The article presents a new framework for understanding decentralization in distributed ledgers, addressing a previous lack of cohesion in the literature. It emphasizes that distributing resources across independent parties mitigates risks tied to single points of failure, enhancing security, privacy, and stability. The methodology proposed can assess both Layer 1 and Layer 2 protocols, including the interaction of Bitcoin with the Lightning Network, and decentralized applications (DApps). Additionally, it suggests future research avenues focusing on the interplay between decentralization and fault tolerance in various contexts.
Our work systematizes the fragmented literature on decentralization into a unified framework, allowing analysis of any distributed ledger's decentralization.
Removing single points of failure via a diverse distribution of resources across independent parties is essential for ensuring security, privacy, and stability.
Our methodology can be applied to combinations of Layer 1 and Layer 2 protocols, enabling a comprehensive assessment of decentralization.
Exploring the relationship between decentralization and fault tolerance represents a promising area for future research, helping to understand its benefits and limitations.
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