# The fragility of decentralised trustless socio-technical systems

## TL;DR

This paper examines the fragility of decentralized trustless systems like blockchains, emphasizing the importance of social and interconnected factors that can lead to systemic failures, exemplified by the Ethereum flash crash.

## Contribution

It introduces the concept of emergent centralisation and highlights the systemic risks in interconnected socio-technical ecosystems beyond isolated blockchain analysis.

## Key findings

- Social coordination can trigger cascading failures in blockchain systems.
- Emergent centralisation increases systemic vulnerability.
- Interconnected systems are more fragile than isolated ones.

## Abstract

The blockchain technology promises to transform finance, money and even governments. However, analyses of blockchain applicability and robustness typically focus on isolated systems whose actors contribute mainly by running the consensus algorithm. Here, we highlight the importance of considering trustless platforms within the broader ecosystem that includes social and communication networks. As an example, we analyse the flash-crash observed on 21st June 2017 in the Ethereum platform and show that a major phenomenon of social coordination led to a catastrophic cascade of events across several interconnected systems. We propose the concept of ``emergent centralisation'' to describe situations where a single system becomes critically important for the functioning of the whole ecosystem, and argue that such situations are likely to become more and more frequent in interconnected socio-technical systems. We anticipate that the systemic approach we propose will have implications for future assessments of trustless systems and call for the attention of policy-makers on the fragility of our interconnected and rapidly changing world.