Measuring Decentralization in Bitcoin and Ethereum using Multiple Metrics and Granularities

Lin, Qinwei; Li, Chao; Zhao, Xifeng; Chen, Xianhai

doi:10.48550/arxiv.2101.10699

Cited by 3 publications

(7 citation statements)

References 16 publications

(26 reference statements)

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“…Our research contributes to three strands of the literature: research evaluating blockchain ecosystems, especially the blockchain trilemma [Bakos et al, 2019, Gomber et al, 2017, Schär, 2020, Werner et al, 2021 and the measurement of blockchain decentralization [Abdulhakeem and Hu, 2021, Cong et al, 2020, Gochhayat et al, 2020, Gupta and Gupta, 2018, Lin et al, 2021, Srinivasan, 2017, blockchain-related SoK or surveys, and the market analysis of DeFi [Angeris et al, 2021, Chen et al, 2020, Harvey et al, 2021, Lehar and Parlour, 2021 (see Figure 1).…”

Section: Related Literaturementioning

confidence: 99%

“…Consensus decentralization thus characterizes the decentralization in the participation of consensus processes, such as mining in PoW protocols and staking or voting in proof of stake (PoS) protocols. Gencer et al [2018], Gochhayat et al [2020], Kwon et al [2019], Li and Palanisamy [2020], Lin et al [2021], Srinivasan [2017] and empirically measure consensus decentralization using metrics such as the Gini coefficient, Shannon entropy, and the Nakamoto coefficient. Arnosti and Weinberg [2022], Chu and Wang [2018], Cong et al [2020], and Gervais et al [2014] theoretically examine the decentralization of consensus protocols using methods such as game theory to model consensus participation and equilibrium.…”

Section: Consensus Decentralization Consensusmentioning

confidence: 99%

“…Blockchain and decentralized finance (DeFi) applications on blockchain promise to be non custodial and openly auditable [Gomber et al, 2017, Schär, 2020, Werner et al, 2021. However, the actual level of decentralization varies greatly in blockchain applications [Gencer et al, 2018, Lin et al, 2021, Oliva et al, 2020. Moreover, a widely accepted definition or measurement of decentralization is still lacking.…”

Section: Introductionmentioning

confidence: 99%

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SoK: Blockchain Decentralization

Zhang¹,

Ma²,

Liu³

2022

Preprint

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Blockchain empowers a decentralized economy by enabling distributed trust in a peer-to-peer network. However, surprisingly, a widely accepted definition or measurement of decentralization is still lacking. We explore a systematization of knowledge (SoK) on blockchain decentralization by reviewing existing studies on various aspects of blockchain decentralization. First, we establish a taxonomy for analyzing blockchain decentralization in the five facets of consensus, network, governance, wealth, and transaction. We find a lack of research on the transaction aspects that closely characterize user behavior. Second, we apply Shannon entropy in information theory to propose a decentralization index for blockchain transactions. We show that our index intuitively measures levels of decentralization in peer-to-peer transactions by simulating blockchain token transfers. Third, we apply our index to empirically analyze the dynamics of DeFi token transfers. Intertemporally, we observe that levels of decentralization converge regardless of the initial levels of decentralization. Comparison of DeFi applications shows that exchange and lending are more decentralized than payment and derivatives. We also discover that a greater return of ether, the native coin of the Ethereum blockchain, predicts a greater decentralization level in stablecoin transfer that includes ether as collateral. Finally, we develop future research directions to explore the interactions between different facets of blockchain decentralization, the design of blockchain mechanisms that achieve sustainable decentralization, and the interplay of decentralization levels and economic factors.

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Section: Related Literaturementioning

confidence: 99%

Section: Consensus Decentralization Consensusmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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SoK: Blockchain Decentralization

Zhang¹,

Ma²,

Liu³

2022

Preprint

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“…A second approach involves using data on mining pools. Mining pools represent a large portion of the global hash rate [Lin et al, 2021] and often provide information on their hash rate share. However, several large mining pools are based in multiple countries and do not provide information regarding their internal geographical distribution.…”

Section: Geographical Distribution Of Minersmentioning

confidence: 99%

Green NFTs: A Study on the Environmental Impact of Cryptoart Technologies

Marro¹,

Donno²

2022

Preprint

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We introduce a model of greenhouse gas emissions due to on-chain activity on Ethereum, focusing on cryptoart. We also estimate the impact of individual transactions on the environment, both before and after the London hard fork. We find that with the current fee mechanism, spending one dollar on transaction fees corresponds to emitting at least the equivalent of 1.151 kilograms of CO2. We also describe several techniques to reduce cryptoart emissions, both in the short and long term.

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“…Decentralization is a key indicator for the evaluation of public blockchains. Most existing works on decentralization in blockchains have focused on Bitcoin [2,9,10,25]. These works pointed out that Bitcoin shows a trend towards centralization because of the emergence of mining pools.…”

Section: Blockchain System Analysismentioning

confidence: 99%

SteemOps: Extracting and Analyzing Key Operations in Steemit Blockchain-based Social Media Platform

Li,

Palanisamy,

et al. 2021

Preprint

Self Cite

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Advancements in distributed ledger technologies are driving the rise of blockchain-based social media platforms such as Steemit, where users interact with each other in similar ways as conventional social networks. These platforms are autonomously managed by users using decentralized consensus protocols in a cryptocurrency ecosystem. The deep integration of social networks and blockchains in these platforms provides potential for numerous cross-domain research studies that are of interest to both the research communities. However, it is challenging to process and analyze large volumes of raw Steemit data as it requires specialized skills in both software engineering and blockchain systems and involves substantial efforts in extracting and filtering various types of operations. To tackle this challenge, we collect over 38 million blocks generated in Steemit during a 45 month time period from 2016/03 to 2019/11 and extract ten key types of operations performed by the users. The results generate SteemOps, a new dataset that organizes more than 900 million operations from Steemit into three sub-datasets namely (i) social-network operation dataset (SOD), (ii) witness-election operation dataset (WOD) and (iii) value-transfer operation dataset (VOD). We describe the dataset schema and its usage in detail and outline possible future research studies using SteemOps. SteemOps is designed to facilitate future research aimed at providing deeper insights on emerging blockchain-based social media platforms. CCS CONCEPTS• Security and privacy → Cryptography; Social network security and privacy.

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Measuring Decentralization in Bitcoin and Ethereum using Multiple Metrics and Granularities

Cited by 3 publications

References 16 publications

SoK: Blockchain Decentralization

SoK: Blockchain Decentralization

Green NFTs: A Study on the Environmental Impact of Cryptoart Technologies

SteemOps: Extracting and Analyzing Key Operations in Steemit Blockchain-based Social Media Platform

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