In the decentralized landscape of Web3, ownership of digital assets has been facilitated by unique NFTs that represent an underlying set of code or smart contracts. NFT stands for "Non-Fungible Tokens" and are unique and irreplaceable tokens of value just as the name suggests. Because each NFT is one of its kind, they are a great technology to digitally denote the ownership of any item by owning and minting that NFT on a blockchain.

This article discusses in-depth the recent use of NFTs by web3 projects to facilitate the sale of nodes on their blockchain as a method of raising capital to support and grow their projects. In addition to being a new alternative to fundraising, node sales also offer significant benefits for both the investors and to enhance the decentralization of the blockchain. Here is an overview of what will be discussed in the subsequent article:

- A detailed understanding of NFTs

- What are nodes? Different classes of nodes

- A case example of Node sales

- How running a node can be profitable

- Conclusion

NFT stands for "Non-Fungible Token" and is a method of proving ownership on a Blockchain using a token. It helps to break the term down to easily understand the concept -

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As Naval Ravikant put it in one of his interviews,

````"You can do anything with NFTs that you can do with a web page, but on top of it, you can have scarcity and ownership and allocation and rights associated with it. This is really big."````

This highlights 3 important qualities of NFTs. -

The blockchain ensures that the ownership and authenticity of an NFT are transparent and verifiable. This prevents counterfeiting and assures buyers that they are purchasing a genuine, one-of-a-kind asset, adding to its potential investment value.

Expanding Ecosystem: The NFT market has seen rapid growth, with increasing participation from artists, musicians, brands, and even traditional auction houses. This expanding ecosystem indicates a rising interest and acceptance of NFTs as a legitimate form of digital ownership and investment.

Mainstream Adoption: High-profile sales and endorsements by celebrities and influencers have brought NFTs into the mainstream spotlight. As more people become aware of and interested in NFTs, the market’s potential for growth increases, offering early investors substantial returns.

Interoperability and Integration: NFTs can be used across various platforms and virtual environments, such as in gaming, virtual real estate, and metaverse applications. This interoperability enhances their utility and can increase demand for specific NFTs that offer functional benefits or exclusive access within these ecosystems.

Royalties and Smart Contracts: NFTs often include smart contract features that allow creators to earn royalties on secondary sales. This ongoing revenue stream can incentivize creators to produce high-quality, desirable NFTs, which in turn can attract more investors looking for assets with long-term value potential.

In essence, NFTs are simple forms of smart contract that are “minted” on a blockchain as a representation of ownership of a digital or physical item. As with everything recorded on a blockchain, NFTs once minted will permanently remain on the blockchain and all transactions associated with that NFT will be recorded.

Such a quality of NFTs opens up doors for numerous opportunities where NFTs can be used to make our lives simpler, more efficient and even help to generate profits for many. In a similar light, multiple projects have utilized this quality of NFTs to sell the ownership of their nodes to individuals interested in purchasing and running a node in order to earn rewards.

Such a technique of fundraising is greatly different from the normal venture capital route where a select group of wealthy individuals receive equity in return for capital to support the growth of a project. Not only are decentralized fundraising techniques like ICO (Initial coin offering), IEO (Initial exchange offering), and now “node sale” revolutionary in raising funds for the startups, but they also completely change the investment dynamics for normal individuals wanting to be a part of their favorite upcoming startup. In a node sale, three main benefits are observed.

By offering the nodes, projects benefit by direct funding from node sales, individuals purchasing the nodes receive rewards for maintaining and properly running the node, and the overall decentralization of the native blockchain is significantly enhanced (the more number of nodes means a greater and more spread out network for verification.

This enhances the network’s security against potential hacks and thus increases the blockchain’s “Nakamoto co-efficient” rating (decentralization scale), making it a more competent and desirable blockchain in the market.

*How would it all work? Quite simply* -

Now onto the second focus of this article, Nodes.

To begin with, it is important to understand the fundamental nature of nodes and the different types of nodes that primarily run on blockchains today -

Node structures are primarily classified within 2 types:

- Full nodes and

- Light or partial nodes.

In a complex blockchain system, nodes play a variety of important roles and hence different nodes are deployed for various purposes. Below we understand the different types of nodes and their intrinsic functions in depth:

