Understanding decentralization


Any blockchain, as a system of distributed records, may have points of centralization that are to be avoided, or at least minimized.

Decentralization consists of distributing rights and obligations avoiding concentration in decisions, seeking consensus in the protocol, not only in its operation but also in its governance.

Decentralization in PoS consensus (proof of stake) is more than a large number of validator nodes.

A PoS blockchain with a large number of nodes and no concentrated delegation finds a principle of decentralization in its network structure, thus avoiding the possibility of the 51% attack

The 51% attack consists of one or a few validators acting in collusion to control the consensus protocol and thus manipulate the network validations.


In February 2021 there are still federated IOG nodes remaining, which will be shut down in March, thus leading to full decentralization in the validation consensus (d=0).


We see in the evolution of the delegation how Binance increases power over the consensus in the last epochs, with its almost 60 pools (BNP) that in the graph are shown consolidated.

For their part, nodes can be very geographically concentrated and thus latency will be higher for clients connected far from those countries, resulting in slower transactions.

The highest concentration of relays is centered in the northern hemisphere, mainly in the USA and Europe.


The service provided by few web servers is also a point of considerable weakness, since the provider with the largest number of connected relays could affect the communication with unexpected failures, impairing the operation of the network (at least until the pool operators look for new providers and restart the system).
The major providers are:

DigitalOcean 20.2%
Amazon 15.4%
Google 13.0%
Hetzner 8.8%
Contabo 4.1%


The amount of ADA in delegation has grown to 70% of the supply, approximately 22 billion, in the Shelley era (as of August 2020) and this implies greater stability to the network, but not necessarily decentralization.

Technology development is another determining point. IOHK team is currently responsible for the development of Cardano software. There is a group of smaller teams around the world part of IOHK. Some universities are also involved in the development of Cardano. So there is a certain level of decentralization in terms of geography and independence of the groups.

Everyone can freely decide to install the Cardano client or build a pool. Nobody needs permission. The source code is available on GitHub. So it is possible to build your own version.

But not everyone can change something in the source code, because if that were possible then everyone could implement code that could destabilize the network.

To avoid that, you have to define an acceptance process that ensures that the proposed code does what you expect and that it will work. The Voltaire era is the era that implements governance that regularly supplies Cardano with treasury with part of the epoch rewards. Anyone will be able to propose a new change called a Cardano Improvement Proposal (CIP) on the protocol and then the community holding ADAs will be able to voluntarily vote, deciding on the change and whether it will be funded.

Thanks to the Voltaire era, Cardano will become a truly decentralized network and will not be under the control of the IOHK. However, under these rules, current IOHK team members will be able to participate in the research and development of Cardano.

Another vector of significance on decentralization is the community itself, i.e. the cryptocurrency holders and users of the blockchain platform. Their nationalities or the merchants in the world that accept the cryptocurrency are factors that should be considered as indicators of decentralization.

Merchants that accept ADA. https://cardanohubs.com/club-cardano/

Most merchants that accept ADA follow the common pattern, focused on the USA and Europe.

Cardano is a new blockchain, only 4 years old. Its rapid growth has been uneven, which is reasonable, but as its usability and adoption grows the distribution of all the factors that make up decentralization will become more proportionate around the world.