The Curses of Blockchain Decentralization

TL;DR

This paper introduces a quantitative measure of blockchain decentralization, highlights its inherent limitations on scalability, and discusses the trade-offs and challenges involved in achieving true decentralization.

Contribution

It proposes a new measure for blockchain decentralization, analyzes its impact on trust models and consensus algorithms, and outlines research directions to balance decentralization and scalability.

Findings

True decentralization is difficult due to skewed mining power.

Fully decentralized blockchains have throughput limits.

Decentralization constraints hinder smart contract scalability.

Abstract

Decentralization, which has backed the hyper growth of many blockchains, comes at the cost of scalability. To understand this fundamental limitation, this paper proposes a quantitative measure of blockchain decentralization, and discusses its implications to various trust models and consensus algorithms. Further, we identify the major challenges in blockchain decentralization. Our key findings are that true decentralization is hard to achieve due to the skewed mining power and that a fully decentralized blockchain inherently limits scalability as it incurs a throughput upper bound and prevents scaling smart contract execution. To address these challenges, we outline three research directions to explore the trade-offs between decentralization and scalability.