Decentralization: A Qualitative Survey of Node Operators

TL;DR

The paper tackles the ambiguous notion of decentralization in permissionless ledgers and its supposed impact on immutability. Using a qualitative, field-based approach with node operators in the Cosmos ecosystem, it develops a two-axis model distinguishing Network topology and Governance topology, arguing that governance structure more strongly shapes outcomes than technical topology. The study finds that decentralization alone does not guarantee immutability or resilience; instances of 'decentralization theatre' illustrate how token distributions and Foundation delegations can falsely imply decentralization. The work calls for a nuanced, holistic view of decentralization (via Vergne's Razor) and sets the stage for future work linking governance dynamics with economic-security considerations in distributed ledgers.

Abstract

Decentralization is understood both by professionals in the blockchain industry and general users as a core design goal of permissionless ledgers. However, its meaning is far from universally agreed, and often it is easier to get opinions on what it is not, rather than what it is. In this paper, we solicit definitions of 'decentralization' and 'decentralization theatre' from blockchain node operators. Key to a definition is asking about effective decentralization strategies, as well as those that are ineffective. Malicious, deceptive, or incompetent strategies are commonly referred to by the term 'decentralization theatre.' Finally, we ask what is being decentralized. Via thematic analysis of interview transcripts, we find that most operators conceive of decentralization as existing broadly on a technical and a governance axis. This informs a two-axis model: network topology and governance topology, or the structure of decision-making power. Our key finding is that `decentralization' alone does not affect ledger immutability or systemic robustness.

Figures (20)

• Figure 1: Two-axis Decentralization Model with example metrics
• Figure 2: Naive model of decision making power vs immutability
• Figure 3: Q1. In a business as usual scenario, via which of the following communication channels would you or your node operations team typically expect to hear of a software upgrade (non-consensus-breaking or soft-fork)? Q2. In a business as usual scenario, via which of the following communication channels would you or your node operations team typically expect to hear of a software upgrade (consensus-breaking or hard-fork)? Q3. In yours or your node operations team's experience, which of the following is the most common communication channel for operational updates and instructions (for example, upgrades). Please pick only one.
• Figure 4: How many employees does your organization have?
• Figure 5: When communicating with the maintainers responsible for upgrading a chain, how many people do you or your node operations team typically have contact with from the counterparty (foundation, core team, etc)?