Full nodes are analogous to servers in a blockchain network. The primary function of full nodes is to store and maintain the complete record of all transactions that have ever taken place on the blockchain. Full nodes are considered the servers of a blockchain due to their importance within the ecosystem. Full nodes play a primary role when deciding an amendment in the protocol of the blockchain. Their involvement is imperative in ensuring the blockchain’s integrity and security:

Role in Governance: Full nodes participate in the governance of the blockchain. Any upgrades or changes to the blockchain typically require the approval of a majority of full nodes. This means full nodes have voting power and can influence the direction of the blockchain.

Forks: Sometimes, a significant number of full nodes may agree on a modification that doesn’t reach the required majority consensus. For instance, if 55% of the nodes support a change while 45% do not, this could lead to a hard cryptographic fork, creating two separate blockchains in which the older blockchain continues to follow the old rules and the rest of the dissenting members form a new blockchain with the new rules.

These nodes have a limited storage capacity. They download and maintain the blockchain ledger up to a certain size. When the storage limit is reached, they delete the oldest blocks while retaining its essential metadata to preserve the blockchain’s intrinsic properties. The primary use case of pruned nodes is associated with its ability to be efficient and precise. Pruned nodes are designed to save disk space and naturally require less storage and processing capacity. By leveraging their ability to remove old blocks, pruned nodes can help reduce storage burden on the network while still supporting its security and functionality.

These nodes store the entire blockchain without any pruning. Archival nodes primarily differ from pruned notes in their capacity to store large amounts of data which naturally requires higher amounts of storage and processing abilities. Archival nodes also differ in their utility as compared to prune nodes. Because archival nodes store all of the past data, they are often required for the purposes of auditing or data analysis.

They are further divided into:

Authority Nodes: Used in permissioned blockchains where certain entities control access and authorize new nodes to join the network. The primary setback of authority nodes is its centralized nature. In an authority node based ecosystem, the identity of node controllers is visible to everyone and a few select nodes hold the power to make significant decisions on behalf of the entire blockchain. Decentralization in this ecosystem is delivered by keeping open and accessible visibility of all the actions of these authority nodes in the network. A prominent example of this system is the membership Service Provider in Hyperledger Fabric.

Miner Nodes: Specific to Proof-of-Work (PoW) blockchains, these nodes mine new cryptocurrency or validate transactions by solving complex mathematical problems. The process requires significant computational power and the miners are rewarded with newly minted cryptocurrency or transaction fees. These nodes play a crucial role in the effective daily operation of the blockchain ecosystem. A good example of such an ecosystem is Bitcoin’s Proof of Work based blockchain.

Masternodes: These nodes do not create new blocks but maintain the blockchain ledger and validate transactions. Staking of assets in the form of local coins is required to incentivize masternodes to act legitimately.

Staking Nodes: Used in Proof-of-Stake (PoS) blockchains, these nodes validate transactions by staking their coins as collateral and are rewarded based on their stake and other criteria like coinage or time spent on the network. In a PoS ecosystem, validators are chosen randomly and on factors like the age of their coinage. The Ethereum blockchain utilizes Proof of Stake as its fundamental consensus mechanism.

Light nodes store only the essential data needed for daily operations, such as block headers, without holding the entire blockchain. Light nodes act to ensure efficiency within the blockchains by providing quick processing of tasks that are small and less computationally demanding.

They provide quicker access to data for routine transactions but rely on full nodes for complete information and block validation. One can think of light nodes as a local server which only carries limited and relevant information and derives more data from the larger server upon request. Light nodes are also known as Simplified Payment Verification (SPV) nodes and are ideal for users with limited storage and processing capabilities.

Super Nodes: Found in specific blockchains, these nodes perform specialized tasks such as implementing protocol changes or maintaining network rules.

Lightning Nodes: Designed to reduce network congestion and transaction delays, lightning nodes facilitate instantaneous, off-chain transactions, which are later settled on the main blockchain, lowering transaction costs and increasing efficiency. Bitcoin lightning is an example of a layer 2 lightning node that holds significant potential in reducing transaction time and cost of Bitcoin users.

These diverse types of nodes each play a critical role in maintaining the blockchain’s functionality, security, and scalability, ensuring a robust and decentralized network. In the next section, the article explores Cluster Protocol’s node structure to deliver on its goals of large scale compute sharing.

