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Blockchain Networks and Quality of Decentralization

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In the context of blockchain networks, decentralization refers to the distribution of power, control, and data across a network of participants rather than being concentrated in a single central authority. This concept of decentralization is a key characteristic of blockchain technology and is often cited as one of the main advantages it provides.

There are a few key characteristics that create a decentralized blockchain network. These characteristics include: 

  1. Peer-to-peer network: Participants in the network communicate directly with each other without the need for intermediaries. 
  2. No central authority: Traditional centralized systems feature a central authority that acts as a controlling force of the network. Within a decentralized blockchain network, there is no single entity with complete control, and decisions are made by consensus among network participants. 
  3. Data redundancy: Blockchains offer enhanced security as they store copies of data on multiple nodes across the network. This redundancy ensures that the system remains resilient to failures or attacks. 
  4. Immutable ledger: Once a transaction takes place on the blockchain its record can not be altered or deleted. The immutable ledger ensures transparency and integrity of the data. 
  5. Incentives for participation: Participants in the network are often incentivized to contribute resources such as computing power (in proof-of-work systems) or tokens (in proof-of-stake systems) in exchange for rewards. This helps ensure the continued operation and security of the network. 

Decentralization is one of the most, if not the most, fundamental aspects of blockchain technology. It works to reduce censorship, manipulation, and single points of failure that are inherent in centralized systems. However, achieving decentralization in practice can be challenging. That is why AzureADA is proud to share the results of the new EDI Decentralization Measurement Tool.

What is the EDI Decentralization Measurement Tool

The Edinburgh Decentralization Index (EDI) is a project that works to measure the quality and level of decentralization of blockchain networks in a systematic manner. The EDI team has created a tool that can measure the quality of block production decentralization for various blockchain projects. Data for Cardano and Bitcoin has been made available for a closer look by the EDI team thanks to their measuring tool. 

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How is Decentralization Measured?

The EDI team has identified 8 areas that it plans to investigate when providing a decentralization measurement. These areas include: 

  • Hardware
  • Software 
  • Network Consensus
  • Tokenomics 
  • API clients 
  • Governance 
  • Geography 

This complex task will require revision and the introduction of new methods throughout the experimentation of measurement in individual areas. The measurements referred to in this article represent data gathered on block production within the Cardano blockchain. Throughout the past 3 years, 137,076 blocks were minted by over 1000 separate entities. 

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Nu. Fi & AdaLite3136
Nordic Pool 2332
Everstake 2204
eToro 1895
FIVE SecureStake1853

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We are thrilled to share with our community that we have been ranked in the top 10 block producers on the Cardano blockchain out of more than 1,000 entities. We are also pleased to share that out of the list of the top 10 producers, AZUR stands as 1 of the 2 mentioned block producers that do not produce on an industrial scale. While it is true that block production is only one input for measuring decentralization, it is certainly one of the more important inputs.

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