Thread by @MorganTBennett

1/ Proof-of-Work vs. Proof-of-Stake

Today: decentralization of miners/validators.

The number of entities that control >50% of block production in Proof-of-Work is frighteningly low:

#Bitcoin: ≤ 4
#Ethereum: ≤ 3
#Litecoin: ≤ 4

2/ This number only gives an upper bound. We can be sure it is not more, but it could be less.

Remember: Back in 2014, a single pool (Ghash) briefly controlled a majority BTC hash rate.

3/ In any case, it is relatively certain that >50% of Bitcoin miners must obey one single jurisdiction.

4/ In contrast, this is the number of entities that control >50% of block production in Proof-of-Stake systems:

#Ethereum: ≤ 10
#Cardano: ≤ 23
#Tezos: ≤ 10

Also here, the number only gives an upper bound.

5/ Some people argue that PoS can become as centralized as PoW (or worse) over time.

In particular, large exchanges can leverage network effects to offer staking services at extremely competitive prices.

6/ But: exchanges running large stake pools are arguably still better than large mining operators.

First, exchanges are geographically well distributed, as they occupy different market niches.

7/ In particular, fiat on-ramps specialize in different regulatory environments (e.g., Coinbase in the US, Kraken in Europe, Bithump in South Korea, etc).

Unregulated exchanges occupy yet another niche.

8/ Second, there are also strategies to further mitigate PoS centralization by offering more decentralized delegation.

https://twitter.com/hasufl/status/1387157814762774535

9/ So, PoS consensus participation currently is and will likely remain much more decentralized than PoW.

Data sources:
blockchain.com
etherscan.io
litecoinpool.org
beaconchain.in
adapools.org
tezblock.io
cbeci.org