternodes.

Payments for a standard day to run a Masternode, can be calculated using the following formula:

(n/t)*r*b*a

Definitions:

n: number of masternodes that an operator control,

t: total number of masternodes,

r: current block reward (currently averaging about 5 LQX)

b: blocks on an average day. For the LQX network, this is usually 1440

a: average payment of the Masternode (40% of the average lock reward)

## Order determination

A special algorithm is used to create a pseudo-random ordering of masternodes. By using the Proof-of-Work (PoW) hash for each block, the security of this functionality will be provided by mining network.

Pseudocode, to select a Masternode:

For(mastenode in masternodes){

current_score = masternode.CalculateScore();

if(current_score > best_score){

best_score = current_score;

winning_node = masternode;

}

}

CMasterNode:CalculateScore(){

pow_hash = GetProofOfWorkHash(nBlockHeight); // get

the hash of this block

pow_hash_hash = Hash(pow_hash); //hash the POW

hash to increase the entropy

difference = abs(pow_hash_hash - masternode_vin);

return difference;

}

Benefit of the Masternodes to the network

The use of masternodes enhances the functionality and security of each blockchain network that utilizes them. The nodes enable advanced transactional privacy, instant transactions, and some are even able to execute smart contracts.

Users running a masternode are helping to make sure the entire system runs properly by running functions and helping to govern the network with voting rights. They are then compensated in coin in various ways for doing so.

Full nodes are servers running on a P2P network that allow users to use them to receive updates on the network events. These nodes use significant quantities of traffic, and other resources that incur a substantial cost.

As a result, a steady decrease in the amount of these nodes has been observed for some time on the Bitcoin network, and as a result, the block propagation times were exceeding 40 seconds. Many solutions have been proposed, as a new rewards scheme from Microsoft Research and the Bitnodes incentive Program.

These nodes are very important for the health of the network. They provide customers with the ability to synchronize and facilitate fast propagation of messages across the network. Propose add a secondary network, known as the Masternode network of the LQX.

These nodes will have high availability and provide a level of service needed for the network in order to participate in the program Masternode reward.

## Untrust Quorums

With the addition of the Masternode network and the warranty requirements, we can use this secondary network to accomplish highly confidential in an infallible way, where no single entity can control the result.

Selecting N Pseudorandom Masternodes of the total set to perform the same task, these nodes can act as an oracle, without the entire network perform the task. As an example, the implementation of a quorum without trust (see InstantSend), which uses Quorums to approve transactions and to block the inputs or the implementation of proof of service.

Another example of using trusted quorums may include the use of the Masternodes network as a decentralized Oracle for financial markets, making possible decentralized contracts. As an example, agreement, if Apple’s action (AAPL) exceeds US \$300 On December 31, 2018, pay the public key A, otherwise Pay the public key B.

Service Functions and Proofs

Masternodes can provide any number of extras services for the network. As proof of concept, our first implementation included the PrivateSend and InstantSend. When using what we call proof of service, we can demand that those nodes were online, answering and even at the correct time of block.

Defective agents can also run Masternodes, but without quality service required from the rest of the network. To reduce the possibility for people to use the system in your favor, the nodes should ping the rest of the Network to ensure that they remain active. This work is done by the Masternodes network by selecting 2 quorums per block. The Quorum A check the Quorum B service on each block.

Quorum A is the closest node to the block hash Current, while quorum B is the farthest from the aforementioned hash.

Masternode A (1) Checks Masternode B (rank 2300)

Masternode A (2) Checks Masternode B (rank 2299)

Masternode A (3) Checks Masternode B (rank 2298)

All the work done to check the network to prove that nodes are active is done by the Masternode network itself. About 1% of the network will be checked in each block. This causes the entire network to be checked six times per Day. To maintain this system without trust, we randomly select the nodes through the Quorum system, and also, we require a minimum of six violations to deactivate a node.

## Masternode Protocol

To deceive this system, an attacker will need to be selected six times in a row. Otherwise, violations will be cancelled by the system, because other nodes are selected by the system Quorum.

Definitions:

n: is the total number of nodes controlled by the attacker

t: is the total number of masternodes on the network

t: is the depth of the current

The selection of Masternodes is pseudo based on the system of Quorums

MASTERNODE PROTOCOL

Masternodes are propagated over the network, using a series of protocol extensions, including an announcement message and a ping message from Masternode. These two messages are all that’s required to make an active node on the network, in addition, there are other messages to run a service proof request, PrivateSend and InstantSend. Masternodes are originally formed by sending 10000 LQX to a specific address in a wallet, that will “activate” the node, making it able to be propagated over the network.

A secondary private key is created and used to sign all other messages. The last key allows the wallet to be completely locked when run in unattended mode.

A cold mode is possible using the secondary private key on two separate machines. The main customer “Hot” signs the amount of 10000 LQX entry, including the secondary private key signature on the message. Shortly after the “cold” customer sees a message including its secondary key and activates it as a masternode.

## List propagation

This allows the “hot” client to be deactivated (client off) and does not leave the possibility   of an attacker gain access to the amount of 10000 LQX, obtaining access to the Masternode after activation.

When starting, a masternode sends a message “Masternode Announce” for the network,   containing:

Message: (10K LQX Input, accessible IP address, signature, subscription time, LQX 10K public   key, secondary public key, donation public key, donation percentage)

Every 15 minutes, a ping message is sent, proving that the node is still active.

Message: (10K LQX Input, Signature (using secondary key), Signature Time, Stop)  After a specific time has expired, the network will remove an inactive node, causing the   node not to be used by the customers. We can also drip the network constantly, but if they don’t have their doors open, they will eventually be flagged as inactive and will not be paid.

#### Payment through Mining and Verification

To ensure that each masternode receives its share of the Block reward, the network must oblige the blocks to pay the Masternode correct. If a miner it’s not on conformity, their blocks should be rejected by the network, otherwise the trickery will be encouraged. We propose a strategy where masternodes form quorums, select a winning masternode and transmit your message.
After N messages are transmitted to select the same recipient, a consensus will be formed and this block in question will be obliged to pay that masternode.
When mining on the network, the software pool (sites that merge the efforts of individual miners) use the RPC API interface for information on how to make a lock. To pay the Masternodes, this interface must be extended by adding a secondary beneficiary to GetBlockTemplate. The pools will propagate their mined blocks successfully, with a split payment between them and a masternode.

#### Masternode List propagation

New customers entering the LQX network will know that Masternodes are currently active on the network, this way they will be able to use their services.

As soon as they join the Network, a command is sent to your peers requesting to know the list of Masternodes. A cache object is used for clients to register their masternodes and their current status, so when the customers are restarted, they simply upload this file instead of requesting the complete masternodes list.

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