TLDR "Decentralization Trilogy" Part 2 · Core Tips
Real events revealed: "Decentralization" and "Fake Decentralization" decided the winner overnight
Bitcoin: The first time that mankind has achieved global asset consensus without relying on authority
Ethereum vs Solana: Different compromises, different futures
Data speaks: The HHI indicator is used for the first time to quantify on-chain concentration, subverting market cognition
The essence is revealed: Decentralization is not idealism, but a new order beyond sovereignty
Great engineering is never just technology, but also an art.
In the first part of the "Decentralization Trilogy" "What is Real Decentralization", we saw a picture:
In the early morning of April 15, 2025, in Tokyo, Japan, an optical fiber pierced our illusion of "decentralization".
In just 15 minutes, the API response time of Binance, the world's largest crypto exchange, soared 12 times, MEXC had more than 180,000 withdrawal requests blocked, and the order failure rate of KuCoin and Gate.io exceeded 47%. DeBank wallet data shows that active transactions on the chain in the Asia-Pacific region have dropped by 58%.
We once believed that this new world would no longer be defeated by a single point of failure. But reality tells us: As long as the core logic, key account systems, and transaction matching still rely on centralized servers, the "decentralized" cloak still hides fatal vulnerabilities.
However, in the hour when the disaster occurred, some systems did not move at all:
Bitcoin continued to generate 1MB blocks every 10 minutes.
The Ethereum Layer 1 mainnet packaged transactions as usual.
Uniswap's on-chain transactions continued to execute, without pause or rollback.
Why?
Why do some systems survive disasters unscathed, while others collapse instantly?
The answer lies in the three words "decentralization."
But it is not a cold technical term. It is an engineering art, an institutional imagination, and an ambition.
Today, we will explore the beauty of blockchain and enter a more challenging question:
How is true decentralization achieved in the real world?
How do its technical logic, game mechanism, and resilience design allow these systems to survive crisis after crisis and win trust?
However, in order to find the answer, we must go back to the starting point of the story:
Bitcoin.
Yes, you read it right. It’s not “blockchain”, it’s “Bitcoin”.
The word blockchain didn’t even appear in the Bitcoin white paper in 2008. It’s because of Bitcoin that we have blockchain and decentralization.
Bitcoin is the starting point of the decentralization story.
On January 3, 2009, Satoshi Nakamoto wrote the title of the day’s The Times in the Genesis Block.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Translation: The Chancellor of the Exchequer is about to carry out a second bank bailout.
The article reports that British Chancellor of the Exchequer, Alistair Darling, has decided to inject £37 billion into British banks to maintain the country's credit liquidity.
Nakamoto wrote the title of this report into the genesis block of Bitcoin, which can be interpreted as a severe criticism of the centrally controlled financial system, and further understood as the centrally controlled system is untrustworthy.
Today, 16 years later, this system that was unpopular at its birth and worth less than a penny has grown into a global asset network with a market value of more than 1.8 trillion US dollars, and has spawned hundreds of thousands of derivative protocols and innovative projects.
Why can it survive?
Why can it become the "benchmark of resilience" for global digital finance?
If you understand how Bitcoin survived to this day, you will also understand -
how true decentralization is achieved.
But to explain this clearly, we have to trace back and look back: Before Bitcoin, humans explored the "decentralized value system".
Many people think that the birth of Bitcoin was a sudden flash of inspiration. But if you look back carefully, humans' exploration of the decentralized value system had experienced at least three failures before it came out.
Every time, it almost touched the ideal, but failed at the key link.
Back in 1989, cryptographer David Chaum founded a company called DigiCash. His goal was simple: to make cash electronic while protecting privacy.
He invented the blind signature technology, which allows users to convert money in their bank accounts into a digital cash called e-cash. During transactions, even banks cannot track users' spending records.
Doesn't this sound like the "anonymous digital currency" that people later dreamed of? Even Microsoft was attracted to it. In 1995, Microsoft took the initiative to propose to integrate e-cash into the payment system of Windows 95. But Chaum rejected Bill Gates' acquisition offer of up to $100 million.
Everything seemed to be going smoothly. But the good times didn't last long.
In 1998, DigiCash declared bankruptcy due to financial crisis. Chaum recalled:
The fundamental reason for our failure is that the system still relies on the servers and legal entities of a single company. Once the company has problems, the assets and privacy of users will collapse instantly.
