Is Solana More Decentralized Than Other Layer 1 Chains

Solana is mainly known for being scalable and having a vibrant ecosystem – not so much for being decentralized.

Mark Jurgens
July 29, 2022

A Centralized Token Distribution

Solana has the reputation of being centralized. This reputation likely stems from the high token allocation to VCs and insiders when the chain first launched. Comparatively, Ethereum had over three times fewer coins distributed to insiders. 

While things are early, it helps to have a central group that can push the ecosystem in the right direction. Over time, these tokens should flow to more users as long-term concentrated ownership may impair Solana’s ability to become neutral public infrastructure.

As better Solana-based projects are born, coins naturally get distributed among new players. But, on the flip side, once investors stake their coins into Proof of Stake, they get the right to the network’s issuance, which can deter further decentralization. 

With a Decentralized Network

One could argue that the network's security and stability, achieved partly through decentralization, is more critical than coin allocation. 

Unstoppable Finance, a DeFi investment app, highlighted how Solana’s network is more decentralized than people think. 

  1. Solana’s validator count has grown steadily since the launch of mainnet beta.
  1. Solana has more active validators than most Proof of Stake blockchains.
  1. Solana has one of the industry's highest Nakamoto coefficients (NC). 

The NC is technically defined as the smallest number of validators who cumulatively stake 33% of the network’s staked tokens. It represents the minimum number of nodes required to disrupt the blockchain's network. A higher NC means a more even distribution of staked tokens.

  1. The Solana community is taking steps to improve decentralization further:
  • Solana Beach encourages visitors to stake to smaller validators and improve the NC.
  • Solana Foundation offers support for buying validator hardware.
  • The foundation also created the delegation program, whereby 80% of its treasury is staked exclusively to smaller validators.
  • No minimum stake: validators can begin staking with 1 $SOL.

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Mark Jurgens

Mark is an industrial engineer, born in Colombia and raised in Argentina, a place that is in deep need for the freedom crypto can offer the world. He is searching for projects that want to make a positive impact. Analytical and creative. Loves to travel around. Biggest holdings are Defichain, Ethereum and Solana.

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