Try Quests to earn AXLDecentralization in Axelar
✨Introduction
What is Axelar?
Axelar is a blockchain-based protocol that aims to provide secure and decentralized cross-chain communication between different blockchain networks. It is designed to enable the exchange of digital assets and data across different blockchains without the need for intermediaries or centralized exchanges.
Axelar is built on a proof-of-stake consensus mechanism, which is known for its security and scalability. It leverages this mechanism to ensure the secure transfer of assets and data between different blockchain networks. It supports interoperability between various blockchains, including Ethereum, Cosmos, Avalanche, and others.
Axelar enables developers to build decentralized applications (dApps) that can interact seamlessly with multiple blockchain networks. This helps to eliminate the need for users to switch between different blockchain wallets or exchange platforms to access different assets or applications. With Axelar, users can access and interact with any asset or application on any blockchain network with just one click. Read More…
Decentralization: The distribution of power and decision-making away from a central authority or control, often through the use of blockchain technology or other distributed systems.
Proof of Stake: (PoS) is a consensus algorithm used in blockchain networks to achieve agreement on the state of the network. In a PoS system, validators are chosen based on the amount of cryptocurrency they hold and "stake" as collateral. Validators are then randomly selected to validate transactions and create new blocks, with their probability of selection proportional to their stake.
Validator: A participant in a blockchain network who is responsible for verifying transactions and adding new blocks to the blockchain.
Delegator: A participant in a proof-of-stake blockchain network who assigns their stake (cryptocurrency) to a validator, who will use it to secure the network and earn rewards on behalf of the delegator.
Staking: The process of holding a cryptocurrency in a wallet or account and using it to participate in the consensus mechanism of a blockchain network, such as proof-of-stake, in order to earn rewards.
Nakamoto coefficient: A measure of decentralization in a blockchain network, calculated by taking the square of the number of nodes in the network and dividing it by the number of nodes that control over 50% of the network's mining power.
Gini coefficient: A measure of income inequality in a population, often used in economics.
Lorenz curve: A graphical representation of income inequality, which plots the cumulative percentage of income against the cumulative percentage of the population.
🛠️ Methodology
I attempted to achieve an overview of staking metrics such as new stakers, total staked AXL volume, total count of validators, and so on in the current dashboard.
Then I look at the top validators in terms of their volume.
I evaluated the Nakamto and Gini coefficients and the Lorenz curve to assess the decentralization, and after that I dealt with staking over time since 2022.
Finally, I set a parameter for you to insert your desired validator and examine their summary metrics over the time period you specify.
✍🏻 Conclusion
Based on the findings above, there are several conclusions that can be drawn:
- Axelar network has seen a significant increase in staked volume since its launch in September 2021, with a peak of over $100M staked in the last week of September.
- Despite the increase in staked volume, there is room for improvement in terms of decentralization on the Axelar network. The Nakamoto coefficient is relatively high, indicating a concentration of power among a small number of validators, and the Lorenz curve and Gini coefficient show a relatively unequal distribution of staked volume among validators.
- The majority of stakers have staked less than 10 AXL, indicating that the network is accessible to smaller investors.
- The top ten validators have received more than 95% of the staked volume, indicating a high degree of concentration of power among a small number of validators.
- The geographic distribution of delegators and validators is diverse, with users clustering around the -7 UTC to +11 UTC region for delegators and around the -2 UTC to +3 UTC region for validators.
Overall, the Axelar network is still in its early stages, and there is room for improvement in terms of decentralization and distribution of staked volume. However, the network has shown promising growth and accessibility for smaller investors.
Hey there 👋!
Firstly, I appreciate you sticking with it until the conclusion.
I'm Hamed, a civil engineering Ph.D.
student interested in data analysis.
I've made many similar dashboards and visualizations since I started at Flipside in January.
Please take a look at my various contact details and let me know what you think.
About:
-
Author: HaM☰d
-
Discord: 0xHaM☰d#8391
-
Twitter: @arjmandi_hamed
-
Email: h_arjmandi2012@yahoo.com
🔎 Findings:
The data presented suggests that there is room for improvement in terms of decentralization on the Axelar network. The Nakamoto coefficient, which measures the number of validators that would need to collude to compromise the network, is relatively high, indicating a concentration of power among a small number of validators. This is further supported by the Lorenz curve and Gini coefficient, which show a relatively unequal distribution of staked volume among validators.