In fact, when it went bankrupt, DigiCash had less than 50,000 users worldwide, far from forming a sufficient network effect. No matter how advanced the technology is, centralized trust is still its Achilles heel.
The failure of DigiCash did not dampen the enthusiasm of cypherpunks.
In 1998, Chinese cryptographer Wei Dai proposed a shocking idea on the Cypherpunk mailing list: b-money.
This is the first time in human history that the concept of decentralized ledger and proof of work (PoW) has been systematically proposed:
A completely anonymous digital currency system, where users use computing resources as the cost of currency generation, and the ledger is jointly maintained by trusted nodes.
It sounds like the blueprint of Bitcoin. But b-money lacks the most important thing: a consensus algorithm.
Dai Wei envisioned that everyone can broadcast the ledger, but when there is a contradiction in the ledger, who has the final say? He did not give an answer. The Byzantine Generals’ Problem—how a distributed system can agree on a single state—remains unsolved.
In the end, b-money became a spiritual beacon for cryptography and libertarians, but it remained in black and white and never became a reality.
Ideals are destined to remain ideals if they lack consensus.
In 1996, former radiation oncologist Douglas Jackson founded e-gold. The logic is simple:
Users deposit gold into the company’s vault, and e-gold issues corresponding digital tokens for global circulation. Gold is used as an endorsement, and tokens are used as a medium of exchange.
By 2006, e-gold had 5 million registered accounts and annual transaction volume reached 2 billion US dollars, setting off a wave of "digital gold standard".
But just when it was in the limelight, the political iron fist fell.
In 2007, the US government froze e-gold's servers and capital pools on the grounds of "unlicensed financial business" and "suspected of money laundering". Founder Jackson was sentenced to probation and the company's business was forced to terminate.
In fact, the gold reserves held by e-gold at that time were as high as 3.8 tons, with a market value of about 85 million US dollars. However, this world's largest digital gold payment system still could not escape legal sanctions.
The tragedy of e-gold shows that no matter how large the system is, as long as the infrastructure is concentrated on a single point in the physical world, the power of law and politics can destroy it at any time.
The story of e-gold is much more complicated than it seems.
It not only became a pioneer in early online payments, but was even once hailed by the liberal financial circle as the "revival of the digital gold standard."
But it was this scale that crossed national borders that aroused the high vigilance of the US government.
On April 24, 2007, a grand jury in the District of Columbia formally indicted e-gold and its founder Douglas Jackson, accusing them of operating a remittance business without a license and suspected of money laundering and supporting criminal activities. In fact, e-gold's open registration and anonymous transfer design have indeed been used by some online scammers and underground economy, although the platform has not actively participated in any illegal activities.
Faced with heavy judicial pressure, Jackson finally chose to compromise. In July 2008, he pleaded guilty on behalf of the company, agreed to pay a fine of 1.5 million US dollars, and accept strict financial supervision in the future. In November 2008, the court sentenced Jackson to 3 years of probation and 6 months of home confinement. At the same time, e-gold's servers and capital pools were frozen, and the business was completely terminated.
This incident caused a strong shock in the cypherpunk community. It proved one thing:
Even if the concept is justified, even if the business is transparent, even if it has gained the global trust of users, as long as the infrastructure relies on a single legal entity and physical server, it will eventually be defeated by the laws and political will of sovereign countries.
This is not only a verdict on e-gold, but also a "death sentence" for all centralized digital value systems.
However, behind the failures of DigiCash, b-money and e-gold, there are still some technical attempts that have not been commercialized but have profoundly influenced future generations.
In 1997, Adam Back invented Hashcash, a "computational stamp" originally used to block spam. The sender must pay the computational cost to find a hash that meets the difficulty requirements. This mechanism later became the basis of Bitcoin's proof of work (PoW) to resist spam transactions and prevent forgery.
In 1998, Nick Szabo proposed Bit Gold. He envisioned that users would use computing resources to solve complex math problems, and the results would be recorded by timestamps and confirmed by encrypted signatures. Bit Gold first proposed: accumulating and confirming digital assets in a decentralized way. Although it has never been implemented, the design is almost the blueprint for Bitcoin's UTXO model and PoW chain.
In 2004, Hal Finney developed Reusable Proof-of-Work (RPOW). This was the first system to attempt to make PoW results transferable, allowing users to verify the calculated proof on a secure hardware server and issue new ownership. This idea of off-chain transfer provided a prototype for the later Bitcoin transaction input/output (UTXO) mechanism.
