6 Principle Indicators for Measuring Decentralization

First, we will establish six comprehensive indicators to measure decentralization: validator node decentralization, client decentralization, permissionless design, technical trade-offs, governance design, and political power decentralization.

1. Validator Node Decentralization

Counting node numbers is meaningless without protection against Sybil attacks targeting node spam. What matters is the distribution of unique validating nodes (nodes participating in block production), as both PoW and PoS networks involve them.

1. Client Decentralization

Borrowing an analogy from democratic systems: a blockchain network with only one type of client is akin to a one-party system, meaning a single client implementation can become the gatekeeper for all protocol changes or upgrades. This is one of the ways Bitcoin has been effectively controlled.

1. Permissionless Protocol Design

No matter how many nodes a blockchain network has, as long as the protocol design includes permission-required elements, its decentralization is only superficial. This includes any blockchain relying on any form of authority (permission) to operate, with notable examples being Ripple and Algorand (Algorand plans to change this).

1. Technical Trade-offs

This category focuses on design decisions that have a centralizing effect on the network, which might include high entry barriers, high node requirements, MEV, delegation/liquidity pools, PBS, etc. In these cases, the details are crucial.

1. Governance Design

On-chain governance design is vital for achieving any form of decentralization but is often overlooked. A lack of governance always leads to a power vacuum, attracting the worst individuals, leading to poor decision-making and protocol control.

1. Political Power Decentralization

The impact of political power decentralization is an inevitable part of human nature, so we need to analyze influential individuals and factions. Technically, if a founder’s cult of personality dominates, then the blockchain is essentially centralized in other aspects.

How Do 7 Major Blockchains Score in Decentralization?

Next, we will use the above six principle indicators, with each dimension scored out of 10 for a total of 60 points, to rate BTC, ETH, SOL, XRP, ADA, AVAX, and TRX:

Measuring BTC’s Decentralization:

8/10; the second-highest number of validators;

1/10; Core client dominance;

10/10; no permission-required elements;

5/10; PoW, no native delegation;

0/10; no on-chain governance;

5/10; the wizard faction is growing (Foresight News note, supporters of engraving NFTs on the Bitcoin blockchain);

BTC Total Score: 29/60

Measuring ETH’s Decentralization:

10/10; the highest number of validating nodes;

10/10; the most diversified client ecosystem;

10/10; no permission-required elements;

7/10; no native delegation;

0/10; no on-chain governance;

6/10; a vast ecosystem with many different factions;

ETH Total Score: 43/60

Measuring SOL’s Decentralization:

7/10; a large number of validating nodes;

7/10; a diversified client ecosystem;

10/10; no permission-required elements;

2/10; PoH, high node requirements;

3/10; plans for on-chain governance;

3/10; a large ecosystem but only a few factions;

SOL Total Score: 32/60

Measuring XRP’s Decentralization:

1/10; a low number of unique validators;

0/10; a single client;

0/10; permission-required elements present;

3/10; uses a validator list;

0/10; no plans for on-chain governance;

4/10; a small ecosystem but strong factions;

XRP Total Score: 17/60

Measuring ADA’s Decentralization:

7/10; a high number of validators;

1/10; a single client;

10/10; no permission-required elements;

8/10; native delegation;

6/10; upcoming on-chain governance;

3/10; little resistance to IOHK (Foresight News note, IOHK is the company behind Cardano);

ADA Total Score: 35/60

Measuring AVAX’s Decentralization:

5/10; an average number of unique validators;

1/10; a single client;

10/10; no permission-required elements;

8/10; native delegation;

8/10; limited on-chain governance;

3/10; a vast ecosystem but few factions;

AVAX Total Score: 35/60

Measuring TRX’s Decentralization:

1/10; a low number of unique validators;

1/10; a single client;

10/10; no permission-required elements;

2/10; enforced delegation;

9/10; comprehensive on-chain governance;

3/10; a medium ecosystem, founder-dominated;

TRX Total Score: 26/60

This model for measuring the degree of decentralization in blockchain networks is simplified. Cyber Capital previously used over 50 parameters to derive a decentralization score and also weighted factors individually. However, this simple yet flawed model eliminates a lot of redundancies.

Despite the model’s simplicity, I still maintain that ETH is currently the most decentralized blockchain, with SOL being more decentralized than BTC.

Objective parameter measurement surpasses sentiment and cult-like thinking, even if this makes many uncomfortable, as they are immersed in the fantasy of perfect decentralization. In reality, decentralization is a multifaceted field, with no single blockchain dominating in all aspects.

In summary, if you take decentralization seriously, it needs to be measured across multiple dimensions.

Disclaimer：

1. This article is reprinted from [marsbit]. Forward the Original Title‘排排坐，7 大公链的去中心化程度各能得几分？’.All copyrights belong to the original author [Justin Bons]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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