Are Crypto Ecosystems (De)centralizing? A Framework for Longitudinal Analysis

TL;DR

This paper introduces a systematic framework for measuring the decentralization of crypto ecosystems over time, revealing overall decentralization growth but recent centralization trends in specific areas.

Contribution

It presents a novel, comprehensive framework for longitudinal decentralization analysis and applies it to seven major crypto ecosystems, highlighting new trends.

Findings

Crypto ecosystems have generally become more decentralized over 15 years.

Recent centralization trends are observed in consensus, NFTs, and developer activities.

The framework enables systematic, replicable analysis of decentralization dynamics.

Abstract

Blockchain technology relies on decentralization to resist faults and attacks while operating without trusted intermediaries. Although industry experts have touted decentralization as central to their promise and disruptive potential, it is still unclear whether the crypto ecosystems built around blockchains are becoming more or less decentralized over time. As crypto plays an increasing role in facilitating economic transactions and peer-to-peer interactions, measuring their decentralization becomes even more essential. We thus propose a systematic framework for measuring the decentralization of crypto ecosystems over time and compare commonly used decentralization metrics. We applied this framework to seven prominent crypto ecosystems, across five distinct subsystems and across their lifetime for over 15 years. Our analysis revealed that while crypto has largely become more decentralized over time, recent trends show a shift toward centralization in the consensus layer, NFT marketplaces, and developers. Our framework and results inform researchers, policymakers, and practitioners about the design, regulation, and implementation of crypto ecosystems and provide a systematic, replicable foundation for future studies.