Thread by @pencilflip

Is Solana centralized?

There are three main reasons why people say Solana is centralized:

1. Expensive to run a validator
2. Token distribution
3. Only one blockchain software client

Let's take a look at each of these reasons 👇

1/ IMO it doesn't matter how much it costs to be a validator—it matters how many validators there actually are, and what the Nakamoto coefficient is.

Turns out Solana's Nakamoto coefficient is pretty high (19 validators required to halt the network).

https://twitter.com/aeyakovenko/status/1454458388092313600

2/ 19 may not sound like a huge number, but it's higher than Ethereum's Nakamoto coefficient.

The NC for PoW Ethereum is 3 (etherchain.org/miner), and for PoS Ethereum it's 4 (source is a bit outdated, not sure exactly what it is now).

https://twitter.com/aeyakovenko/status/1388148053228486658

3/ Another thing people like to claim is that all of Solana's validators run on AWS/GCP/etc.

This isn't true! For example, only 66/1386 validators run on AWS (validators.app/data-centers).

https://twitter.com/dankrad/status/1460353918685396993

4/ Also, some people run a Solana node from their homes 🤷‍♂️

https://twitter.com/permaweave/status/1459696908474011649

5/ There's another variant on this argument that says the cost of running a non-validating node is the metric that really matters.

https://twitter.com/epolynya/status/1466287353492738049

6/ Basically, it goes like this:

- If you control more than 2/3 of the stake, you can produce invalid blocks
- But, if users are running full nodes themselves, they will ignore these invalid blocks
- So even if validators are compromised, the network can recover (e.g. be forked)

7/ I think this sounds nice in theory.

But in reality, the majority of people do not run their own node to interact with Ethereum (there are currently only ~2k Ethereum nodes, see etherscan.io/nodetracker).

And I doubt this will change any time soon.

8/ To recap

- We should care about how many validators are running (and the Nakamoto coefficient), not how cheap it is to run a validator. The latter may influence the former, but doesn't fully determine it
- Solana's Nakamoto coefficient is higher than Ethereum's

9/ Let's move on to the next argument—token distribution.

You may have seen a graph like this that shows how Solana's initial token allocation was quite centralized.

https://twitter.com/EdnStuff/status/1466073178371940358

10/ Even now, ~40% of SOL is not in the circulating supply (you can confirm on CoinGecko).

This is a decent argument for centralization. The Solana Foundation controls what to do with these tokens, giving them a lot of power to influence the ecosystem

https://twitter.com/RyanBerckmans/status/1438694236698947590

11/ To me, this is fine. While things are still early, it helps to have a central group that can push the ecosystem in the right direction.

Over time, these tokens will be distributed, and ownership will be more decentralized.

12/ Overall, Solana may be less decentralized than Ethereum WRT token distribution—but that doesn't mean it's centralized!

https://twitter.com/SolNFTs/status/1466877515671212037

13/ Finally, let's look at the last argument—the fact that Solana only has one blockchain software client

https://twitter.com/RyanBerckmans/status/1438694233171447808

14/ This is true, but I assume it was also true for Ethereum at the beginning 😛

Even now, >95% of Ethereum nodes run the same client 🤷‍♂️ (etherscan.io/nodetracker)

Overall, this doesn't seem like a huge deal given how early Solana is, as long as it improves over time.

15/ @cryptogosu also brought up a good point in Discord:

"Anyone can still propose and build on top of the current validator for Solana as well. All conversations are public in the discord"

16/ A quick summary of my thoughts:

Centralization is a spectrum, not black and white. Solana is more decentralized in some aspects, and more centralized in others.

17/ Perhaps most importantly, Solana's Nakamoto coefficient is quite high (higher than Ethereum's), making it hard to halt the network.

18/ And wrt token distribution and having a single blockchain client—we're still early!

Right now, things are decentralized *enough*, and will become more decentralized over time.

19/ If you have any thoughts, please chime in!

Also thanks @cryptogosu @jamesflorentino @nik_hayes @mryalamanchi for your thoughts on Discord 😛