A quick analysis of Node setup will help beginners understand the nature and complexity of setting up and running a node, and will help serious blockchainers to get started on their node journey.

A brief understanding of layers within a Node is important to understand the crucial role layers play in the Node and the overall blockchain. These layers act together to make every Node within a blockchain ecosystem functional.

Application Layer: This is where the blockchain’s specific functionalities are implemented, such as smart contracts, APIs for dApps, and user interfaces for interacting with the blockchain. These are usually layer 3 solutions that interact with the underlying blockchain ecosystem. A good example of this would be Ethereum’s smart contracts.

Consensus Layer: Manages the process by which the network agrees on the current state of the blockchain. Some consensus algorithms include Proof of Work (PoW), Proof of Stake (PoS), and others.

Networking Layer: Handles main communication with other nodes in the blockchain network. Uses protocols like TCP/IP and P2P (peer-to-peer) networking to ensure nodes can discover and connect with each other. Essentially the spider web of the blockchain keeping all nodes together.

Data Storage Layer: Responsible for storing the blockchain data, which includes the complete ledger of transactions, blocks, and possibly additional metadata. As discussed above, these layers are important in Archival full nodes where complete history of all transactions is stored.

Choose the node for purchase: Choose a node sale that suits your interests and budget, taking into account the project’s reputation and the specific type of node being offered. Popular types of nodes include validator nodes and data nodes.

Read the requirements: Familiarize yourself with the technical specifications and financial obligations needed to participate.

Purchase: Complete the necessary registration process on the project’s official website or platform and acquire a node license (NFT) during the designated Node Sale period.

Set up node: Obtain the requisite hardware components, install the necessary software, and establish a connection to the network.

Run the node: Commence processing transactions and actively contribute to maintaining the network’s operations.

Node maintenance: Regularly update your node’s software and hardware, while monitoring its performance and ensuring its stability.

Earn rewards: Earn rewards based on your node’s performance metrics, such as transaction fees or tokens distributed by the network.

The blockchain infrastructure is run by two primary types of nodes and a user can purchase either of the types during a node sale. The main difference between the two is simply in their functionality. Validator nodes as the name suggests work to validate transactions on a blockchain whereas data nodes, also deemed as worker nodes, simply provide the storage to store the data.

Validator nodes, handle the authentication and secure processing of data flowing in and out of a decentralized storage layer. They play a critical role in maintaining the integrity and security of the decentralized infrastructure and are therefore rewarded with a high rate of token emissions. Running a validator node requires a node license, which is non-transferrable for the first year, after which it can be freely traded.

Worker nodes provide the actual data storage space needed for the network. Unlike validator nodes, they often do not require a license to operate but consequently receive lower rewards. While they are essential for storing data, they do not handle the high-security tasks that validator nodes perform.

Both types of nodes are integral to the network’s functionality. Validator nodes ensure secure and authenticated data processing, contributing to the network’s overall security and integrity, while worker nodes manage data storage, supporting the network’s infrastructure. As a user, you can purchase either of the nodes to suit factors like resources availability, profit expectations and the level of involvement desired within the ecosystem.

Now with a comprehensive understanding of NFTs, nodes and how projects facilitate node sales, a viable question is, can running a node be profitable? The section below delves into why running a node can be a great source of passive income all while actively being part of the ecosystem in which you run the node.

*How you can easily setup a blockchain node -*

Sign Up:

- Visit the platform of your choice and create an account.

- Complete the necessary verification steps if required.

Select a Node Type:

- Choose the blockchain network and node type you want to set up (e.g., Ethereum Validator Node).

- Review the pricing and features of the node.

Purchase the Node:

- Make the payment using the available payment methods (fiat or cryptocurrency).

- Ensure you receive confirmation of your purchase and access to the necessary software and keys.

System Requirements:

- Ensure your computer meets the minimum hardware requirements (e.g., multi-core CPU, 16GB+ RAM, SSD with sufficient storage, stable internet connection).

Install Dependencies:

- Install necessary software such as Docker, if the node requires it.

- For most blockchain nodes, you will need specific versions of libraries and runtime environments (e.g., Node.js, Python).

