SoK: A Stratified Approach to Blockchain Decentralization
Christina Ovezik, Dimitris Karakostas, Aggelos Kiayias
TL;DR
The paper tackles the challenge of defining and measuring decentralization in blockchain systems, arguing that decentralization is not a binary property but depends on multiple interdependent layers. It introduces a stratified, bottom-up framework spanning eight layers plus Geography and presents the Minimum Decentralization Test (MDT) as a practical litmus for single points of failure. The authors demonstrate the approach with a cross-layer Bitcoin study and discuss other systems (e.g., fiat-backed stablecoins, bridges) to show MDT failures and centralization risks. The work aims to guide research, policy, and design by enabling cross-layer decentralization assessment and outlines future work on quantitative metrics, Layer 2 integration, and a formal decentralization index.
Abstract
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 by existing systems. 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 it 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) client 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. We also introduce a practical test, the "Minimum Decentralization Test" which can provide quick insights about the decentralization state of a blockchain system. To demonstrate how our stratified methodology can be used in practice, we apply it fully (layer by layer) to Bitcoin, and we provide examples of systems which comprise one or more "problematic" layers that cause them to fail the MDT. Our work highlights the challenges in measuring and achieving decentralization, and suggests various potential directions where future research is needed.