🔗 Nakamoto Coefficients
The Nakamoto coefficient is a way to quantify the decentralization of a blockchain or other decentralized system. It's the number of entities you need to compromise at least one essential subsystem.
Quantifying decentralization allows us to:
1) Measure a system’s current decentralization level
2) Determine how a proposed modification quantitatively impacts decentralization
3) Design optimization algorithms & architectures to maximize decentralization
| Chain | Token | Price | Threshold (1) | Coefficient (2) | Bribe (3) |
|---|---|---|---|---|---|
(1) Percentage of votes required to stop block production. For most chains that use traditional BFT consensus (e.g., Tendermint), this number is 33%+1. Some other consensus algorithms require higher percentages (e.g., Ethereum's Casper 50%+1).
(2) The minimum number of nodes or validators that can collude and shut down the network.
(3) Value of the staked tokens owned by the smallest group of nodes that can collude to shut down the network. You can bribe them with this amount to perform the action.