This article gives a simple, quick understanding of Validators and how Masternodes are selected from them on XDC.
First, let's cover the terminology.
Terminology
- Validator — an address that has staked a minimum of 10 million XDC on the XDCValidator contract (0x00...0088).
- Masternode — a Validator in the active state, responsible for mining blocks and keeping the network alive.
- Standbynode — a Validator waiting in reserve to become a Masternode when an active Masternode drops out.
- Penaltynode — a Validator that has failed to perform its duties (e.g. an offline node) and has been temporarily removed from active duty.
Masternode Selection
Masternodes are selected from the pool of Validators by ranking them on stake amount — simply put, the top stakers get in. The maximum number of Masternodes is 108, so the top 108 Validators become active Masternodes. Every epoch (~900 blocks, ~30 minutes) the list is re-calculated.
When Validators have staked the same amount (for example, all sitting at the 10M minimum), the tie-break is decided by the sorting algorithm — the resulting order looks arbitrary but is deterministic.
A non-performing Validator (a Penaltynode) is excluded from this calculation.
You can view current staking numbers and rankings on the XDC Masternode Dashboard.
Reward Distribution
Every epoch (~900 blocks, ~30 minutes) a fixed reward of 5,000 XDC is shared among the active Masternodes — roughly 46 XDC per Masternode (90% goes to the node owner, 10% to the XDC Treasury). Over a year this works out to approximately 10% APY.
Note: The ~10% APY is not guaranteed. Rewards are tied to block production — they are only paid out as blocks are created.
Rewards are based on the fixed 10M stake only; staking more than 10M does not earn additional rewards. However, topping up above 10M can raise your ranking and therefore improve your chance of getting into the top 108 and becoming an active Masternode.
Standbynodes do not receive on-chain rewards today, but currently receive manual rewards monthly, funded by the XDC Treasury wallet. In the next protocol upgrade (ETA 2026), Standby nodes will be split into Protector and Observer nodes, and their rewards will be automated and paid out on-chain.
Penaltynodes do not receive any rewards.
FAQ
When are Masternode rewards paid?
Masternode rewards are paid automatically on-chain at the end of every epoch (~900 blocks, ~30 minutes).
When does the active Masternode set change?
At the epoch boundary — every ~900 blocks — the list is re-calculated and any changes take effect.
How are Validators with the same stake ranked?
Validators are ranked purely by stake, from highest to lowest. When several have staked the same amount (for example, all at the 10M minimum), the tie-break is decided by the sorting algorithm. The resulting order looks arbitrary and isn't based on anything a Validator controls, but it is deterministic — it's not random, and the network always arrives at the same order.
What is the limit to the number of Standbynodes?
No — there is currently no limit on the number of Standbynodes. In the next protocol upgrade (ETA 2026), Standby will be split into Protector and Observer tiers, which will have maximum limits.
How does a Penaltynode recover?
A penalised node rejoins by submitting signing transactions, which confirm it is back online and ready to resume its duties.
How do I become a Masternode from a Standbynode?
Stake additional XDC on top of your 10M so that your ranking rises into the top 108 Validators.
How do I stake on the Validator contract?
Staking requires locking 10M XDC and a KYC process. It's not covered in this article — see the Masternode Setup Guide and XDC Network Staking Portal (Governance).
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