Hey All,
Understanding Nakamoto Coefficient in depth would require to go through many documents and blogs. But whereas understanding it in simple terms and what it is indented for its better off seeing the analytics provided for various protocols, blockchains out there vis the analytic tool created by SmartStake - Here
In a very simple and layman's terms The Nakamoto Coefficient is a method that provides a score to measure the decentralization of any given network and as matter of fact a blockchain. If we want to know how much a blockchain is decentralized then we leverage The Nakamoto Coefficient. It represents the minimum number of entities that would have to intrigue to control over 50% of the staked tokens in the network - and thus, the network itself. A network is said to be more decentralized if the Nakamoto coefficient value is higher, the more decentralized the network is considered to be. With the help of Nakamoto Coefficient we can also come to know about the minimum number of nodes required to disrupt the network.
The Nakamoto Coefficient represents the number of validators or nodes that must agree to affect the blockchain and prevent it from functioning correctly. A bigger value relative to the total number of validators, the lower the risk of something like this happening and, therefore, the more decentralized the network.
Decentralization Metrics by Smart Stake
There are a lots of smart tools out there which can help you to know what exactly The Nakamoto Coefficient value of your favorite project or blockchain looks like. I tried searching The Nakamoto Coefficient value for HIVE but unfortunately could not find it. As there is no simple straight forward Nakamoto coefficient formula to use. One would need to take the time to obtain large sets of data, graph them on a Lorenz curve and analyze the results to get the Nakamoto Coefficient value. The tool that I found handy was the analytic tool created by SmartStake and it does list out various blockchain Nakamoto Coefficient value.
Most of the projects that they are tracking is associated to the Cosmos eco system. I recently invested in a project which is associated to Liquid Staking - The Quicksilver Protocol which plans to bring scalable liquid staking to the Cosmos ecosystem through Interchain Accounts. And was happy to see that it has a very good Nakamoto Coefficient value which is 14 when compared to other listed projects. This definitely showcase the focus of the project on fostering decentralization and working towards it. Decentralization is the way to go and is the future ahead at least in the Crypto world.
Have your say on The Nakamoto Coefficient..
Did you know about The Nakamoto Coefficient? Its importance and the role it plays in letting us know how much a network is decentralized? Tried searching for HIVE The Nakamoto Coefficient value? Let me know your thoughts on The Nakamoto Coefficient overall in the comment box below? cheers
The Nakamoto Coefficient - What is it & its Importance in decentralized network...
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