Why Launching a Node on a New Crypto Project Can Be a Good Investment (2024)

Introduction

Testnet phase crypto projects offer a unique opportunity for investors to generate revenue and actively participate in the evolution of blockchain technology. By launching a node in such a project, you can benefit from various rewards like airdrops, transaction fees, and staking rewards.

What Types of Nodes Offer Rewards

In the cryptocurrency ecosystem, certain types of nodes offer rewards for participating in the network. These typically include:

• Masternodes: In several cryptocurrency networks, such as Dash, masternodes are rewarded for their role in maintaining network stability, security, and special features like instant or private transactions. These rewards are usually a portion of the block rewards.
• Validator Nodes: In Proof of Stake (PoS) systems and their variants, validator nodes receive rewards for creating new blocks and validating transactions. For example, in Ethereum 2.0, validators are rewarded for their participation in securing the network.
• Mining Nodes: In Proof of Work (PoW) systems, mining nodes receive rewards for creating new blocks. Bitcoin and Litecoin are examples of cryptocurrencies that use rewarded mining nodes.
• Authority Nodes: In networks with a centralized or semi-centralized governance model, such as EOS or TRON, authority nodes (sometimes called super nodes or block producers) are rewarded for their role in validating transactions and creating blocks.
• Full Nodes and Light Nodes, which play a crucial role in containing a complete or partial copy of the blockchain, validating, and relaying transactions and blocks in the node network, typically do not offer rewards, but some projects reward these nodes in the testnet phase.

The Importance of Testnet Phase Projects

Testnet phase projects are preliminary versions of crypto projects not yet available to the general public. They are used to test the protocol and technology of the project before its official launch. Participating early in a testnet phase project is essential to fully benefit from the rewards, as crypto projects are often highly competitive, and rewards are distributed primarily to early participants.

For instance, the Celista project perfectly illustrates this point. Celista distributed airdrops worth a total of 10 million dollars to participants in its testnet phase. Early participants received airdrops significantly more valuable than those who joined later.

Two Ways to Earn Rewards in Testnet Phase

There are two main ways to earn rewards in testnet phase crypto projects:

1. Task Completion: The first possibility involves performing tasks on the testnet network using currency provided via a crypto faucet. These tasks can be diverse, such as staking, swapping, bridging, lending, etc.
2. Node Launching: Launching a node is another way to earn rewards in testnet phase crypto projects. More and more projects are making individuals who launch nodes eligible for airdrops, often with substantial distributions. Nodes contribute to the security and stabilization of the blockchain network and are rewarded for their contribution.

How Much Can You Expect to Earn with Nodes in Testnet?

The amount of rewards you can expect to earn by launching a node on a testnet phase crypto project depends on several factors, including the project’s popularity, the type of rewards offered, and the amount of resources needed to launch and maintain the node.

Taking the Celestia project as an example, 800 users who launched Celestia nodes in the testnet phase received enormous rewards as follows:

• Light nodes received 8,500 TIA each.
• For executing the bridge and full nodes, they received 15,000 to 20,000 TIA.
• Validator nodes received 30,000 to 40,000 TIA. As of writing this, the TIA is valued at approximately 16 dollars, and you can do the math…

Not all crypto projects achieve the same level of reward success as the Celestia project. Celestia rewarded its early adopters with substantial gains, demonstrating the lucrative potential of these investments. Many serious projects like Shardeum, Aleo, Massa, etc., have announced rewards for those who launch nodes in the testnet phase.

Where to Host a Node?

When it comes to hosting a node, there are two main options:

• Self-hosting: This option involves hosting the node on a physical or virtual server that you own and manage yourself.
• VPS Server: This option involves renting a flexible and easily accessible virtual server from providers like Contabo, Hostinger, Vultr.

Advantages of Self-hosting:

Self-hosting offers several advantages, including:

• Total control: You have complete control over the server and the node environment.
• Increased security: You can implement stricter security measures to protect your node.
• Better scalability: You can easily upgrade your server according to your node’s needs.

Disadvantages of Self-hosting:

However, self-hosting also has some disadvantages, such as:

• Higher costs: The cost of a physical or virtual server can be higher than that of a VPS server.
• Greater complexity: Configuring and maintaining a physical or virtual server can be more complex than a VPS server.

Advantages of VPS Servers:

VPS servers offer several advantages, including:

• Affordable cost: VPS servers are generally more affordable than physical or virtual servers.
• Ease of configuration: VPS servers are generally easy to configure and maintain.
• Great flexibility: You can choose the resources you need for your node.

Disadvantages of VPS Servers:

VPS servers also have some disadvantages, such as:

• Less control: You have less control over the server than when you own and manage it yourself.
• Lesser security: The server’s security is generally managed by the service provider.
• Limited scalability: It can be more challenging to scale your server according to your node’s needs. In my opinion, I recommend using VPS servers for their flexibility and affordable price, allowing you to efficiently launch and manage multiple nodes on the same server. When a capacity limit is reached, it’s easy to switch to a more powerful server or rotate projects, thus ensuring optimal resource and security management.

Is It Technically Complicated to Launch a Node, and Does It Take Time?

Launching a node may seem technical, but in reality, there are many well-explained tutorials available to guide you. Maintenance requires a certain level of commitment as you sometimes need to update nodes, but this task is largely manageable, especially with the assistance resources available today through Discord channels.

Setting up a node doesn’t take much time. However, to be eligible for rewards, you need to regularly monitor the state of your node and follow the project’s update announcements on the official website or Discord channels to perform updates. Nevertheless, these tasks are largely manageable and are no longer than the tasks required for airdrops.

Opportunities to Seize

Testnet phase crypto projects offer not only a chance to generate revenue but also to actively participate in the evolution of blockchain technologies. By getting involved in the testnet phases, you are trained in new technologies and support projects that interest you, enriching your experience in the crypto universe. Finally, by participating with a node on the testnet, you become eligible as a future candidate to launch a validator node on the mainnet. This activity can be very lucrative, especially if you position yourself at the beginning of the project.

What Are the Risks of Participating in Testnet Phase Projects?

Participating in testnet phase projects in the world of cryptocurrencies can involve risks. Here are the three main ones to consider:

• Time loss: Projects in development carry the risk of failure or devaluation. It is crucial to select reliable projects after thorough analysis to avoid considerable time loss.
• Financial loss: Installing a node involves costs in computer resources. Although the distribution date of the rewards is uncertain, leading to hosting expenses, these investments can be largely offset by potential gains.
• Security risk: Testnet projects can be vulnerable to attacks. Increased vigilance is recommended, particularly by using isolated machines (VM, VPS, etc.) and dedicated wallets to enhance security. It is important to note that these risks also apply to tasks performed to obtain airdrops. Staying informed of the latest trends and risks in the crypto world is important for making informed investment decisions.

Conclusion

Launching a node in a crypto project, especially in the testnet phase, is a strategic approach for those looking to invest in blockchain technology. With the right information and resources, even the technical aspects become accessible. Many serious projects like Shardeum, Aleo, Massa, etc., have announced rewards for those who will launch nodes in the testnet phase. I will soon present several tutorials to help you set up nodes in the testnet phase of serious crypto projects.

Thank you for taking the time to read this article. If you have any questions, find me on my Discord.

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