Although these pioneering attempts did not pass the three life and death barriers of law, economics, and engineering, they laid an indispensable foundation for Satoshi Nakamoto's "final answer" in 2009 in terms of mathematics and mechanism design.
From DigiCash to b-money, and then to e-gold, despite the different directions of exploration, the fatal flaws exposed in the end are surprisingly consistent:
Insufficient censorship resistance - the system relies on a single legal entity or server, and is as fragile as paper under political pressure.
Lack of state consensus - unable to resolve the consensus contradiction of distributed ledgers, the ideal stops at a sketch.
Reliance on a single point of control - any centralized account, server or fund pool is a weak point.
These three difficulties blocked every sprint in the early days of digital currency.
It was not until the emergence of Bitcoin that "decentralization" became a reality for the first time, rather than an idea.
On January 3, 2009, Satoshi Nakamoto pressed the start button of history. On that day, the Bitcoin mainnet was officially launched, and the first block, the Genesis Block (Block #0), was mined.
Block reward: 50 Bitcoins.
Block hash: Starts with a string of leading zeros, proving that it meets the difficulty target of Proof of Work (PoW).
A system completely different from all previous digital currencies was born.
Bitcoin relies not on legal protection, not company endorsement, but on code, algorithms and economic incentives.
In a distributed system, the most important thing is not speed, not function, but how to make everyone reach a consensus on "history" and ensure that no one can rewrite the past at will.
The answer given by Satoshi Nakamoto is two simple and elegant rules: Proof of Work (PoW), and Longest Chain First.
All miners have to compete for the right to write blocks by calculating a large number of hash collisions. Whoever first calculates the block hash that meets the difficulty requirements will have the qualification to write the transaction into the chain and receive a reward.
If the network forks, the chain with the largest cumulative workload (the longest chain) will be regarded as the real history by all nodes, and other forks will be automatically abandoned.
The effect of this design has proved its tenacity in 16 years.
As of May 6, 2025, there are approximately 21,406 active full nodes on the Bitcoin network (data source: bitnodes.io). These nodes are spread across six continents, with the most widespread being the United States, Germany, Canada, the Netherlands, and the United Kingdom, but no country or organization controls more than 30% of the nodes. Even if a single entity controls a huge amount of computing power, as long as it does not exceed the 51% computing power threshold, it cannot tamper with the historical ledger.
In 2014, the computing power of the mining pool GHash.io once reached an astonishing 42%, just a stone's throw away from the 51% red line. The global community was immediately alerted and set off a wave of decentralized self-help. In the end, GHash.io took the initiative to reduce computing power under community pressure and persuaded miners to disperse and join other mining pools. This event became a milestone in the history of Bitcoin governance, proving the self-correction ability of consensus mechanisms and community consensus.
Since then, no mining pool has approached the 50% threshold.
The second pillar of Bitcoin is its amazing trust self-proof mechanism.
Unlike the traditional banking system, Bitcoin does not require you to trust that the bank will not tamper with your balance, nor does it require you to trust that a platform will record the account truthfully. It uses a model called UTXO (unspent transaction output), where the ownership and circulation of each Bitcoin are split into independent "outputs" instead of simply represented by account balances.
Every transaction can be verified by anyone.
The key advantage of this design is that even if you don't know any other users and don't have to trust them, you only need to run a full node to verify all the historical records of the entire blockchain.
In order to prevent forgery and cheating, Bitcoin also uses the Elliptic Curve Digital Signature Algorithm (ECDSA). Each transaction must be signed by a private key, and any node can verify the authenticity of the signature with a public key. This encryption mechanism ensures that only those who have the private key can transfer the corresponding bitcoins.
As of 2025, the full Bitcoin blockchain will be approximately 650GB in size. An ordinary laptop with adequate hard drive space can run the Bitcoin Core client and independently verify the history of the entire network.
By simply entering one line of command: bitcoin-cli verifychain, a node can independently check the validity of the blockchain without relying on any third-party API or server.
In the past 16 years, there has never been a widely accepted forgery of Bitcoin's on-chain data. Even if centralized exchanges such as Mt.Gox, Bitfinex, and FTX have exploded one after another, the on-chain Bitcoin asset records have always been accurate, open and transparent.
Trust no longer comes from "trusting someone", but from "self-verification" - facts that everyone can verify.
