Decentralization in PoS Blockchain Consensus: Quantification and Advancement

Abstract: Decentralization is a foundational principle of permissionless blockchains, with consensus mechanisms serving a critical role in its realization. This study quantifies the decentralization of consensus mechanisms in proof-of-stake (PoS) blockchains using a comprehensive set of metrics, including Nakamoto coefficients, Gini, Herfindahl Hirschman Index (HHI), Shapley values, and Zipfs coefficient. Our empirical analysis across ten prominent blockchains reveals significant concentration of stake among a few validators, posing challenges to fair consensus. To address this, we introduce two alternative weighting models for PoS consensus: Square Root Stake Weight (SRSW) and Logarithmic Stake Weight (LSW), which adjust validator influence through non-linear transformations. Results demonstrate that SRSW and LSW models improve decentralization metrics by an average of 51% and 132%, respectively, supporting more equitable and resilient blockchain systems.