A new comparative peer-revieed study on the levels of decentralization in bitcoin and ethereum finds that “the full node distribution for Ethereum is much more decentralized.”
The Cornell team, including Adem Efe Gencer, Soumya Basu, Ittay Eyal, Robbert van Renesse, and Emin Gün Sirer, further finds ethereum has fairer variance, facilitating smaller miners. Thus potentially incentivizing a higher level of miner decentralization.
Studying node distribution through ping latency, measuring how long a node would take to respond to a “command,” the study finds:
“Only 13% of Ethereum latencies are under 100ms, while Bitcoin has a surprisingly high 46%. Additionally, the estimated peer-to-peer latency between Ethereum nodes is 26.7% higher than Bitcoin on average.
This geographic proximity between nodes, along with the observation that Bitcoin has many nodes with 100 Mbps of provisioned bandwidth, seems to indicate that many Bitcoin nodes are run in datacenters.
56% of Bitcoin’s nodes and 28% of Ethereum’s nodes belong to an autonomous system that provides dedicated hosting services.”
More than half of bitcoin nodes are run in datacenters according to the study, while only around a quarter of eth nodes are. This is while eth processes 4x the number of bitcoin transactions at magnitudes lower fees with far less congestion. The study says:
“Ethereum nodes are not accumulated in a single geographical region, but are more evenly distributed around the world… Ethereum nodes are geographically further apart than Bitcoin.”
While the study says neither is that decentralized due to a small number of mining pools, the data suggests ethereum is fairer to smaller/solo miners as it has a more predictable variance allowing small miners to have a more constant stream of income. They say:
“A high variance results in centralization pressure since smaller miners will have a more difficult time affording the loss of revenue due to a transiently high fairness score.
This high variance is a direct result of a significantly smaller number of blocks being generated in Bitcoin. Since Ethereum has a higher block frequency than Bitcoin, smaller miners have a more predictable payoff than larger miners. This makes Ethereum more predictable to mine for smaller miners due to the lower variance in block rewards.”
Ethereum mining however could become more efficient and allow for more capacity by incorporating a relay network, such as Falcon or FIBRE, the authors say.
But the network is soon to move away from Proof of Work mining with Casper at the last stage of testnet evaluation. It will thus be interesting to see what a comparative study on decentralization will show once ethereum moves to Proof of Stake.