The Nakamoto coefficient was first formally described in 2017 by former Coinbase CTO Balaji Srinivasan. The Nakamoto coefficient measures decentralization and represents the minimum number of actors required to disrupt the blockchain’s network. A high Nakamoto coefficient means that a blockchain is more decentralized. When this measurement was created, Proof-of-Work networks dominated the world, so Balaji did not focus on Proof-of-Stake networks. We don’t mind, because the principles are the same. Balaji described more categories that can be measured. For example, hash rate distribution across countries, number of nodes, number of clients, the number of nodes, or even development. In this paper, we will only consider attacks that can break the network consensus.
TLDR
- It is not necessary to attack all nodes in the network if the goal is to break the network consensus.
- Internal attacks are dangerous. For example, the CEO of Binance wanted the Bitcoin pool operators to reverse a transaction.
- The attack strategy varies depending on the specific damage the attacker wants to achieve.
- The Minimum Attack Vector (MAV) is a similar figure that corresponds to the Nakamoto coefficient focused on mining.
- Some people don’t see the difference between the number of user nodes and the number of block producers.
- The Edinburgh Decentralization Index (EDI) is an index developed by the University of Edinburgh to measure the level of decentralization of cryptocurrencies.
- Decentralization may be an unattainable goal because control can be bought with money.
This article was prepared by Cardanians with support from Cexplorer.
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