Masternodes function is similar to full nodes that are maintained by owners with additional functionalities including clearing transactions, anonymizing them, and partaking in voting and governance.

The idea of masternodes was initially popularized back in 2014 in order to incentivize users for maintaining blockchain services. For the Bitcoin blockchain, the masternode helps to take the load off nodes.

Masternodes are a direct response to the gradual decline of nodes. The addition of masternodes also increases the overall efficiency of the blockchain system. The reward mechanism for masternodes is similar to that of Proof-of-Work for miners.