🔢 [Analysis] Quantifying Decentralization - Balaji Srinivasan and Leland Lee

The most popular advantage of protocol networks like Bitcoin and Ethereum is "decentralization". But for this word to have any real meaning and lasting significance, it needs to be precisely defined and measured, according to Balaji Srinivasan and Leeland Lee. In this piece, Srinivasan and Lee introduce the "minimum Nakamoto coefficient" as a simple, quantitative measure of a system’s decentralization, motivated by the coefficient and Lorenz curve, which leads to a metric that returns a higher coefficient value for a given network, the more decentralized it is. The basic idea is to: enumerate the essential subsystems of a decentralized system, determine how many entities one would need to be compromised to control each subsystem, and use the minimum of these as a measure of the effective decentralization of the system.