Before we dive into this, perhaps it’s worth considering what decentralization in blockchain means, and where it fits in the Web3 space. So here goes.
What’s decentralization, and why should I care?
In the world of blockchain, decentralization points to the transfer of decision-making and governance from a centralized entity (could be an individual, organization, government, or a group) to a distributed network that, by its very nature, is decentralized. Decentralized networks aim to remove the need for trust that parties place in each other. Decentralized networks also remove a controlling party’s ability to exercise authority in ways that harm the network.
Why decentralization matters
Decentralization is not a new concept. While blockchain technologies often use decentralized networks, a blockchain application itself cannot be categorized simply as being decentralized or not. The point is that decentralization is a sliding scale that we can apply to all aspects of a blockchain application. Three primary network architectures should be typically considered in building a technology solution: centralized, distributed, and decentralized.
Decentralization typically harbors tradeoffs, such as lower transaction throughput, but ideally, the tradeoffs are worth the improved stability and service levels they produce. By decentralizing management and access to resources in an application, we create a more outstanding and fairer service, in line with the spirit of Web3. Who wouldn’t want such a thing?
Who can run a node?
In theory, with the right DevOps experience, anyone can run a node. These open systems have to be robust enough to mitigate DDoS and other attacks. The system’s role is to produce the block that contains the data running through the blockchain.
These nodes are the basis of all blockchain networks; they vary in numbers. Some networks have hundreds of nodes, while others have thousands.
How does a blockchain network secure data?
The mechanics of how networks secure their data are simple. A node, server, or validator is created with a secure infrastructure that helps mitigate all forms of network attacks. These servers possess weight in terms of capital backing — the capital being bonded to the nodes. In return for producing a block, the node receives a reward from the underlying platform ‘gas.’ Gas is what most refer to as cryptocurrency.
Nodes, servers, and hardware running a protocol that creates and provides access to the records of a public ledger are owned and operated by various private individuals and enterprises.
Companies or individuals can run any number of nodes in any one of the countless grids running the multiple servers which dominate blockchain networks. While a network with a large number of consistent, professionally run systems is to be celebrated, there are several dangers of which we should be aware:
Network risk of performance issues
When one service dominates a network, the scale of a performance problem might be enormous. It can materially affect the network, which could easily result in massive financial losses if service is not delivered. It is equivalent to the collapse of a centralized network, resulting in heavy economic losses that can be anywhere from thousands to billions of dollars. Bad behavior triggers losses. One such example would cause all colluding nodes to change the public records of the blocks they create because they control 51% of the network. In some cases, 30 or 25% of the network is sufficient.
Risk of validation network dominance
Where one or a few players dominate validation networks, said parties could establish a presence capable of driving the network’s direction to support their financial interests further. Naturally, such a situation does not serve the network’s best interests and can sway the vision, driving profits as opposed to system performance.
Risk of validator farm bias
Many large validator farms are focused only on high net-worth accounts (whales). Often, they fully load their servers as a private service, dedicating nodes accordingly. Hence, their interest in the network supports these substantial accounts. Such action can skew the behavior of the network to serve large holders only. This is completely counter to the philosophy and ambition of Web3, as the aim of Web3 is a more open, fair, and connected network.
Centralization in blockchain projects
Some network operators have achieved a degree of centralization in most blockchains projects. Hence, choosing a small, responsible node operator that provides rewards is a must. Most node operators don’t run infrastructure. They help develop the system to enable broad use of these very efficient socio-economic platforms that bring us closer to the Web3 promise of data ownership, privacy, frictionless trustless capital, and security, among other advantages we’ve yet to discover.
Hence we support the Polkadot ecosystem because we know it’s the only network today delivering the Web3 infrastructure, bypassing the constraints of scalability faced by 99% of other technologies.
