Terra Decentralization — July 2021
Introduction
Welcome! Welcome! Welcome!
This will be a recurring piece, updated monthly, discussing the evolution of Terra blockchain decentralization. Too long didn’t read versions will be posted on Twitter @TerraValidator
One housekeeping item: We are here to promote the Terra community in positive, constructive, fact-based ways ONLY. That being said mistakes can happen. If we make a mistake, misquote, or misrepresent something please let us know and we will work to set the record straight quickly.
Our mission is to promote knowledge and community conversation around Terra Validators.
· What is good for the community?
· What is bad for the community?
· How do validators work?
· What do you maybe not know about YOUR validator?
Before we go any further, we need to provide a hat tip to dedicated Terra community member, Joseph. His seminal post from June 2021 (available here) helped spur progress towards decentralization as well as inspire this work.
The landscape of Terra decentralization has undergone a tremendous overhaul for the better in the last 30 days. Here are a few examples of what’s changed…
New Validators
In June and July 29 new validators were created, filling ALL 130 network validator positions for the first time in the history of Terra. This is a very positive step for Terra. While some of these validators may have been created in effort to farm the upcoming Nebula airdrop
there are signs many of these new validators are genuinely here for the long term. Here are some statistics about the 29 new validators that make us think this way.
Statistics regarding the 29 new validators which Joined Terra in June & July:
· 14 have zero validator commissions
· 13 voted on proposal 110
· 4 run Tequila testnets*
· 1 runs a Bombay testnets*
· 4 appear to be related to projects**
· 2 appear to be TFL owned
*It can be challenging to determine which validators run testnets. Our metrics were based on validators which share a name with a testnet validator.
**If there are additional new validators related to projects please reach out and the table will be updated.
Voting Power Distribution
On June 29th Joseph published the distribution table below showcasing less than optimal decentralization of the Terra network.
Joseph’s graphic has been borrowed for this article only as a baseline. Future articles will cite our own prior work.
One month later things look a lot different…
While the shape of these two graphs may feel similar there are notable improvements from the perspective of decentralization.
· The number of validators with greater than 25MM delegation has decreased from three to two.
· The number of validators with between 10MM and 15MM delegations has not materially changed.
· The size of the delegations to validators between 10MM and 15MM has not materially changed.
· The total count of validators has increased from 107 to 130.
This leads us to the marked improvement in decentralization. The majority of the delegations which have moved from the top 3 validators have moved to the smallest validators on the network including many which did not exist sixty days go.
Next, we will talk about how we can quantify some of the general patterns we are seeing to quantify Terra’s progress towards decentralization over time.
Gini
A useful way to think about the decentralization of blockchains is by using an economics tool called the Gini coefficient. The Gini coefficient is a metric usually used to describe the level of income inequality in various countries. A Gini coefficient of 1 would indicate economic resources are completely centralized (i.e. perfect inequality) whereas a Gini coefficient of 0 would indicate economic resources are evenly distributed to all participants (i.e. perfect equality).
Currently the Terra blockchain has a Gini coefficient of 0.70
For comparison, the highest Gini coefficient of any country tracked by the World Bank is South Africa at 0.63. The United States has a Gini coefficient of 0.41 and South Korea has a Gini coefficient of 0.31. Using the Gini coefficient of developed economies begins to provide a useful framework for what we should want to see in the future of Terra’s decentralization.
Unfortunately, we don’t have the benefit of prior period Gini measurements of the Terra blockchain as a basis of comparison. However, we know from the distributions of the graphs above things are moving in the right direction.
In conclusion, it is incredible to see the pace of development on the Terra blockchain, not just in terms of new projects but also in terms of expanding network resources and stability. Checkback each month to see new developments in Terra decentralization!
Or follow along on Twitter @TerraValidator
A to do item for the TVWT Team (Terra Validator Watchtower) is to look at the Gini coefficient of other PoS blockchains to see how Terra stacks up! Look forward to more content soon!