The biggest challenge of a decentralized system is not writing code or setting up a server. Rather, it is: If there is no boss, who will maintain the network? If there is no law, who can stop evil?
In the traditional world, banks rely on salary systems to manage employees, and governments rely on laws to punish evildoers. But Bitcoin rejects all central authority. It must answer this question itself.
Nakamoto's answer is a design that no one has cracked so far:
Turn "honesty" into the lowest cost option, and turn "doing evil" into a business that is bound to lose money.
Miners compete for the right to write blocks through proof of work (PoW). The winner gets a new block reward - the starting reward in 2009 was 50 BTC, which is halved every 210,000 blocks. By 2024, the block reward has been reduced to 3.125 BTC. At the same time, miners also charge transaction fees paid by users.
In order to prevent excessive growth in computing power from undermining network stability, Bitcoin automatically adjusts the mining difficulty every 2016 blocks (about two weeks) to ensure that the block time of the entire network is always maintained at about 10 minutes.
This mechanism ensures:
As long as you work honestly, your income is stable; once you want to do evil, you will not only not make money, but will lose everything.
This theory has never been broken by reality in 16 years.
In 2024, a new case once again confirmed its power.
That year, the concentration of Bitcoin's computing power reached a historically rare level. According to data from CryptoSlate, the world's two largest mining pools - Foundry USA and AntPool - together control about 57% of the computing power. Among them, Foundry USA accounts for 30% and AntPool accounts for 27%.
In theory, they are fully capable of launching a 51% attack.
If they want, they can prevent the recording of new blocks, reverse transactions, and even conduct double-spending attacks. But in reality, the attack did not happen.
Similar to the GHash.io incident in 2014, when GHash.io once approached 50% of the computing power and finally took the initiative to reduce its share, Foundry USA and AntPool also chose to "rule by inaction".
It is not because of inability, but because launching an attack is costly and has negative benefits.
First, the attack will instantly destroy the global trust in Bitcoin and cause the price of the currency to plummet. This means that the Bitcoin assets held and mined by the mining pool itself will depreciate significantly.
Secondly, the Bitcoin community can exclude the attacker from the new chain through soft forks or hard forks, and the billions of dollars of equipment and electricity costs invested by the mining pool will become "electronic waste".
More importantly, the business models of these two mining pools themselves rely on long-term stable mining income and customer trust. Once an attack is launched, not only will the community be lost, but also the regulatory crackdown may be faced.
The potential benefits of the evildoers are far less than the cost.
Foundry and AntPool have not publicly promised to "not do evil", but their choice - or their "inaction" - itself is the best proof of the effectiveness of Bitcoin's economic incentive mechanism.
In 16 years, no one has successfully launched a 51% attack. It's not because no one wants to, but because no one can bear the consequences.
This is the second pillar of decentralization:
Trust, not based on morality, but on accounting. If the accounts can be settled, honesty becomes the only rational choice.
From 2009 to 2025, Bitcoin has experienced three bull-bear cycles, dozens of global regulatory crackdowns, and even encountered comprehensive bans in many countries, but it has never been interrupted for even a minute. Because:
State consensus: A global network of 21,000+ nodes ensures that history cannot be tampered with.
Trust self-verification: Any user can independently verify data without relying on a third party.
Economic incentives: The cost of attack is always higher than the potential benefits, eliminating the motivation for evil.
As you can see: Bitcoin is not a technological project, but the first system in history that can still operate and win trust under conditions of human distrust.
For the first time, decentralization has truly become a reality that can be relied on.
Bitcoin proves that decentralization is not only possible, but also feasible in reality. But people soon realized that decentralization alone is not enough.
If decentralization only means that everyone can transfer money safely, but cannot build complex transaction logic, cannot increase speed, and cannot connect with real-world data - then it cannot meet the higher expectations of "network services" in the digital age.
Decentralization must become "useful".
As philosopher Isaiah Berlin reminds us:
All freedoms ultimately come at the cost of compromise.
So, in the new generation of blockchain projects after Bitcoin, developers have to face a difficult choice - stick to the ultimate purity of decentralization, or compromise between performance and user experience?
Ethereum and Solana are representatives of these two completely different answers.
In 2015, Vitalik Buterin, a young man who was only 21 years old at the time, led his team to launch the Ethereum mainnet. Bitcoin can only record “who gave whom how much money”, but Ethereum wants to do more - to enable blockchain to execute complex programs like a computer. These programs are called smart contracts, and they do not rely on traditional servers to run, but are executed in tens of thousands of decentralized nodes around the world.
