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here is Just The Metrics - your newsletter with the latest updates from the Cryptoverse, Crypto Metrics, L1 Comparisons, and all about Cardano.

This week we will dig into Ethereum and answer the question:

How Decentralizes is Ethereum compared to Cardano?

Curious?

Ok, let's dig in!

Ethereum

An Fundamental Analysis based on the Blockchain Trilemma

Just The Metrics

Your Weekly Newsletter explaining Layer 1 Blockchain Metrics.

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So, let's look at our well-known Assessment Framework comparing Ethereum to Cardano and their performance in the three dimensions of the blockchain trilemma.

1. Decentralisation

2. Scalability

3. Security

So here is the Blockchain Trilemma as Assessment Framework

Let's take a look at specific metrics of Ethereum that determine its degree of

• Security

• Scalability &

• Decentralization

General Decentralization Metrics:

Initial Token Distribution:

• Ethereum had a fair initial token distribution event; the Ethereum Foundation managed this.

• 80% of the initial 72 million ETH supply was sold to the public.

• 15 % was allocated to the team and 5% to the Ethereum foundation.

• This is very similar to the token allocation patter of Cardano.

The number of individual staked wallets:

• Before we go into the individual metrics, it is essential to point out that there is a considerable difference between how the Proof of Stake Sybil resistance mechanism in Ethereum and Cardano.

• In Cardano, you have a choice to run your own validators or you can delegate your $ADA to the validators you prefer. As Cardano has no locking periods, you can restake your $ADA anytime you want

• In Ethereum, you don't have that choice. You can participate in Validation if you have a minimum of 32 $ETH, or you have to depend upon centralized staking providers like Lido, Coinbase, or Kraken to earn a yield.

• It's important to remember that the staked $ETH is locked for an indefinite period, and you can unstake your $ETH at will.

So how can we compare Cardano and Ethereum under this category?

• The total number of individual staked wallets of Cardano could be compared to the total number of "Unique Depositors" in Ethereum.

• So here are those numbers where we compare the total number of individual wallets participating in the staking mechanism of both Cardano and Ethereum.

Here are the sources:

https://pro.nansen.ai/eth2-deposit-contract

https://datastudio.google.com/u/0/reporting/3136c55b-635e-4f46-8e4b-b8ab54f2d460/page/k5r9B

• It's vital to notice that those Cardano wallets are participating in staking at the L1 protocol level.

• But most Ethereum wallets participating in staking depend on a third party. This is leading to the flourishing of centralized staking providers.

Staking ratio:

• Here we can see the contrast between both chains regarding the participation in staking, a.k.a Staking ratio.

• The fundamental difference in approach to PoS by these two blockchains is the main reason for this contrast.

• For eg: Cardano has no slashing, but Ethereum has slashing.

The total number of active validator nodes/relay nodes/stake pools:

• This is one such metric that was never shown in a transparent way for a long time.

• Ideally, the number of validators should reflect the number of individual nodes/computers/machines participating in the networking layer of a blockchain to achieve an agreement on the validity of transactions happening on the blockchain.

• Popular sites like stakingrewards.com give false information regarding this.

And publications like Coindesk have addressed this problem before. But still, many spread fake news about the inflated numbers of Ethereum validators.

• These are attesters. 480K attestations are happening on Ethereum. But that is very different from validation.

• You can run a node with 320 or 3200 ETH. Then you can create 10 or 100 different attestors on the same machine. Ethereum clients are optimized to do that.

• So there are no 480k entities participating in the the validation.

• But they just sign and attest to the transactions that are already validated by the nodes.

• In that sense calling them validators is not technically correct.

• That is the reason why we don’t call bitcoin full nodes validators; they are also attesting to the validity of transactions, not validating them.

• That's why we call the "480k" validator claim of Ethereum a tool for propaganda/misinformation.

• You will get the correct number of validator nodes by looking at the networking layer of Ethereum.

• So etherscan.io will give you the correct numbers.

So now, let's compare the number of validator nodes on Cardano and Ethereum.

• The total number of nodes participating in the Ethereum network is around 8257, and Cardano has around 3234 validator nodes.

