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Case Studies in Blockchain Decentralization: Bitcoin, Stablecoins, and Wrapped Tokens
- The article discusses case studies in blockchain decentralization, focusing on Bitcoin, stablecoins, and wrapped tokens.
- For Bitcoin, the hardware layer shows centralized hashing power distribution among few ASIC manufacturers.
- Bitcoin's software layer is centralized around Bitcoin Core, with majority full nodes running it.
- In terms of the network layer, Bitcoin nodes communicate mostly over Tor, presenting decentralization across Autonomous Systems.
- Bitcoin displays mixed levels of decentralization on the consensus layer, with mining power concentrated in few pools.
- Tokenomics of Bitcoin reveal the early disproportionate distribution of tokens and centralized wealth distribution.
- Bitcoin wallet software is mostly SPV or explorer-based, impacting decentralization at the client API layer.
- Bitcoin's governance layer shows a partial centralization in decision-making and lacks clarity on development funding.
- Fiat-backed stablecoins and wrapped tokens are examples that often fail the Minimum Decentralization Test due to centralization in governance.
- The paper is authored by Christina Ovezik, Dimitris Karakostas, and Aggelos Kiayias from the University of Edinburgh.
- The article is available under CC BY 4.0 DEED license on arxiv.
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