Cardano vs. Ethereum, which one is more decentralized? Let’s dig in…

Ethereum community often calls themselves decentralization maxis but if we look at the real metrics Cardano is far ahead than Ethereum on decentralization. Here are the reasons why Cardano is the most decentralized PoS-based blockchain out there.

Decentralisation is the core ethos that gives meaning to the public blockchain space because it eliminates the need for trusted parties. Bitcoin initiated this movement in the backdrop of the 2008 financial crisis resulted from the corrupt banks & lack of transparency.

That's why decentralization is the one core principle that no layer 1 blockchain should compromise. Compromising on decentralization takes away the whole value proposition of public blockchains.

Now let's move to the facts and metrics comparing Ethereum and Cardano.

We are looking at 5 metrics that are relevant:

• Staking ratio
• Initial coin distribution
• Nakamoto coefficient (MAV)
• The total number of validator nodes

• Individual wallets participating in staking

  Let's start with initial coin distribution. Both Ethereum and Cardano had a fair token distribution.

This shows the similarities in the fundamental ethos of these blockchains at the beginning.

Now let's look at the participation in the staking of both Ethereum and Cardano. There are primarily 2 metrics that reflect the participation in the staking:

• Staking ratio
• Individual wallets participating in staking

But before we get into those metrics, it's essential to understand some of the fundamental differences between the PoS-mechanism of both Ethereum and Cardano.

On 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.

On Ethereum, things are a bit different. Ethereum does not give you a choice. You can participate in validation if you have a minimum of 32 ETH or you have to depend upon centralized/permissioned staking providers like Lido, Coinbase or Kraken to earn a yield. It's also important to remember that the staked ETH is locked for an indefinite period and you cannot unstake your ETH at will.

These factors have immense downstream implications on the participation and thereby the decentralization of the system.

• Staking ratio

  Here we can see the contrast between both chains regarding the degree of participation of total tokens in circulation in the staking, a.k.a staking ratio. Cardano has a staking ratio of 71% whereas Ethereum has a staking ratio of 13%.

  Now the next metric:

• Individual wallets participating in staking

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" on Ethereum. Where we compare the total number of individual wallets participating in the staking. Cardano has 14x more participation than Ethereum.

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 leading to flourishing centralized staking providers and centralization of the Ethereum network.

As we have gone through the metrics determining the decentralization of token and stake distribution now let's take a look at the decentralization of the networking layer of both Ethereum and Cardano.

• The total number of validator nodes

This is where the fun starts. Ethereum claims to have almost half a million validators. That's many multiple of the total validators of all other blockchains combined!! What's the truth? Does "validator" mean "validator nodes"?

Validators are defined as network nodes that operate in Proof of Stake (PoS) blockchains also validating transaction blocks on the blockchain. This definition fits all other blockchains except Ethereum. On Ethereum, "validators" do not mean validator nodes So, what is it?

When they say "validators" on Ethereum what they mean is "attestors." An attestor is not a node, and it does not validate any transactions So, in the Ethereum networking layer, there are two entities:

1. Validator nodes

2. and Attestors

A validator node can run any number of attestors. Ethereum protocol is optimized to maximize the number of attestors The hardware resources for running multiple attestors are meager. Sometimes there could be 1000 attestors behind a single node. This is what happens in Ethereum staking. Attestors supply the stake to the validator nodes. Validator nodes create and validate blocks. Attestors simply agree on the order of transactions, which is already determined by the validator node to which they supply their stake to.

So, there are 480K attestations happening on Ethereum but that is very different from validation.

Calling attestors "validators" is a propaganda tool at the protocol level because sites like http://stakingrewards.com show these numbers under the number of validator nodes which is false information. What is the exact number of validator nodes? Now we know that there are no 479240 validators participating in the consensus of Ethereum let's look at the actual nodes in the network. This you can find by looking into the networking layer.

Let's compare the number of nodes of Ethereum & Cardano.

Ethereum has around 9000 nodes (numbers that Etherscan shows can vary at times). Whereas Cardano has around 3000 validator nodes. 3x more validators but there is a catch…

The decentralization of the validator nodes in a PoS blockchain is determined by the Nakamoto coefficient or MAV (minimum attack vector). MAV is the minimum number of how many independent parties have to collude to have that 51% control of the network.

Currently, Cardano has a MAV of 24, and Ethereum has a MAV of 3. This shows that the #Cardano networking layer is 8 times more decentralized than the networking layer of Ethereum.

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