Sitting in a row, how many points can each of the 7 major public chains score in terms of decentralization?

Written by: Justin Bons

Compiled by: Frank, Foresight News

What is decentralization? How can we truly measure it? Too many projects use centralization as a cover to justify their mediocrity. In this article, we will provide a true decentralization rating for BTC, ETH, SOL, XRP, ADA, AVAX, and TRX.

6 Key Metrics for Measuring Decentralization

First, we will identify six comprehensive metrics for measuring decentralization: decentralization of validating nodes, decentralization of clients, permissionless design, technical trade-offs, governance design, and political power decentralization.

1. Decentralization of Validating Nodes

Counting the number of nodes is meaningless, as there is no protection against node spam attacks. What matters is the distribution of unique validating nodes (nodes participating in block production), as they are involved in both PoW and PoS.

2. Decentralization of Clients

Using 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 act as the gatekeeper for all protocol changes or upgrades. This is one of the ways Bitcoin is effectively controlled.

3. Permissionless Protocol Design

Regardless of how many nodes exist in a blockchain network, if there are elements in the protocol design that require permission, then decentralization is merely superficial. This includes any blockchain that relies on any form of authority (permission) to operate—famous examples are Ripple and Algorand (Algorand plans to change this).

4. Technical Trade-offs

This category of technical trade-offs focuses on design decisions that have a centralizing impact on the network. This may include high entry barriers, high node requirements, MEV, delegation/liquidity pools, PBS, etc. In these cases, details are crucial.

5. Governance Design

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

6. Political Power Decentralization

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

How Do the 7 Major Public Chains Score?

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

Measuring the Decentralization of BTC

1. 8/10; second highest number of validators;
2. 1/10; Core client dominance;
3. 10/10; no permissioned elements;
4. 5/10; PoW, no native delegation;
5. 0/10; no on-chain governance;
6. 5/10; the wizard faction is growing (Foresight News note, supporting those who inscribe NFTs on the Bitcoin blockchain);

Total score for BTC: 29/60

Measuring the Decentralization of ETH:

1. 10/10; highest number of validating nodes;
2. 10/10; most diverse client ecosystem;
3. 10/10; no permissioned elements;
4. 7/10; no native delegation;
5. 0/10; no on-chain governance;
6. 6/10; large ecosystem with many different factions;

Total score for ETH: 43/60

Measuring the Decentralization of SOL:

1. 7/10; numerous validating nodes;
2. 7/10; diversified client ecosystem;
3. 10/10; no permissioned elements;
4. 2/10; PoH, high node requirements;
5. 3/10; plans for on-chain governance;
6. 3/10; large ecosystem with only a few factions;

Total score for SOL: 32/60

Measuring the Decentralization of XRP:

1. 1/10; few unique validating nodes;
2. 0/10; single client;
3. 0/10; has permissioned elements;
4. 3/10; uses a list of validating nodes;
5. 0/10; no plans for on-chain governance;
6. 4/10; small ecosystem but with strong factions;

Total score for XRP: 17/60

Measuring the Decentralization of ADA:

1. 7/10; many validating nodes;
2. 1/10; single client;
3. 10/10; no permissioned elements;
4. 8/10; native delegation;
5. 6/10; on-chain governance is about to be implemented;
6. 3/10; little resistance to IOHK (Foresight News note, IOHK is the development company for Cardano);

Total score for ADA: 35/60

Measuring the Decentralization of AVAX:

1. 5/10; average number of unique validating nodes;
2. 1/10; single client;
3. 10/10; no permissioned elements;
4. 8/10; native delegation;
5. 8/10; limited on-chain governance;
6. 3/10; large ecosystem but few factions;

Total score for AVAX: 35/60

Measuring the Decentralization of TRX:

1. 1/10; low number of unique validators;
2. 1/10; single client;
3. 10/10; no permissioned elements;
4. 2/10; forced authorization;
5. 9/10; comprehensive implementation of on-chain governance;
6. 3/10; medium ecosystem, founder-dominated;

Total score for TRX: 26/60

This model for measuring the decentralization of blockchain networks is highly simplified. In previous research, Cyber Capital used over 50 parameters to derive a decentralization score and weighted factors individually. However, this simple yet flawed model can save a lot of unnecessary discussion.

Despite the model's simplifications, I still maintain that ETH is currently the most decentralized blockchain, and SOL is more decentralized than BTC.

Objective parameter measurement outweighs emotional and cult-like thinking, even though this may unsettle many who are immersed in the fantasy of perfect decentralization. In fact, decentralization is a multifaceted domain, and no single chain can excel in all aspects.

In summary, if you take decentralization seriously, you need to consider multiple dimensions to measure it.