# Masternodes

XDN Masternodes are a fundamental part of the XDN protocol layer and are responsible for processing and validating transactions as well as approving and fulfilling cross-chain protocols. 

Running a masternode requires a collateral of 2,0000,000 XDN and are rewarded in the following ways:

1. Block rewards -- A percentage of new block rewards are paid to Masternodes by a serialized method which cycles through the list of active nodes.

## How to Setup Your Masternode <a href="#how-to-setup-your-ghostnode" id="how-to-setup-your-ghostnode"></a>

You can set up an XDN Masternode in 5 minutes with our partners [AllNodes](https://www.allnodes.com/xdn/host) and [Ihostmn](https://ihostmn.com/index.php?ref=bMnD8mZG)

There are 2 sides involved to successfully operate Masternodes:

### **Server Side** <a href="#server-side" id="server-side"></a>

This is where all of the work is done. You can either setup and maintain your own server using a VPS, or you can pay a hosting provider to keep your node updated and running smoothly for you. Coins are **not stored** on the server side.

You can find instructions setting up the server side here: <https://github.com/DigitalNoteXDN/DigitalNote-2>

### **Client Side** <a href="#client-side" id="client-side"></a>

This is your supported XDN wallet where your collateral is stored and remains under your full and complete control.

Instructions for each individual wallet can be found on the following page: [QT Wallet MN setup](/support/masternode-setup/client-side/qt-wallet.md)


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