Tyler

DECENTRALIZATION OF L1 POS BLOCKCHAINS A COMPREHENSIVE ANALYSIS 2025 ETH | SOL | TRX | ADA | DOT | AVAX | SUI When the media and influencers, when they talk about decentralization, talk only about the "Nakamoto Coefficient" - yes, it is important. And no, it is not the only parameter of decentralization. That's why we're starting right now. I must say right away that I will not publish all the calculations here, it would take too much of your time. This is my personal opinion - I do not claim to be 100% true. DYOR. Let's take as a basis that the total score in the table is 100% = this is the maximum possible decentralization that everyone is striving for. But so far no one has achieved it and probably won't, and I doubt it's possible. That's why even the best decentralized blockchain doesn't have 80%. This analysis evaluates the decentralization of Layer 1 PoS (Proof of Stake) blockchains through 8 layers, based on the methodology of EDI (Edinburgh Decentralisation Index) - I took it as a basis, but it's not the same (!). Each layer focuses on a specific aspect of the network, using metrics like HHI, Gini, Shannon Entropy, and Nakamoto Coefficient. Importance: In PoS, decentralization reduces risks of attacks, censorship, and failures, increasing resilience. The layer weight reflects its contribution to the overall score (0-100). Below is a brief overview of each layer, with parameters and their importance in evaluating PoS blockchains. Hardware (5%) This layer evaluates the concentration of hardware infrastructure (validator hosting) to identify risks of provider failures. 1. HHI by cloud providers: measures concentration across cloud providers (high HHI = risk from dominance, e.g., AWS). Importance: In PoS, a provider failure can stop validators, reducing liveness. 2. Dependency ratio on top providers: share of top-3 providers. Importance: Shows dependence on a few, vulnerable to attacks or downtime. Software (7%) Focus on diversity of software clients (node implementations) to avoid bugs in a dominant client 1. Concentr. ratio for top 2 clients: Share of top-2 clients. Importance: In PoS, dominance (e.g., Geth in ETH) risks a fork from an error. 2. Shannon entropy by client shares: diversity of client shares. Importance: high entropy = more alternatives, increases resilience to vulnerabilities. Network (8%) Evaluates network decentralization (connectivity) to make the network resilient to DDoS or partitions 1. HHI by ASNs: concentration across autonomous systems (ASNs). Importance: In PoS, high HHI in ASNs (e.g., AWS ASNs) makes the network vulnerable to ISP failures 2. Gini by node peers: Inequality in the number of peers per node. Importance: even peer distribution ensures good gossip, reducing latency and censorship 3. Shannon entropy by node peers: Diversity of peers. Importance: High entropy = network not dependent on a few hubs, improves liveness Consensus (34%) Key layer (!) - concentration in block production, determines PoS security. 1. Nakamoto coefficient: minimum number of entities to control >1/3 stake. Importance: Shows attack risk (low NC = centralization). 2. Gini coefficient: stake inequality. Importance: High Gini = concentration, vulnerability to whales. 3. Effect.number validators/pools: effective number of entities (exp(Entropy)). Importance: Accounts for real diversity, balancing raw count. 4. Cost of 33% attack: cost of 1/3 stake attack. Importance: Economic protection in PoS, high cost = low attack feasibility. 5. Shannon entropy: stake diversity. Importance: High entropy = evenness, reduces risks. 6. Herfindahl-hirschman Index: stake concentration. Importance: Penalizes large entities, standard for monopoly risks in PoS. 7. "1-concentration ratio": share of top-1. Importance: shows dependence on one entity. Tokenomics (24%) Token distribution and economics, influencing incentives 1. Gini by holders: Inequality among holders. Importance: High Gini = concentration in whales, manipulation risk. 2. HHI by token distribution: token concentration. Importance: High HHI = economic power in few hands, low decentralization. 3. Voter turnout rate: % participation in staking/governance. Importance: High turnout = active community, reduces speculation in PoS. API Clients (2%) Concentration of API providers for network access 1. HHI by API providers: API concentration. Importance: High HHI (e.g., Infura dominance) = risk of outage for dApps 2. Dependency ratio: Share of top-3 API. Importance: Dependence on a few = single point of failure for users. Governance (13%) Diversity of governance for democracy 1. Shannon entropy by proposals: diversity of proposals by authors. Importance: High entropy = proposals from many, reduces elite control. 2. Gini by votes: Inequality of votes. Importance: High gini = votes concentrated, low participation diversity. Geography (7%) Geographical distribution for censorship resilience. 1. HHI by countries: concentration by countries. Importance: High HHI = risk from regional regulations/outages 2. Censorship resistance Index: share in censored regions. Importance: Low index = high censorship risk in PoS. Why Nakamoto coefficient differs from nakaflow website? The Nakamoto coefficient on "nakaflow io" is higher because they divide pools into multiple node operators (e.g., ETH: Lido - ~500 operators, not 1), which increases the number of entities and NC. This is a more optimistic approach, but it can overstate decentralization if operators are connected (e.g., through cloud). I prefer to consider entities Conclusion: This is not "just random numbers" - this is a structured analysis (NC, Gini, HHI, etc.), which help compare chains in terms of security, resilience, and risks (e.g., 33% attack, stake concentration). Usefulness: shows strengths/weaknesses (e.g., Cardano high in distribution, ETH low in NC), but due to approximations (old data for hardware/network, N/A for governance) this is not "final", but indicative. In my opinion, $ADA is the most mature blockchain in terms of decentralization, but there is room for growth. For example, develop alternative Software to reduce concentration. I also see some problems with SOL and ETH, especially in the Governance layer. TRX looks the worst of all. DOT AVAX SUI shows good metrics. FYI: none of the blockchains paid me for this research, so it's as independent as possible. What kind of research should I do next? maybe for a complete picture of the blockchain trilemma, it is necessary to consider the scaling and security of PoS blockchains in separate studies.

