Comparing Decentralization of Popular Cryptonetworks
Most blockchains are decentralized but in their own way…
Back to our decentralization series: two weeks ago we looked at the three vectors along which decentralization can take place and we saw that all three are necessary to create a rich, open, and inclusive ecosystem. These vectors are:
- Infrastructure
- Software
- People i.e Governance
This week we’ll take a stab at evaluating some of the better known blockchain platforms using the above framework. This proposal is by no means final and is instead designed to spark discussion. Practically each box in this table deserves its own debate and post, so would love to hear thoughts, questions, and comments!
Notes:
- The consensus algorithm (used for writing the “truth” to the blockchain) is highlighted under the “infrastructure” column because it plays a role in barrier to node entry.
- Consensus algorithms explained: POW: Proof of Work | POS = Proof of Stake | DPOS: Delegated Proof of Stake
Some takeaways
- Ripple’s centralized governance means there’s no incentive for developers to build on the platform even if it’s open source.
- Ethereum and Tezos favor decentralization over throughput, whilst EOS, with a limited number of nodes, is favoring throughput over decentralization. DFINITY and RChain are tackling both using novel cryptographic and computing approaches.
- Most projects are built on similar infrastructures and software architectures, where they differ is in their approach to governance i.e. decision making. Legacy projects, Bitcoin and Ethereum, don’t have any formal process, RChain is taking an approach that has worked well in other industries, and Tezos, DFINITY, and EOS are experimenting with new partially digitized mechanisms. It’ll be interesting to see how it all plays out!
From around the web
Minimum Viable Decentralization (Medium) by John Backus — Highlights importance of balance between decentralization and good UX. A solution should decentralize enough to resist censorship but not too much that it unnecessarily hurts user experience. The theory is brought to life using web 2.0 P2P file sharing as example (for a more detailed explanation see the previous post Resistant protocols: how decentralization evolves).
The Tezos Experiment (Medium) by Meltem Demirors — Overview of the network’s unique characteristics around network topology and governance.
Methodologies for measuring project health (Nadia Eghbal blog) — Interesting post on ways to asses an open source network’s community engagement and code development.
What If We’re Wrong? Steelmanning The Case Against Crypto (Building Blockchain Tech blog) — Reflections on Augur’s assassination markets and decentralization’s dark sides.
Drinking from the Crypto Firehose (avc.com) — Fred Wilson refers to Carlota Perez’s “Financial bubbles and technological revolutions” framework (one of my favorites) to explain the current crypto project frenzy.
Up to Two-Thirds of Bitcoin Transactions Have No Economic Value (Bloomberg) — Interesting fact that impacts bitcoin valuation (if that’s even possible).
State of the Blockchain Q2 2018 (Coindesk) — Quarterly report summarizing key trends and events in Q2 2018. Most interesting are the political ideology slides; it’s not so skewed as one may imagine.
Ekiden — A Hardware Approach to Privacy-Maintaining Smart Contracts (Medium) — Summary of the technical paper that has deep roots in academia, answers a market need, and that’s associated to Oasis Labs.
Game of the week 🤯
Well designed ponzi scheme game that may never end, fascinating experiment! ⚠ This is a ponzi scheme, play at your own risk.
More info (worth a read): Millions of Dollars Are Being Sent to a Ponzi Like Ethereum Smart Contract Game That Might Never End
Weekly newsletter published internally at Google. The views expressed are my own and do not necessarily represent the views of my employer.
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