Passive income. Sweet words to anyone’s ear. A concept that makes money do all the work but you get to reap the rewards. That is one of the incentive's of owning your own masternode. So, why aren’t people locking up all their assets in a masternode on networks like DASH?

The reason is that as in most things in nature, there is a point of equilibrium. In theory, there can be as many masternodes in a network as there are coins circulating in a network. So then, at what point does it become too many masternodes on the network?

There are three factors that go into what your masternode reward will be: 1. How many masternodes there are on the network 2. How many coins are in circulation 3. Block height.

During the early stages of a masternode cryptocurrency’s life, there is a larger supply than demand. So, the price per coin is low enough that the cost of entry is at a point that makes it easy to set up your own masternode. How do you get interested in getting people to set up a masternode on your newly formed blockchain? Incentivize them with a large ROI that rewards early adopters, but later on in the blockchain’s life cycle the ROI will decrease.

Time goes on, your blockchain is gaining traction, demand rises therefore causing an increase in price. Eventually it hits a point of equilibrium. Now the cost of setting up a masternode for new users doesn’t outweigh the benefits. Those who are interested in your coin would rather play the market instead of setting up a masternode.