CryptoMediaClub
Wednesday, July 30, 2025
  • All news
  • Bitcoin
  • Ethereum
  • Altcoins
  • NFT
  • Blockchain
  • Analysis
No Result
View All Result
  • All news
  • Bitcoin
  • Ethereum
  • Altcoins
  • NFT
  • Blockchain
  • Analysis
No Result
View All Result
CryptoMediaClub
No Result
View All Result
Home Analysis

Do proof-of-stake blockchains trend toward decentralization over time?

06.10.2023
A A
0
125
VIEWS
ShareShare

As blockchain technology transitions toward proof-of-stake consensus models, a pressing question arises — will these systems maintain decentralization, or will rewards disproportionately pool among large players at the expense of broader participation?

Dr. Wenpin Tang, a leading researcher of blockchain incentives, analyzed these dynamics in proof-of-stake (PoS) systems using advanced mathematical models. His findings highlight and begin to unpack the complex forces at play.

In pure PoS chains like Ethereum, miners bid using their coin balances for validation rights with no trading allowed between miners. Winners earn more coins as rewards. This seems to favor large players, but Dr. Tang explains it’s more nuanced:

The key takeaway is it will be different for large and small miners. For large miners (e.g. Binance or Musk), their shares will be stable e.g. if they have 10% initial shares, they will also be close to 10% in the end. That is not the case for small miners (e.g. many retailer miners), their shares suffer from fluctuations. If they have 0.01% initial shares, they may end up with 0.0001% or 0.1%, say — with the downward probability being higher than the upward probability.

So while giants remain steady in this pure PoS system, small miners face significant volatility with a long-term trend toward loss of stake. Dr. Tang notes this could lead to greater reliance on large validators for blockchain upkeep.

Introducing trading to the ecosystem, however, has a profound effect. When miners can trade coins, new dynamics emerge. Dr. Tang modeled a “market impact” approach where selling drops prices and buying lifts them. The math then showed trading enforcing decentralization over time.

This, however, presumes a “homogenous” group of miners validating the network, meaning that all are acting to optimize their positions. “The analysis presumes miners have identical incentives and information,” Dr. Tang says, “but reality is far messier.”

Equally vital is moving beyond perfect rationality assumed in most models. “Real decisions come from ‘feeling,’ not calculated optimization,” Tang explains. “This chaotic collective behavior requires study.”

In other words, human feelings shape incentives, and differing incentives create heterogeneity among the mining population that is difficult for pure mathematics to account for. So while Dr. Tang’s equations lend directional insights, real-world human actions drive ultimate results. Dr. Tang uses the term “bounded rationality”—rational thought that is nevertheless “bounded” by human foibles and incentives.

Here Dr. Tang sees machine learning playing an important role in analyzing the huge number of idiosyncrasies across different actors on the blockchain. It could cluster and analyze different miner behaviors and knowledge. Insights gained would assist protocol designs in better promoting decentralization.

This interplay of theory and practice leads Tang to conclude:

“Well-structured PoS systems can potentially decentralize wealth. But achieving this demands carefully calibrating rewards and trading parameters − and always accounting for human imperfection.”

While fully decentralized networks remain an aspirational goal, Dr. Tang’s research provides hope they can be achieved through careful design considerations. Importantly, it demonstrates the models that do trend in a favorable direction, and provides at least a partial framework for sustainable network design.

However, mathematical models alone are not quite sufficient to tell the whole story. Maintaining broad participation requires deep understanding of miner behaviors and incentives. By combining insights from theory and practice, blockchains may yet fulfill their promise of equitable access and distributed trust. But the path forward will require acknowledging social and cognitive nuances beyond the purely technical.

The post Do proof-of-stake blockchains trend toward decentralization over time? appeared first on CryptoSlate.

Share10Tweet6ShareSharePin2

Related Posts

StanChart predicts corporates will control 10% of Ethereum supply over time
Analysis

StanChart predicts corporates will control 10% of Ethereum supply over time

29.07.2025
0

A new report by Standard Chartered identifies publicly traded Ethereum (ETH) treasury companies as a distinct and rapidly evolving asset...

