How to ensure true decentralization for security and censorship resistance

Decentralization is at the heart of blockchain technology, promising a more flexible and censorship-resistant alternative to centralized systems. But are the leading network protocols as decentralized as they claim?

Decentralization can be measured in several dimensions. At first glance, network validation or the number of entities involved in the block mining process is one of the simplest and most visible indicators. However, other factors also contribute to increasing or eroding decentralization:

• Hosting Terms: Where nodes are located directly affects who manages them. If thousands of entities deploy nodes in facilities controlled by one or more entities, this puts the network at risk. For example, Hetzner unilaterally shut down 40% of Solana’s validators in 2022.
• Jurisdiction: Geographical location is relevant because it provides diversification of risk related to adverse or unexpected regulatory actions.
• Client program: A blockchain with nodes running on a single client software is more vulnerable to bugs and vulnerabilities than a single piece of code.

The following table compares the degree of decentralization of leading protocols using these dimensions:

Source: Solana Decentralization Report, Ethernodes Geographical location of ETH nodes, Tron nodes, Polkawatch

Decentralization is expensive: the longer the distance between peers, the higher the latency. Latency is essential for validators to complete their assigned tasks within a reasonable time frame. Failure to meet these deadlines results in missed rewards for validators, which increases the incentive to locate near large clusters of peers, thus increasing centralization. The larger the block size, or the shorter the block duration, the greater the incentives to centralize.

In other words, many protocols implicitly penalize decentralization by reducing the rewards for those who dare to deploy infrastructure in areas where no one else has. Pioneers shoulder the burden of blockchain flexibility with no incentive other than to do what needs to be done, where it needs to be done.

There are few protocols that provide any prior and explicit incentives at the protocol level to decentralize the network (e.g. greater priority in block offerings, participation in emission rewards). In most cases, incentives are administered as voluntary grants or delegations from protocol funds to specific network participants on a case-by-case basis.

If decentralization remains the cornerstone of blockchain’s ethos, the network must act accordingly. Protocols must adopt mechanisms that encourage nodes to operate in different jurisdictions, be hosted on independent facilities, and use different client software (if any). Without such incentives, the natural pull of economic efficiency leads to centralization, which threatens the very promise of blockchain: the sustainability of censorship resistance.

The future of blockchain depends on networks designed to remain decentralized, not by accident or good intentions.

Let’s ensure that decentralization is not just an aspiration, but a measured, incentivized reality.