Library > SoK: A Stratified Approach to Blockchain Decentralization
November/2022, ArXiv e-print
Decentralization has been touted as the principal security advantage which propelled blockchain systems at the forefront of developments in the financial technology space. Its exact semantics nevertheless remain highly contested and ambiguous, with proponents and critics disagreeing widely on the level of decentralization offered. To address this, we put forth a systematization of the current landscape with respect to decentralization and we derive a methodology that can help direct future research towards defining and measuring decentralization. Our approach dissects blockchain systems into multiple layers, or strata, each possibly encapsulating multiple categories, and enables a unified method for measuring decentralization in each one. Our layers are (1) hardware, (2) software, (3) network, (4) consensus, (5) economics ("tokenomics"), (6) API, (7) governance, and (8) geography. Armed with this stratification, we examine for each layer which pertinent properties of distributed ledgers (safety, liveness, privacy, stability) can be at risk due to centralization and in what way. Our work highlights the challenges in measuring and achieving decentralization, points to the degree of (de)centralization of various existing systems, where such assessment can be made from presently available public information, and suggests potential metrics and directions where future research is needed. We also introduce the "Minimum Decentralization Test", as a way to assess the decentralization state of a blockchain system and, as an exemplary case, we showcase how it can be applied to Bitcoin.