If Bitcoin is “digital gold”, then Ethereum’s goal is to become a “decentralized world computer”.
But the ideal soon encountered a hard wall of reality.
3.1.1 The first compromise: from PoW to PoS
Ethereum used the same Proof of Work (PoW) consensus mechanism as Bitcoin in the early days - that is, through a lot of calculations "guessing puzzles" to win the right to record accounts. This mechanism is safe and reliable, but extremely slow: Bitcoin can only process about 7 transactions per second, and Ethereum can only do 15 to 20 transactions in the early days.
Speed has become a bottleneck.
In September 2022, after years of development, Ethereum completed a major upgrade called The Merge, switching from PoW to Proof of Stake (PoS). Simply put: PoS no longer allows miners to "compete for computing power", but to see who stakes (locks) more Ethereum coins (ETH). The more you stake, the more chances you have to verify new blocks.
This method reduces Ethereum's energy consumption by 99.95% (official data) and greatly improves its transaction processing capacity.
But problems also arise. The minimum threshold to become a validator is to stake 32 ETH. By July 2025, this is equivalent to $110,000 - a price that is almost unattainable for ordinary users. As a result, most validators can only choose to join large staking pools. These pools are operated by professional institutions, and users entrust their ETH to them in exchange for income.
The power of consensus began to concentrate in a few large institutions.
3.1.2 The second compromise: Single point concerns of L2 and Sequencer
In order to further improve the speed, the Ethereum community has developed Layer 2 (L2) Rollup technology. Rollup means: first package a batch of transactions off-chain (outside the main chain), and then write the results back to the main chain.
Today, L2 networks such as Base, Arbitrum, Optimism, and zkSync process more than 1.2 million transactions per day, far exceeding the throughput capacity of the Ethereum main chain.
However, Rollup has a "secret that cannot be told": The sequencing of transactions is usually controlled by a single point sequencer. In other words, whether your transaction is included and in which order it is ranked does not depend entirely on the rules on the chain, but depends on the operator of the Sequencer.
A typical case: On January 10, 2022, Arbitrum's single Sequencer unexpectedly went down for more than 2 hours, resulting in the suspension of on-chain transactions. Although user funds were not damaged, the incident exposed the concentration risk of the L2 network.
Although the Ethereum Foundation and various teams have launched decentralized sequencer research (such as EigenLayer and Espresso Systems' sorter sharing solution), a fully decentralized sequencer network has not yet been implemented. Until now, most mainstream Rollups (such as Arbitrum, Optimism, and Base) still use a single sequencer architecture.
This is a clear and painful trade-off between performance and decentralization.
3.1.3 is a compromise and a balance.
Of course, Ethereum does not hide these compromises. Vitalik frankly admitted in a blog post: Decentralization is not black and white, it is a layered engineering problem. We must find a balance between user experience, scalability and decentralization.
This balance has been successful, at least so far, and Ethereum still maintains its dominant position in the public chain field:
As of May 6, 2025, the total locked value (TVL) of the Ethereum main chain has reached approximately US$80.3 billion, accounting for more than the sum of all other L1 and L2.
Ethereum no longer pursues absolute decentralization, but chooses a modular, hierarchically distributed decentralized structure. It sacrifices some "purity" in exchange for a leap in user experience.
If Ethereum is carefully balancing between ideals and reality, then Solana's choice is very clear:
Performance first, even at the cost of centralization.
In 2020, Anatoly Yakovenko and his team launched the Solana mainnet, with the goal of building a decentralized network that is as fast as NASDAQ.
3.2.1 Miracle of Performance
Solana has set a shocking record in the blockchain industry:
The peak of transactions per second (TPS) exceeds 65,000.
Block confirmation time: about 400 milliseconds, almost close to the payment speed of traditional Internet.
This performance almost eliminates the delay of users' operations on the blockchain, making the transaction experience of DeFi, NFT, and even real world assets (RWA) close to Web2 applications.
3.2.2 The cost of high speed
But this speed comes at a price.
Solana's verification node operation threshold is very high. The official recommended minimum configuration:
12-core CPU
256GB memory
1TB NVMe high-speed hard drive
In fact, most validators use servers hosted by professional data centers to ensure efficiency.
As a result, by 2025, the number of Solana global validators will be about 3,000. Among them, the top ten validators control about 42% of the total staking rights.
