A New York law firm is trying to test blockchain projectsâ decentralization claims against their perhaps not-quite-so-distributed realities.
Called the âKetsal Open Standardsâ rubric, the toolkit, developed by the Ketsal law firm and revealed exclusively to CoinDesk, proposes using hard, measurable data points to either bolster or burst a blockchainâs decentralized credentials.Â
Itâs the latest contribution to a long-raging debate in crypto: when, and how, is something truly decentralized?Â
Finding that key, said toolkit co-creator and Ketsal partner Josh Garcia, can help investors, security researchers and even securities regulators root out blockchain projectsâ sometimes bogus claims.
âItâs a tool to push along an informed discussion on what youâre talking about when youâre saying, âmy network is decentralized.ââ
âNow you can push backâ with evidence the assertion is demonstrably false, he said.
Garcia and co-author Jenny Leungâs Open Standards is hardly the first decentralization measurement toolkit. But a review by CoinDesk shows it to be one of the most robust.Â
See also: To Get Serious About Decentralization, We Need to Measure It
Thirty-three data points probe the hard facts behind blockchain decentralization. Many are obvious. For example, the focus networkâs node count â a decentralized network should have plenty â and its underlying codeâs licensure status â open source or bust â are clear benchmarks.
But others appear to be more novel. Ketsalâs framework proposes weighing the networkâs GitHub statistics, measuring inter-node communication times, determining how large a stake of the cryptocurrency rests in wallets (and with the big-investing whales) â and even the theoretical cost of mounting a 51% attack, among others.Â
Compiling these statistics can help researchers better understand a blockchainâs in-the-moment distribution even if reaching an up-down verdict on its decentralization is impossible, said Garcia.
âItâs not an answer to the question, âWhat is decentralization,â but itâs a way to find that answer,â he said. âIf people can decide whether or not some of these metrics are valid,â they can use their chosen set to test for the type of decentralization theyâre looking at.
Providing a broad selection of diverse metrics is critical, he said, because of the political, computational and economic analysts searching for a âdecentralizationâ particular to them. A securities regulator concerned with the Howey Test would likely choose different data points than a security researcher probing the network for holes.Â
Read more: Coinbase-Led Crypto Ratings Council Plans Transparency Boost as New Members Join
But different analysts also might hone in on similar points. For one, mining power concentration, or the concentration of miners whose computational efforts cryptographically secure proof-of-work blockchains, is a critical benchmark for any decentralization hawk.
If all the key miners are geographically concentrated or grouped into a single pool, a blockchain may face mounting centralization and security risks, according to Ketsal. Just four pools mined 58% of Bitcoin blocks in the past year, the rubric shows.Â
Garcia said his team spent months compiling all the relevant data points from the worldâs best-known blockchain network. Bitcoinâs resilience as well as the consensus agreement that it is decentralized make it an ideal case study, and Garcia said itâs the obvious benchmark to hold other projects against.
âIf you do the same exact chart for another blockchain network, and you compare it side by side to Bitcoin ⦠you know how far off you are from [decentralization]â he said.Â
Read the Open Standards whitepaper and rubric: