Methodology

The Edinburgh Decentralization Index (EDI) is a methodology framework for defining, analyzing, and evaluating the decentralization level of blockchain systems across multiple layers. These layers are: Hardware, Software, Network, Consensus, Tokenomics, Client API, Governance, and Geography.

This dashboard offers visualizations of the Consensus layer results. The ledgers that are currently supported are: Bitcoin, Bitcoin Cash, Cardano, Dogecoin, Ethereum, Litecoin, Tezos, and Zcash. Decentralization is evaluated by applying metrics on the distribution of blocks across the entities that produced them. Specifically, the following metrics are presented in the dashboard: Nakamoto coefficient, Gini coefficient, Shannon entropy, Herfindahl-Hirschman index (HHI), Theil index, 1-concentration ratio, and the 0.66-tau index. Metric definitions are provided in the respective charts. Historical block data for each blockchain is collected from BigQuery and self-hosted full nodes. Each block is mapped to its creator (see clustering options below) and then the distribution of blocks across entities is calculated for each 30-day interval of the observation period. For certain metrics, such as the Gini coefficient, it is important to include all entities that were active during some time period, even if they did not succeed in producing any blocks. For this reason, when estimating the active participants in a given 30-day window, we consider an to be active if it produced at least one block in the preceding or following 30-day window. For detailed information on how the data is processed you can refer to the documentation of the relevant open-source GitHub repository .

A user can choose which off-chain sources to use to attribute blockchain data to real world entities. This enables the clustering of seemingly independent objects under the same identity. On the consensus layer, clustering helps to attribute multiple blocks to the same producer, like a mining pool.

For Consensus, the clustering options are: “Explorers”, “On-chain metadata”, and “None”. “Explorers” refers to attribution and deanonymization data collected from blockchain explorers, namely BitInfoCharts, Etherscan, Wallet Explorer, Dogecoin Whale Alert, TzKT, Blockchain.com, BTC.com, and the GitHub projects bitcoin-data/mining-pools, btccom/Blockchain-Known-Pools-LTC , blockchain/Blockchain-Known-Pools.

“On-chain metadata” refers to self-identifying information, such as name and website, that consensus participants publish on-chain.

Explorer data is used for all ledgers except Cardano, whereas on-chain metadata are used only for Cardano.

A user can choose either “None” or any combination of the other options.

By default, all clustering options are applied.