In addition, Solana introduced Firedancer, a high-performance client developed by the Jump Trading team. Although it further improves the network speed, it also makes the entire network technically dependent on a small number of development teams.
3.2.3 Results from Concentration
Solana's strategy has brought amazing real results:
In 2025, Solana became the chain with the most daily active users of NFT in the world.
The application landing speed of DePIN (decentralized physical infrastructure) and RWA (real world assets) is leading in the industry.
The users of self-branded mobile phone SAGA and payment tool Solana Pay in the Southeast Asian market exceed 5 million.
Faced with external doubts about centralization, Anatoly admitted in an interview with CoinDesk in 2024: Solana's goal is to show that high performance and decentralization can coexist, even if some compromises are required.
The story of Solana is not a self-talk of technology, but a real experiment on the boundaries of decentralization.
From the extreme purity of Bitcoin, to the modular trade-off of Ethereum, to the performance supremacy of Solana, different blockchains have given different answers to "decentralization and reality".
Decentralization is no longer an absolute proposition of "yes" or "no". It has become an engineering continuum - each chain makes its own choice between user experience, transaction speed, cost and decentralization principles.
Inheritance or compromise ultimately determines their future.
Decentralization has never been just an idea, it is a measurable engineering attribute. Just as the resilience of a bridge can be measured by stress testing, the decentralization level of blockchain also has objective quantitative standards.
Among many evaluation tools, the Herfindahl-Hirschman Index (HHI) has become an international standard for measuring system concentration.
This indicator was first independently proposed by Dutch economist H. Herfindahl and American economist A. O. Hirschman in the 1950s, and was originally used to analyze monopoly risks and competitive structures in industrial organizations.
In 1982, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) officially included HHI in the antitrust review standards, and it is widely used to assess the concentration of corporate mergers and acquisitions, financial markets and Internet platforms.
The calculation method of HHI is very intuitive: add up the squares of the market share of all participants (such as computing power, pledge, or market share). This process can sensitively reflect whether resources are over-concentrated.
For example, if 10 players evenly distribute the market share, each accounting for 10%, HHI = 10 × 10 × 10 = 1,000. This means that the market is fully competitive and resources are evenly distributed.
However, if one player holds 50% and the remaining nine players each hold 5.55%, the HHI will rise significantly: HHI = (50 × 50) + 9 × (5.55 × 5.55) = 2,500 + 277 = 2,777. This level exceeds 2,500, which means that the market is highly concentrated and there is a risk of monopoly.
According to the standards of US antitrust law, HHI is divided into three intervals:
Below 1,500 belongs to a competitive market;
1,500 to 2,500 is moderately concentrated;
Above 2,500 is considered highly concentrated.
This "thermometer" widely used in industry and finance has now become a core tool for measuring the level of decentralization of blockchain.
If the HHI standard is applied to the main blockchain networks, we can clearly see the differences in the level of decentralization among the three.
4.2.0 Note: Assumptions and limitations of HHI calculation
This article adopts the industry's common simplified method when evaluating the HHI of Bitcoin, Ethereum and Solana: the control rights of the top 5-10 entities are selected as the main sample, and the remaining participants are considered to be evenly distributed. This method can effectively reflect the overall trend, but there are two potential underestimations:
(1) Implicit control-the surface share of the mining pool may underestimate the true concentration of a single computing power provider or institution.
(2) Overlapping delegations - In PoS systems such as Ethereum, there may be common controllers or protocol delegation relationships between multiple staking pools.
Despite this, this method is still widely used in industry concentration analysis and can reflect relative concentration trends, but readers should note that it provides a "trend scale" rather than an absolute precise value
4.2.1 The concentration of Bitcoin (BTC) is a bit high.
The above figure shows the hashrate distribution of the 16 largest mining pools as of May 6, 2025. The calculated HHI is about 1,727, which is in the moderate concentration range. Although the hashrate of individual mining pools has increased, the overall situation is relatively stable. No pool is close to 51%, and the largest has only 31% of the share, showing good anti-censorship resilience.
4.2.2 The concentration of Ethereum (ETH) is unexpectedly low
The above figure shows the distribution of the top nine staking entities as of May 6, 2025. Although they control about 61% of the total ETH staking, the market concentration is not high. Calculated based on market share, the current HHI is about 889, which is far below the 1,500 dividing line of the US antitrust standard, showing the low concentration of Ethereum verification rights.
