Decentralization is the foundation of blockchain technology, promising a more resilient and censorship-resistant alternative to centralized systems. But are the industry’s leading protocols as decentralized as they claim to be?
Decentralization can be measured across multiple dimensions. At first glance, the number of entities participating in the validation or block-mining process of a network is one of the simplest and most apparent metrics. However, other factors also contribute to the enhancement or erosion of decentralization:
Hosting facilities: Where nodes are hosted directly impacts who controls them. If thousands of entities host nodes on facilities controlled by one or few entities, it puts the network at risk. For example, Hetzner unilaterally shut down 40% of Solana validators in 2022.
Jurisdiction: Geographic location is relevant because it provides diversification of risk related to unfavorable or unpredictable regulatory action.
Client Software: A blockchain with nodes
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