• But to explain the distribution of validators and to showcase the entities that control the network, we need to look at the MAV. MAV is the minimum number of how many independent parties have to collude to have that 51% control of the network.

• Cardano has an MAV of 24 and Ethereum has currently an MAV of 3.

• Three entities: Lido, Coinbase and Kraken control 51% of the total staked $ETH.

• Considering the five metrics:

• 1. Initial coin distribution

• 2. Individual wallets participating in staking

• 3. Staking ratio

• 4. The total number of Validator nodes

• 5. and the Minimum Attack Vector

• Cardano is much more decentralised than Ethereum.

Permissioned vs. Permissionless Node (Yes/No):

• Both Ethereum and Cardano are permissionless blockchains.

Factors Enabling Decentralization:

Size of a full node: 

• The current size of Ethereum blockchain is around 1047 GB.

Minimum hardware & connectivity requirements for running a validator node/relay nodes/stake pool:

Recommended hardware requirements to run a Full node:

• CPU: 4+ cores

• RAM: 16 GB+

• Storage: SSD drive with at least 1 TB capacity

• Connectivity: 25 MBit/s bandwidth

• Monetary requirement: Each node needs to stake a minimum of 32 ETH (USD 37084) to become a Validator

Recommended hardware requirements to run a Full Archive node:

• The requirements are pretty similar except the storage.

• Storage will vary depending on the client software

• Archive mode on Geth takes ~12 TB and Erigon takes up ~2 TB.

General Security Metrics:

Cost of 51% attacks:

• For an attacker to control 51% of the Ethereum Network, it will cost over 70 billion USD, not factoring in the price appreciation that will occur with a buyer trying to purchase that much ETH.

• Moreover Ethereum has slashing. This makes a 51% attack very costly.

• But like everything with downstream effects, slashing has effects on the decentralisation of the system.

Vulnerability to denial-of-service (DoS) and distributed denial-of-service (DDoS) attacks:

• Ethereum is a secure network that has low vulnerability for such attacks.

Propagation network types (a peer-to-peer propagation network or a relay propagation)

• Ethereum has a peer-to-peer propagation network, whereas Cardano has a relay propagation network.

Factors Enabling Security:

Full Node/Partial Node Ratio:

• Low: Due to the large size of the Ethereum full node/Archival node, it's a challenge to run the Ethereum full node on a regular computer.

Client Diversity:

• Ethereum is the blockchain with the most number of clients.

• Whereas Cardano has only one client.

General Scalability Metrics:

Transaction throughput:

• Ethereum has an average throughput of 14-15 TPS.

• Cardano on the other hand has a TPS of 20-30 TPS.

Transaction latency & finality time:

• The beacon chain of Ethereum takes ca. 15 minutes to finalize transactions.

• Cardano has a transation finality time of 5-10 minutes.

Active Layer 2s (rollups/state channels):

• Ethereum follows a rollup centric roadmap. This has resulted in a flourishing rollup ecosystem on Ethereum.

• According to l2beat.com, Ethereum has around 25 different rollup solutions (Optimistic-, zk-Rollups, Validium) deployed, with a total TVL of 4.3 billion USD.

• This is a very remarkable achievement for Ethereum to enable such a thriving rollup ecosystem.

• In the case of Cardano, it has no rollup-centric roadmap, and as of now, Milkomeda is the only project building a rollup on Cardano.

Factors Enabling Scalability:

Status of data availability that enables rollups:

• Ethereum enables better data availability than Cardano. But that's not enough to make rollups viable.

• Ethereum has a rollups-centric roadmap, and upgrades like Proto-Danksharding and Danksharding are focused on increasing the data availability of Ethereum.

• Cardano focuses on creating a faster and more decentralized L1 before moving the settlement to L2. That's why Cardano focuses on solutions like Input endorsers and Mithril.

So what does now the overall verdict look like:

Decentralization:

a. Token distribution: high

b. Stake distribution: low

Security: High

Scalability: Moderate-high

Ethereum has a wide decentralized distribution of tokens, but when it comes to staking, the current staking mechanism tends to centralize the stake distribution. At the same time, Ethereum has an elaborate rollup-centric roadmap for future scaling with a thriving rollup ecosystem.

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