This distribution allows Ethereum to maintain decentralized resilience that is superior to most financial and Internet platforms while sacrificing some pure decentralization in exchange for performance and user experience.
4.2.3 Solana's concentration is a bit high
As of May 6, 2025, the top ten liquidity staking pools control about 82% of the total SOL staking, and the concentration is significantly higher than other mainstream blockchains. According to calculations, its HHI index is about 1830, which is in the moderate concentration range. This concentration is not accidental, but an engineering choice made by Solana in pursuit of extreme performance and high transaction throughput.
This design greatly improves the user experience and enables Solana to support complex applications such as finance, games, and DePIN at speeds close to the traditional Internet, but it also sacrifices some of the purity of decentralization. This concentration has become a core variable that Solana system resilience needs to pay continuous attention to.
4.2.4 Supplementary Notes
In addition, with the rise of restaking networks such as EigenLayer and Karak, and the development of data availability (DA) layers such as Celestia and EigenDA, the concentration of verification and sorting rights is evolving across chains and layers.
A single entity may simultaneously control sorters, verification nodes, or staking delegation rights in multiple L2, DA, and Restaking networks, forming "second-order concentration".
Currently, the industry lacks a mature indicator system to measure this cross-layer concentration, but researchers have proposed using "cross-domain HHI" or "inter-chain governance cross-index (CGCI)" as a future reference.
The HHI used in this article mainly reflects the current status of a single chain and a single layer. In the future, the measurement of this complex concentration still requires the establishment of new methods.
Through the HHI indicator, we can intuitively compare the different paths of the three major mainstream public chains in terms of decentralization:
Bitcoin (BTC): HHI ≈ 1,727, which is in the moderate concentration range. Its proof-of-work (PoW) mechanism and globally distributed computing power demonstrate good anti-censorship and distribution, which is in line with the system design goal of "digital gold".
Ethereum (ETH): HHI ≈ 889, which is lower than the 1,500 demarcation line of the antitrust law. It is currently the most decentralized mainstream blockchain. Ethereum has achieved a balance between performance expansion, user experience and decentralization, and the decentralization of verification rights is a major engineering achievement.
Solana (SOL): HHI ≈ 1,830, although it is moderately concentrated, it is significantly higher than ETH. This reflects the engineering compromises made by Solana in the pursuit of high throughput and extreme performance. It sacrifices some decentralization in exchange for speed, which is suitable for speed-sensitive application scenarios such as DeFi, games and DePIN.
This comparison shows that decentralization is not a single goal, but an engineering balance between performance, scalability and user needs. Different blockchains choose different levels of concentration in this balance according to their respective application scenarios and value propositions.
More importantly, this comparison also reveals a fact that has been overlooked by the market: Ethereum's decentralized advantage far exceeds its reflection in market value and asset pricing.
Although ETH's current market value is much lower than BTC (about $217 billion vs. $1873 billion), it has achieved the engineering optimal level in terms of the decentralization of verification rights. This underestimation of the "value of decentralization" may become an important variable in future market revaluations.
In human history, what is truly remembered for every technological revolution is never its "difficulty", but the unprecedented achievements it has brought:
The steam engine - the first time that human physical strength was liberated from the laws of nature; The Internet - the first time that information dissemination broke through physical distance; And decentralization, is the first time that a trustless order has been built in human society.
This is not a simple technological breakthrough, but an engineering art. It allows the cross-border integration of ideas, algorithms, economics, and social consensus, solving contradictions that traditional systems cannot overcome at all.
We can use three achievements that changed the world to understand its extraordinary significance.
In traditional society, asset consensus relies on authority.
Banks record who has how much money, and land registries record who owns which piece of land. But this system has three problems that can never be avoided:
You have to trust that the institution will not forge;
You have to accept national laws as endorsement;
Authoritative institutions themselves are single-point fragile and can be easily destroyed by politics, war, and corruption.
And Bitcoin broke this paradigm for the first time.
From January 3, 2009 to 2025, more than 21,000 independent nodes have been running uninterruptedly for 16 consecutive years without a central server or any authority, ensuring the world's largest "permissionless asset registration system". Bitcoin's ledger does not belong to any government and does not rely on any law. It only belongs to the global participants who run this consensus algorithm.
This is the first time that mankind has achieved a consensus asset system at the level of 1.88 trillion US dollars (BTC market value on May 6, 2025) without any sovereign support.
