Collateral Requirements

How collateral works, locking mechanisms, and investment considerations.

6 min read

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Collateral Requirements

Operating a Flux node requires locking a specific amount of $FLUX as collateral. This collateral serves as a financial commitment that aligns node operators' incentives with the health and reliability of the network. Unlike proof-of-stake systems where tokens are delegated to a validator, Flux collateral is locked in a standard wallet transaction — you retain full custody of your coins at all times, and no third party ever has access to your funds.

Collateral Amounts by Tier

Node Tier	Collateral Required	Description
Cumulus	1,000 FLUX	Entry-level tier for operators with modest hardware and capital
Nimbus	12,500 FLUX	Mid-level tier offering a strong balance of investment and reward
Stratus	40,000 FLUX	Premium tier for enterprise-grade hardware and maximum rewards

How Collateral Works on Flux

Flux collateral is not staking in the traditional sense. Instead, it works through the UTXO (Unspent Transaction Output) model inherited from Bitcoin. To lock collateral, you send the exact required amount of FLUX to your own address in a single transaction, creating a UTXO of precisely the right amount. This UTXO is then referenced in your node's start transaction on the blockchain.

The key distinction is that your FLUX never leaves your wallet and is never sent to a smart contract or third party. The collateral UTXO simply sits in your address, and the blockchain verifies its existence each time your node is checked. As long as that specific UTXO remains unspent, your node is considered properly collateralized.

The collateral must be a single UTXO of the exact required amount. For example, if you want to run a Cumulus node, you must have exactly 1,000 FLUX in one transaction output — not two UTXOs of 500 FLUX each. If you have your FLUX spread across multiple transactions, you will need to consolidate them into a single output first.

Locking Collateral with Zelcore or SSP Wallet

The two officially supported wallets for managing Flux node collateral are Zelcore and the newer SSP Wallet (Secure, Simple, Powerful). Both wallets have built-in node management features that simplify the collateral locking process.

1
Install and Set Up Your Wallet
Download Zelcore from zelcore.io or SSP Wallet from the official Flux GitHub. Create a new wallet or import an existing one. Enable the Flux asset within the wallet.
2
Ensure Sufficient Balance
Transfer enough FLUX to your wallet to cover the collateral amount plus a small transaction fee (typically 0.01 FLUX). Make sure you have slightly more than the exact collateral amount to cover fees.
3
Create the Collateral Transaction
In Zelcore, navigate to the Flux Apps section and select "Node Management." Choose your desired tier and click "Create Collateral Transaction." The wallet will automatically construct a transaction sending the exact collateral amount to one of your own addresses. In SSP Wallet, the process is similar via the built-in node setup wizard.
4
Wait for Confirmations
The collateral transaction must receive at least 2 confirmations on the Flux blockchain (approximately 4 minutes) before you can start your node. Some operators wait for 10+ confirmations for extra assurance.
5
Start Your Node
Once confirmed, use the wallet's node management interface to broadcast the node start transaction, which references your collateral UTXO and your node's identity key. Your node will then appear on the network and begin queuing for rewards.

What Happens If Collateral Is Moved

If you spend, move, or otherwise interact with the UTXO that serves as your collateral, your node will immediately lose its status on the network. This means:

•Your node will stop receiving rewards and will be removed from the reward queue.
•You will need to create a new collateral UTXO and re-register the node.
•Your node's position in the reward queue resets — you start at the back of the line.
•Any pending rewards that had not yet been paid out are not lost, but future rewards stop immediately.

Be extremely careful when making transactions from a wallet that holds node collateral. If you accidentally include the collateral UTXO as an input in another transaction (for example, when sending FLUX to an exchange), your node will go offline. Always use a separate address or wallet for day-to-day transactions, and keep your collateral wallet untouched.

Unlocking Collateral

Since collateral is not locked in a smart contract, there is no unbonding period. To unlock your collateral, you simply spend the UTXO — send it to another address, an exchange, or consolidate it into a different transaction. The moment the UTXO is spent, your node goes offline and the FLUX is fully liquid. This gives Flux operators significantly more flexibility compared to proof-of-stake networks that impose 7-28 day unbonding periods.

Investment Considerations

The real-world cost of running a Flux node depends on the current market price of FLUX. The table below illustrates the dollar-equivalent collateral cost at various price points:

FLUX Price	Cumulus (1,000)	Nimbus (12,500)	Stratus (40,000)
$0.05	$50	$625	$2,000
$0.10	$100	$1,250	$4,000
$0.25	$250	$3,125	$10,000
$0.50	$500	$6,250	$20,000
$1.00	$1,000	$12,500	$40,000
$2.00	$2,000	$25,000	$80,000

When evaluating the investment, remember that collateral is not consumed — it remains your property and can be recovered at any time by shutting down the node. Your actual costs are the hardware, electricity, internet, and the opportunity cost of having FLUX locked rather than traded. Many operators view collateral as a long-term investment in both the network and the FLUX token itself.

Understanding collateral mechanics is fundamental to operating a Flux node. The UTXO-based system provides full self-custody, instant liquidity when needed, and a clean economic model that ensures all operators have meaningful skin in the game. Before setting up your node, make sure your collateral transaction is correctly formed and that you have a plan to keep that UTXO untouched for the duration of your node's operation.

Collateral Requirements