Download Software:

- Log in to your account on the platform.

- Navigate to the node setup section and download the provided node software package.

Extract and Install:

- Extract the downloaded package to a preferred directory on your computer.

- Follow the installation instructions provided by the platform. This typically involves running a setup script or executable file.

Configuration Files:

- Locate the configuration files in the extracted directory (e.g., config.json).

- Edit the configuration files to include your node’s credentials, network settings, and other parameters provided.

Environment Variables:

- Set up any required environment variables on your computer. This might include API keys, database connections, and network ports.

Initial Sync:

- Start the node software by running the command specified in the documentation (e.g., ./run-node.sh).

- Allow the node to synchronize with the blockchain. This process can take several hours to days depending on the blockchain and your internet speed.

Monitor Progress:

- Use monitoring tools or dashboards to check the synchronization progress.

- Ensure your computer remains on and connected to the internet during this process.

Firewall and Security Settings:

- Configure your firewall to allow necessary ports and block unauthorized access.

- Apply security patches and updates regularly.

Backup and Redundancy:

- Regularly back up your node configuration and data.

- Consider setting up redundancy if you plan to run a mission-critical node.

Start the Node:

- Once synchronized, keep the node running using the provided start commands (e.g., ./start-node.sh).

Monitor and Maintain:

- Regularly monitor the node’s performance using the available tools.

- Update the node software as required to ensure compatibility and security.

*You can also easily setup a node using NodeOps-*

Prerequisites:

- Checker Node Key License.

- EVM Wallet (We Support MetaMask, OKX Wallet, Coinbase Wallet & Many others powered by Rainbow)

- Some $ETH on Arbitrium One for Gas Fees to perform delegation transaction.

Steps:

- Sign In To NodeOps Console.

- Select Aethir & Node Type As Checker.

- Connect Your Wallet Holding the Checker Nodes & Click on Fetch NFT.

- Pay The Subscription Fees via your favorite Network & respective Token.

- Your Order is now been executed. Once you are directed to your NodeFolio, you must see a section mentioning Action Required

- Delegate your Licenses to the dedicated Burner Wallet / Address

- Copy The Public Key From the Above Step to Proceed to Delegate on your Aethir Dashboard.

- Headover to https://app.aethir.com/licenses🔗, Click on Delegte & Paste the Respective Address

- Submit the Delegate Transaction.

*That’s It, Within 10–15 seconds, your nodes should be up and running which you can check on both NodeOps Console & the Aethir Dashboard. You Should See Something Like This -*

Aethir Dashboard Licenses

By providing a detailed explanation of NFTs and nodes, a preliminary understanding of node sales can be established. The article above explained NFTs and nodes in detail to explain to the readers how projects in the web3 space are utilizing the two technologies to not only raise funds, but also provide a new proposition to the market.

The proposition that decentralization can disrupt the potential of projects to raise large sums of money by providing direct utility value to its consumer base. Node sales also offer a great amount of unique value to consumers who are passionate about a particular project and would like to benefit from its growth. Using such a win-win model, node sales facilitated using NFTs also enhance the decentralization of the native blockchain’s ecosystem, further enhancing its reputation in the market. All of these factors have contributed to the recent rise in the popularity of node sales from various DePIN based projects, and reports suggest it is only likely to increase.

Cluster Protocol is a decentralized infrastructure for AI that enables anyone to build, train, deploy and monetize AI models within few clicks. Our mission is to democratize AI by making it accessible, affordable, and user-friendly for developers, businesses, and individuals alike. We are dedicated to enhancing AI model training and execution across distributed networks. It employs advanced techniques such as fully homomorphic encryption and federated learning to safeguard data privacy and promote secure data localization.

Cluster Protocol also supports decentralized datasets and collaborative model training environments, which reduce the barriers to AI development and democratize access to computational resources. We believe in the power of templatization to streamline AI development.

Cluster Protocol offers a wide range of pre-built AI templates, allowing users to quickly create and customize AI solutions for their specific needs. Our intuitive infrastructure empowers users to create AI-powered applications without requiring deep technical expertise.

Cluster Protocol provides the necessary infrastructure for creating intelligent agentic workflows that can autonomously perform actions based on predefined rules and real-time data. Additionally, individuals can leverage our platform to automate their daily tasks, saving time and effort.

🌐 Cluster Protocol’s Official Links:

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