In the past, humans had to be authorized by the king, parliament or central bank to create "currency". Bitcoin tells the world: no longer necessary.
Historically, the maintenance of all order requires "external constraints".
Laws rely on courts and police, commercial contracts rely on arbitration, and national security relies on the military. But these constraints have costs, and the cost of failure is extremely high (such as the financial crisis in 2008, or the currency collapse in Venezuela).
Blockchain has achieved the first: writing the motivation for honest behavior into the system itself.
Miners are dishonest? The cost of attacking the blockchain is so high that it can bankrupt everyone, and the chance of success is close to zero.
Validators are evil? Ethereum's Slashing mechanism directly confiscates the pledged funds, and the evildoers cannot get any net benefits from it.
Even if it is close to the threat of 51% computing power for a short time like GHash.io, the Bitcoin community can quickly correct itself and promote the redistribution of computing power. This incentive-punishment mechanism does not rely on legal enforcement, but through economic game methods, making "honesty" the lowest-cost behavioral choice.
In the past financial history, this has never been achieved.
This is the first real implementation of an autonomous system.
In April 2025, the fiber optic cable of Amazon Cloud Service in Japan was broken, paralyzing the centralized trading platform and some Layer 2 networks in Asia. However, the core decentralized protocols such as Bitcoin, Ethereum Mainnet, and Uniswap did not stop for a second.
This is not accidental.
Decentralized design is essentially a resistant system:
Nodes are distributed globally, so they are not afraid of natural disasters or political conflicts;
If any node goes offline, the overall system will self-repair;
The consensus mechanism ensures that historical records are irreversible.
This system does not rely on a single server, a specific government, or even the continued will of any single human organization.
In the history of engineering, only the Internet TCP/IP protocol has attempted a similar design (in order to survive communications after a nuclear war). But even TCP/IP cannot achieve global synchronous consensus on assets and status.
Only blockchain, in Bitcoin and its successors, has done it. This ability to transcend single point failure, automatically tolerate faults, and continuously evolve is the first time that humans have it.
Decentralization has never been just a "technical problem", but a brand new possibility that humans have for the first time - building a sustainable and credible order without a central authority.
It is not a game for technical people, but a civilization project jointly created by economists, engineers, cryptographers, legal scholars and liberals.
It proves that even without a central authority, humans can still build trust.
It has created: a global asset and data order that can operate, protect and evolve on its own.
But its significance goes far beyond this.
Just as the steam engine opened the industrial age and the Internet opened the information age, decentralization is opening an economic age beyond sovereignty.
In the past 16 years, Bitcoin has proved one thing with irrefutable facts:
Decentralization is not an ideal, but a mechanism that can survive and continue to win in the real world.
In 2009, when Satoshi Nakamoto mined the Genesis Block, it was just an experiment by an unknown person; in 2025, Bitcoin became the world's tenth largest asset, with a market value of more than 1.8 trillion US dollars.
And Bitcoin is not alone.
Ethereum brings smart contracts and modular design, making decentralization no longer just "saving money", but a programming financial and logic engine.
Solana chooses the route of extreme performance. Although it has made some concessions in decentralization, it has made real verification of the speed limit of decentralized systems.
They are not the product of ideological debates, but different answers in engineering practice.
This is not a miracle, this is the first bottom-up consensus engineering
Just like every great innovation in history:
The steam engine liberated human physical strength from the laws of nature and opened the industrial age;
The Internet broke the information barrier and opened the information age;
Blockchain, with a trustless consensus, brought mankind into the economic age beyond sovereignty for the first time.
This is the beauty of blockchain.
It is not just the elegance of the code, nor the resilience of the protocol, but a civilization-level engineering art:
It makes cooperation between people possible without the need for authority;
It makes finance, data and even social systems self-healing with an unalterable consensus;
It replaces punishment with incentives, trust with transparency, and lets the world run on its own.
Decentralization is not about resisting authority, but about the instinct of survival. It is not about idealism, but about having a "second choice" at the worst moment.
But the meaning of decentralization is far more than just survival.
For the first time, it broke the isolation between politics and economy, allowing humans to build a self-organized financial and social order without central sovereignty.
This change is causing the classic paradigm of political economics to collapse.
In the next article, which is the last part of the "decentralization trilogy", we will explore in depth:
After solving its own "survival" problem, what kind of future can decentralization bring?
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