Ethereum mining pools are an increasing area of centralization: ConsenSys

In a recently released report titled, “Measuring Blockchain Decentralization,” ConsenSys’ research team ran through the metrics they used in analyzing Ethereum’s on and off-chain data to answer a specific question: Is Ethereum actually getting more decentralized over time?

The analysis began by determining which elements of Ethereum’s architecture most significantly impacted its decentralization. The report noted a steady increase in the number of addresses on the Ethereum network, with growth in active addresses flattening after the bubble of Q4, 2017. According to ConsenSys, this might suggest that fewer people are using the network post-bubble.

The report also noted, “a fairly steady linear increase in non-zero addresses quarter-over-quarter with no major bumps, even during dramatic price fluctuations.” ConsenSys said that though this is not conclusive evidence, it could point to more individual actors on the network, which is good news for the decentralization of Ethereum.

“The growing delta between the non-zero addresses and total addresses is increasingly made up by smart contract addresses. This evolution may indicate that the network is still being used as a means of direct peer-to-peer transaction and dapp interaction, but is also increasingly being used for smart contract functionality. Overall, this would indicate that Ethereum has been supporting more diverse, and thus more decentralized, types of on-chain business logic over time.”

The report also talked about how the ‘Decentralized’ in DeFi rests on the assumption that the protocols, DApps, and the logic they are being built on are, themselves, decentralized. ConsenSys’ data also indicated that DeFi adoption is rising, with its newest wave having introduced a host of new protocols.

“It is not enough just to claim that any financial tool on a blockchain is decentralized.”

The report claimed that more options for people to execute decentralized finance mean fewer central…

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