Solana is destined to become the most decentralized blockchain! Decentralization ultimately comes from fees, without scalability; Ethereum loses the game SOL price only needs to double to surpass ETH's security budget! As no one has a monopoly on decentralization & security 🧵 Relative to market capitalization, we can even argue that SOL is more decentralized now: ETH's Nakamoto Coefficient is 2! SOL's Nakamoto Coefficient is 19! (Nakamoto Coefficient measures the number of parties that need to collude for an attack) This is a direct consequence of ETH's decision not to implement native delegation, resulting in a single provider (Lido) dominating staking instead! We can also compare the total number of validators; in the case of ETH, these figures are often extremely misleading. ETH supporters often fall into the bad habit of counting multiples of 32 ETH instead of the physical machines involved in block production! Here are the real numbers: ETH has 8.8k validators SOL has 1.1k validators (Counting ETH consensus clients using "Ethernodes" as the source. For SOL, we count validators using "Solana Beach" as the source) ETH has a clear lead here; however, this is all while ETH has a market cap that is five times that of SOL! As the number of validators absolutely does scale with the value of the network. ETH still wins in this particular metric, but this is not a meaningful difference As I mentioned in the opening, SOL only needs to double in price for it to exceed ETH's security budget What is interesting about this is that this is even possible at a fifth of ETH's market capitalization. As that makes SOL significantly more efficient in terms of security. This is primarily due to SOL having a higher staking participation rate, which is more due to circumstance than any particular design feature: ETH has a security budget of $50.5B SOL has a security budget of $25.3B Here is the security budget math: ETH 524B+0.97B+3.33B x 0.29 x 0.33 = $50.5B SOL 107B+0.70B+5.26B x 0.68 x 0.33 = $25.3B (Market capitalization + fees + inflation / staking participation rate / attack threshold) The most commonly ignored decentralization metric is governance; this is where SOL wins. ETH has thoroughly rejected the idea of on-chain stakeholder governance, whereas SOL is continuing down the path of true decentralization. Even if SOL's on-chain governance is still relatively basic & incomplete, the social contract has at least been established. Whereas the opposite of that is now true for ETH: ETH has centralized governance! SOL has decentralized governance! We have covered four decentralization metrics so far & the score is 2-2. It is up to you to decide what metrics you prioritize over others There are also more decentralization metrics that I did not include here, but I would consider these to be the most important, excluding permissioned & centralized design features, which fortunatly neither ETH nor SOL have, so it was not relevant to include here In absolute technical terms, ETH is more decentralized at present. I will go even further & say that ETH is technically the most decentralized blockchain. Even if SOL is more decentralized, politically speaking However, projecting that out into the future, I am confident that SOL will eventually overtake ETH in all decentralization metrics The primary reason for this assessment is the difference in the two underlying scaling roadmaps. That is because, compared to SOL, ETH is not scaling its L1 meaningfully at all! How L1 scaling impacts decentralization: The more the L1 scales, the higher the node requirements become; however, the more the L1 scales, the more useful it also becomes This usefulness or utility, which comes from scale, brings with it massive economic benefits in the form of fees Fees are what will ultimately pay for the majority of security, scarcity & decentralization we expect from blockchain technology This means that the ideal blockchain design must strike a balance between these two levers. Thereby, in the process, maximizing both decentralization & utility. Because going too far in either extreme is detrimental to both, due to positive & negative feedback loops This is how ETH is hurting decentralization in the name of decentralization, a tragic irony... The "ETH perspective" represents an overly simplistic understanding of decentralization, where they think low node requirements = decentralization When you reason in a vacuum as an engineer, this is true. It is, however, absolutely false when you place a blockchain into the real world & account for economics, incentives, & politics When in reality, by temporarily taking off your engineer's hat & putting on the hat of a social scientist & economist. It becomes abundantly clear that SOL, over the long term, is taking a more decentralized approach. By not sacrificing utility on the altar of decentralization & losing both in the process A good blockchain designer understands there is a middle way Conclusion Is SOL perfect? Absolutely not; however, it is still significantly better than ETH in the long run in every single way, including decentralization & utility! The classic blockchain trilemma is outdated due to advances in scaling tech; we have now far exceeded it, as Vitalik also originally predicted when he first coined the term It is a shame that Vitalik now holds the opposite point of view, which is partially why ETH chose the "L2 scaling" path, an uncompetitive solution when L2s take the majority of fees. Allowing SOL to eventually overtake ETH's security budget! That is how ETH exceeded the decentralization of BTC, so that is also how SOL will exceed the decentralization metrics of ETH in the near future SOL already has a lion's share of all crypto revenue, as the security budget funding ratio between inflation & revenue flips, so will the combined security budget of SOL flip that of ETH! SOL's relative price to ETH doubling will also do the job of making SOL the new leader in security & eventually also decentralization SOL already has way more capacity, while being cheaper & faster. Because of this, it will also be the most decentralized & secure in the long run When the security budget finally flips, all non-scalable chains will have no legs left to stand on! 🦕☄️