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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Evaluating Centralization on Proof-of-Stake Based Blockchain |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Date | 2023 |
| Abstract Text | In recent rapid expansion of retail investment in crypto assets and wide scale adoption of decentralized finance industry also known as DeFi there is a massive investment is being made in DeFi ecosystem. Many applications are being launched to target the retail investor, luring with higher APR and rewards. This has made DeFi an interesting avenue for investors. Most of the time this DeFi applications running on blockchain are viewed as democratization of the current finance system, but in recent time many have expressed concerns about unfair practices made my few powerful to manipulate the market. While DeFi is a step in the right direction, many have expressed concern over massive wealth accumulation by a few have the power to manipulate the prices. This thesis look at blockchain as a network of peers and tries to analyse the wealth concentration by various peers, specifically in Proof-of Stake protocol based blockchain Tezos and Casper. In the analysis, we have used various heuristics suggested in research papers on other blockchain and used similar heuristic to establish the centralization of wealth on PoS based chains as well. In our results, we have found that PoS based blockchain are suffering from concentration of wealth. However, the situation is much worse on PoW based blockchain like Bitcoin, Ethereum (analysis made previously before PoS transition) etc. We have concluded after performing large scale comparative analytics on weekly transactions and used statistical interpretation on graph networks to analyse different network properties. PoS based chains have managed to perform better in terms of rewards distribution for mining. More peers participation in block creations, but the transaction behaviour have shown as similar trend like PoW based blockchain. |
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