Bitcoin Tops Ethereum in Decentralization Hierarchy

A recent joint study by ARK Invest and Glassnode found that Bitcoin has the highest level of decentralization among major cryptocurrencies, followed closely by Ethereum. The researchers measured decentralization using a metric called the Nakamoto coefficient, which calculates the minimum number of entities needed to control more than half of a network's production.

The study found that three mining pools - Foundry USA (27.27%), AntPool (17.06%), and F2Pool (16.96%) - could collectively control more than 61% of Bitcoin's hash rate, resulting in a Nakamoto coefficient of three. This is significant because it means that these three entities have the potential to disrupt finality on the network.

However, the researchers emphasized that this does not necessarily mean that these mining pools own the underlying hardware or control the nodes themselves. The mobility of miners and their ability to redirect their computing power elsewhere limits how closely pool concentration can be equated with permanent control.

Ethereum, on the other hand, requires three staking entities to exceed 33%, but pooled delegation complicates direct control assumptions. Lido represented 23.04% of staked ETH in the report's July data, while Binance controlled 8.88% and Kraken held 6.91%. The researchers estimated that exiting a 1% position would take around 14.6 days under current conditions.

Solana recorded the highest Nakamoto coefficient for the selected block-production threshold at 19 validators needed to control more than 33% of delegated stake. However, its physical infrastructure was found to be highly concentrated, with approximately 100% of the measured infrastructure operating in commercial data centers.