In Lorenz cure when the cumulative voting power lose to prefect equality it represent the more distribution of staked volume and more decentralization.
It's important to note that while these metrics can provide insight into the decentralization of a network, they do not necessarily reflect the actual difficulty of conducting an attack on the network. Other variables such as the resources and capital required for an attack would also need to be considered.
In conclusion, the data presented suggests that there is a need for improvement in terms of decentralization on the Axelar network. Based on the data provided, it appears that 16 validators or 33% of the entire staked amount, would be required to compromise the network. However, it's important to keep in mind that the actual difficulty of conducting an attack on the network would depend on various other factors as well.
According to the data presented, the Nakamoto coefficient of the virtual currency "AXL" has been steadily rising over the past year, with values ranging from 10 to 16.
The data shows that the Nakamoto coefficient has been increasing over time, which indicates a concentration of power among a smaller number of validators. This suggests that there is a need for greater decentralization in the Axelar network to reduce the risk of centralization and potential attacks on the network.
The following charts show that more than 30% of staking volume is belong to 3 validators.
🔎 Findings:
As of the graphs above, it is observable that one third of stakers staked less than 10 AXL, 23.4% staked 10 to 50 AXL, and 22.7% staked 100 to 500 AXL, while 23.3% of validators received less than 10 AXL, 19% received 10 to 50 AXL, and 17.% staked more than 1K AXL.
The bar chart on the left shows how staked volume has been split between the top ten validators and other validators over time. It shows that more than 95% of the volume has gone to the top ten validators.
The top ten Axelar validators have a high staked rate, according to the data. This suggests a concentration of power among a few validators, which could compromise network security and decentralization.
Staked volume among Stakers is also unequal, with a large proportion of Stakers holding small amounts of AXL. This may suggest a barrier to entry for smaller Stakers and increase power concentration among larger Stakers.
Addressing these issues will improve Axelar network independence and security. This could entail encouraging validators and Stakers to share staked volume and participate more in governance and decision-making.
🔎 Findings:
In the query in the above visuals, I tried to find the voting and governance interactions of validators, but I found that no validators participated on any proposals, so I followed the delegators footprints on Axelar's governance voting. According to the charts above, it's observable that over 56% of voters were steadfast in saying "yes" to protocols.
Additionally, it appears that Stakers have been more active in recent weeks in terms of participating in governance voting. This could suggest that Stakers are taking an active role in shaping the future of the Axelar network.
:hourglass_flowing_sand:Selected Validator
The following visuals depict the average staked AXL volume, stake transactions, and unique stakeholder counts over time.
The PIE chart shows that the majority of unique Staker counts are in the range of less than 10 AXL, which indicates that there is a long tail of small Stakers on the network.
For the selected validator "Flipside," the average staked volume spiked in the second week of October, but has since fallen to close to zero. Additionally, over half of the Staker's volume is in the range of less than 10 AXL, which is consistent with the overall distribution shown in the PIE chart.
⏳ Overall View
Based on the information provided in the charts above, it seems that Axelar has a high level of staking participation, with the majority of stakers choosing to delegate their tokens rather than undelegate or redelegate them. Additionally, there is a significant amount of AXL tokens that have been delegated, indicating a strong interest in the Axelar network and its potential for growth.
⏳ Staking Metrics Over Time
🔎 Findings:
Based on the information provided, it seems that public staking on Axelar started in the third week of September and experienced a spike to over $100 million in the last week of September, before decreasing to below $6 million in the early week of October. The staking volume has since fluctuated and is currently below $1 million per week, with an increase in undelegate volume raising to above $2.4 million per week. Staking transactions and unique staker counts have also decreased since the early hype in September. Decreasing of the cumulative volume growth since early November confirms these findings.
Note that the delegators count here is low as we are looking at users that have made transactions in >20 unique hours, which is necessary for this analysis.
AXELAR Delegators seems to come from Arizona to Micronesia Region.
We see users clustering around the -7 UTC to +11 UTC region. This suggests that most of the delegators were distributed around world.
Note that the validators count here is low as we are looking at validators that have received transactions in >20 unique hours, which is necessary for this analysis.
Axelar validators seems to come from Mid Atlantic to Abu Dhabi Region.
We see users clustering around the -2 UTC to +3 UTC region. This suggests that most of the validators were from Mid-Atlantic (? which is odd) and Europe region.