TD flashed a buy signal on Cardano $ADA. Now $0.37 must hold to open the path to $0.54.

Stop press: One of the first concrete outcomes of the Critical Cardano Integrations workstream is now in place! The Steering Committee representing @IOGroup @Cardano_CF @emurgo_io @midnightfdn, and Intersect has approved the first major integration under this framework: bringing Pyth Lazer oracle to Cardano. @PythNetwork provides low-latency, institutional-grade market data across thousands of price feeds spanning crypto, equities, FX, commodities and ETFs, already used by hundreds of DeFi applications across 100+ blockchains to power trading, lending and risk management. This is one of the first integrations progressing under the Critical Integrations framework, with Intersect acting as administrator. Delivery work has already begun, with deployment targeted for early 2026. Stay tuned for more news on this exciting new partnership next week!

Updated Midnight Tokenomics. Biggest delta is TGE (Token Generation Event). "a number of leading exchanges have received a portion of NIGHT tokens, of which they intend to distribute to their customers (including Kraken, OKX, Bitpanda, and NBX). The final NIGHT volume and participation figures from these exchanges will be updated to reflect additional community allocations via exchanges that receive tokens from the TGE." #Cardano

#Chainlink Weekly Time-frame Update 📈👇 $LINK is holding strong on this key lower support line on thee weekly at around 13$. If it manages to hold here and get a bigger push from the broader crypto market, we could see a possible 46$ $LINK. 🔥 ✅Fundamentals are strong ✅Technicals look good

Jump to 2050. Banks run on Bitcoin. Your identity, credit, payments and business all flow through dapps. What does your day look like?

Congratulations to @MidnightNtwrk @midnightfdn, and the Shielded team for deploying the Midnight Cardano Native Asset: adastat.net/tokens/0691b2f… Full launch December 8th.

💥BREAKING: ISO 20022 JUST WENT LIVE ACROSS GLOBAL PAYMENTS. SWIFT HAS SHUT OFF OLD MT MESSAGES, FROM NOW ON, BANK-TO-BANK PAYMENTS MUST SPEAK ISO 20022.

QT will end on December 1st. Last time this happened, altcoins went parabolic!

The Gateway to Bitcoin DeFi is open. $BOB is live.

Cardanians will be a Midnight validator! 🕛 $ADA holders delegated to Cardano stake pools running Midnight validators will receive both $ADA and $NIGHT as staking rewards. Delegate to Cardanians to maximize your staking rewards. More details to follow.

It’s so over!

We’ve come a long way since QT last ended for Bitcoin.

No interest in Bitcoin & Crypto. Worst cycle ever!

Diminishing returns also brings us diminishing losses. Expecting a -70% drop in the bear market.

$1,800 looks like a great spot to buy Ethereum $ETH!

From $74K and lower, I’ll start aggressively DCA’ing into Bitcoin.

Say less. 😎 Interested in being a midnight ambassador? Start here: mpc.midnight.network/midnight-ambas…

We’re excited to team up with @ChangeNOW_io and bring $DOGS to even more holders worldwide 🌍 Manage $DOGS easily on 👉 changenow.io/?from=dogs&to=… Interview 👉 changenow.io/blog/inside-do…

One of the most important things in success is to NEVER let $ change who you are. This is Jensen Huang, the CEO of the largest company in the world, enjoying fried chicken and beer at a regular chimaek shop in Korea… not some fancy Michelin restaurant.