A masternode is a special server on the blockchain that does a lot more than just validate the transactions. Although simple nodes facilitate very important transactions, instant transactions with masternodes, an additional layer of privacy, governance, voting, and treasury administration can also happen. Before operating a masternode, participants are typically required to put up large sums of the native cryptocurrency on that network as collateral, too, which additionally incentivizes commitment and discourages bad behavior.
In its place, masternode operators receive rewards in the form of tokens. With many projects such as Dash, the function of Masternodes has become increasingly well known in securing network stability and decentralization, functionality overall. Distributing this initial native coin will be a critical factor, especially for Proof-of-Stake and hybrid blockchain systems, as they play a role in security and consensus.