The article discusses a framework for understanding blockchain decentralization but does not provide precise metrics for quantifying it. It reviews various potential metrics, including Shannon entropy and the Gini coefficient, which measure resource distribution to assess decentralization. Shannon entropy indicates diversity in resource allocation, while Gini expresses wealth inequality. Other metrics discussed include min-entropy and the Nakamoto coefficient, which reflects the number of parties controlling resources. The article emphasizes the need for further research into these metrics and their application to real-world scenarios, highlighting the complexity of measuring decentralization effectively.
Our work offers a framework for analyzing blockchain decentralization, but not specific metrics to quantitatively measure it. Future work will explore alternatives and real-world computations.
A first option is Shannon entropy. The more bits of entropy in the resource distribution, the more diverse it is, thus the more decentralized the measured component is.
Min-entropy can also be used to provide a lower bound measure of decentralization, highlighting how a lack of diversity in resource distribution increases vulnerability.
Gini coefficient expresses wealth distribution and could help evaluate decentralization. A value of 0 indicates perfect equality, while 1 reveals extreme inequality.
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