Read moreDetails
Global stablecoin searches hit all-time high with Washington leading traffic

Global stablecoin searches hit all-time high with Washington leading traffic

29.07.2025
BlackRock’s ETHA becomes 4th-largest ETF by 30‑day inflows as Ethereum funds aim for $10B

BlackRock’s ETHA becomes 4th-largest ETF by 30‑day inflows as Ethereum funds aim for $10B

29.07.2025
Bitcoin steadies near $114,800 but fragility risk rises as leverage climbs

Bitcoin steadies near $114,800 but fragility risk rises as leverage climbs

29.07.2025
Increased market volatility as the U.S.–Europe tariff deadline looms

Increased market volatility as the U.S.–Europe tariff deadline looms

27.07.2025
Load More
Next Post
EU Market Regulator Issues Second Consultation Paper on MiCA Mandates

EU Market Regulator Issues Second Consultation Paper on MiCA Mandates

0 0 votes
Рейтинг статьи
Subscribe
Notify of
guest
guest
0 комментариев
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Recommended

ChatGPT Empowers Digital Artist to Generate a Memecoin Worth $50M

ChatGPT Empowers Digital Artist to Generate a Memecoin Worth $50M

2 years ago
Tom Brady NFT Fetches $40K as Super Bowl Legends Hype Digital Collectibles

Tom Brady NFT Fetches $40K as Super Bowl Legends Hype Digital Collectibles

1 year ago
Locked Ethereum Surges to Record High; Binance’s CZ Expresses Bullish Sentiment

Locked Ethereum Surges to Record High; Binance’s CZ Expresses Bullish Sentiment

2 years ago
Binance to shut down BUSD lending by October 25

Binance to shut down BUSD lending by October 25

2 years ago

Categories

  • All news
  • Altcoins
  • Analysis
  • Bitcoin
  • Blockchain
  • Ethereum
  • NFT
No Result
View All Result

Highlights

SharpLink Secures 438K ETH, Spending $290M in Weeklong Buying Spree

Interactive Brokers Considers Launching Its Own Stablecoin

The Future of Bitcoin BTC Income: EarnMining App Offers Stable Daily Rewards

93% of Financial Institutions Plan to Implement AI Agents in Compliance

Major Breach Study Reveals Widespread Leaks of Bank Statements, SSNs, and Crypto Keys

Global stablecoin searches hit all-time high with Washington leading traffic

Trending

ChatGPT’s 28-Indicator XRP Analysis: 95% ETF Odds Ignite Battle Over $3.11 Support Line
All news

ChatGPT’s 28-Indicator XRP Analysis: 95% ETF Odds Ignite Battle Over $3.11 Support Line

29.07.2025
0

XRP is trading at $3.09, with volume declining 13.36% to $6.66 billion. Bloomberg analysts have upgraded ETF...

StanChart predicts corporates will control 10% of Ethereum supply over time

StanChart predicts corporates will control 10% of Ethereum supply over time

29.07.2025

Billionaire Calls for Buying More Bitcoin as U.S. Debt Spirals – Best Wallet Automates the Strategy, ICO Hits $14.3M

29.07.2025
SharpLink Secures 438K ETH, Spending $290M in Weeklong Buying Spree

SharpLink Secures 438K ETH, Spending $290M in Weeklong Buying Spree

29.07.2025
Interactive Brokers Considers Launching Its Own Stablecoin

Interactive Brokers Considers Launching Its Own Stablecoin

29.07.2025
  • All news
  • Altcoins
  • Bitcoin
  • Blockchain
  • Ethereum
  • NFT
  • Analysis
Editor: cryptomediaclub.com@gmail.com
Advertising: digestmediaholding@gmail.com

Disclaimer: Information found on CryptoMediaClub is those of writers quoted. It does not represent the opinions of CryptoMediaClub on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoMediaClub covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.

© 2023 Crypto News. All Rights Reserved

No Result
View All Result
  • All news
  • Bitcoin
  • Ethereum
  • Altcoins
  • NFT
  • Blockchain
  • Analysis

Disclaimer: Information found on CryptoMediaClub is those of writers quoted. It does not represent the opinions of CryptoMediaClub on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoMediaClub covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.

© 2023 Crypto News. All Rights Reserved

wpDiscuz