# What is a node (DaaS)

**Creating a node**

A "node" is created when someone "locks" an amount of tokens away forever. In return, this node will generate the owner perpetual rewards in the form of the token paid.

**Compounding**

Compounding is where you take your pending node rewards and re-use them to improve your node or increase the amount of nodes you own. This concept is highly effective in tokenomics as it incentivizes earnings to stay in the ecosystem.

> **Example:**
>
> I pay 10 RAINBOW for a Unicorn. This Unicorn will generate me 0.7 RAINBOW per day. 
>
> I can take my daily reward of 0.7 RAINBOW and accumulate them to make another Unicorn now I get 1.4 rainbow a day.