Blockchain technology has gained popularity in recent years for its potential to disrupt traditional industries by providing a more decentralized, transparent, and secure way of conducting transactions. One of the most important features of blockchain technology is its ability to enable distributed consensus, which allows all network participants to agree on the current state of the ledger without relying on a central authority.

Validators play a crucial role in achieving distributed consensus in blockchain networks. Validators are responsible for validating transactions, creating new blocks, and maintaining the integrity of the blockchain. In return for their services, validators typically receive rewards in the form of newly minted tokens or transaction fees.

To become a validator, one must typically stake a certain amount of the network's native cryptocurrency. This means locking up a portion of one's cryptocurrency holdings to demonstrate one's commitment to the network and to discourage bad behavior. The more cryptocurrency one stakes, the greater the chance of being chosen as a validator and earning rewards.

The relationship between the number of validators and the total amount of staked cryptocurrency is an important metric for measuring the decentralization of a blockchain network. If a small number of validators control a large portion of the staked cryptocurrency, the network may be more centralized and susceptible to attacks or collusion.

One way to measure the decentralization of a blockchain network is by calculating the Gini coefficient, which is commonly used to measure income inequality. In the context of blockchain networks, the Gini coefficient measures the inequality of wealth distribution among validators. A Gini coefficient of 0 indicates perfect decentralization, while a Gini coefficient of 1 indicates perfect centralization.

In summary, validators and staked cryptocurrency are critical components of blockchain networks, and their relationship is an important indicator of decentralization. By calculating the Gini coefficient, we can gain insights into the level of centralization or decentralization of a blockchain network and make informed decisions about how to improve its security and resilience.

To measure the decentralization of the Near Protocol ecosystem over time, we can use various metrics such as the Nakamoto coefficient, the GINI coefficient, the count of validators, and the percentage of staked supply.

The Nakamoto coefficient measures the degree of distribution of mining power in a blockchain network. A Nakamoto coefficient of 1 indicates that a single miner controls the entire network, while a Nakamoto coefficient of 0 indicates that the mining power is evenly distributed among all participants. Since Near Protocol uses a proof-of-stake consensus mechanism, we can use the GINI coefficient instead, which measures the degree of wealth inequality among validators.

To calculate the GINI coefficient, we need to first rank the validators by their stake, from the largest to the smallest. Then, we calculate the cumulative share of stake held by each validator and plot it against the cumulative number of validators. The GINI coefficient is equal to twice the area between the line of perfect equality (i.e., the diagonal line) and the actual curve. A GINI coefficient of 0 indicates perfect equality (i.e., every validator holds an equal share of stake), while a GINI coefficient of 1 indicates maximum inequality (i.e., a single validator holds all the stake).

We can also look at simpler metrics such as the count of validators and the percentage of staked supply. An increase in the count of validators and a decrease in the percentage of staked supply held by the top validators could indicate a more decentralized network.

To analyze the decentralization of the Near Protocol ecosystem over time, we can use the fact_staking_pool_balances and fact_staking_pool_daily_balances tables. We can aggregate the data by month to get a monthly snapshot of the network's decentralization. Then, we can calculate the GINI coefficient, the count of validators, and the percentage of staked supply for each month and plot them over time.

The first observation is the growth of the total amount of NEAR staked over time, with a significant increase from late 2022 to the current date. This indicates a growing interest in the NEAR protocol among investors and stakers. However, it is worth noting that the top 50 validators' percentage has decreased since the increase in staked NEAR, which suggests that the decentralization of the protocol has improved. This is an encouraging sign for a blockchain protocol that aims to achieve true decentralization, which is critical for security, transparency, and trust.

The second observation is the growth in the number of active validators participating in staking and unstaking. The increased participation of validators indicates a growing interest in the NEAR protocol among validators. However, it is important to note that the proportion of NEAR staked vs. the number of validators has remained relatively constant since the increase in NEAR staked to 400M. This implies that although more validators are participating, the protocol's decentralization has been maintained.

Finally, the staking ratio's decline over time is an expected observation due to the increase in the total amount of NEAR staked. The staking ratio is the average amount of NEAR staked per validator, and it is natural to see a decrease as more validators participate, and the total staked amount increases. It is an also a good sign that even though the staking ratio has decreased over time, the number of validators has remained constant, indicating a stable and decentralized network.

NEAR Staked per Validator: This metric shows the amount of NEAR tokens staked by each validator. The image displays the top validators ranked by their staked NEAR amount. The higher the staked NEAR amount, the higher the validator's ranking on the list. This metric is important because it shows which validators have the most influence in the network by having a higher stake. Validators with a higher stake are more incentivized to act in the best interest of the network because they have more at risk.

Nakamoto Coefficient: This metric is used to measure the degree of decentralization in a blockchain network. It is calculated by taking the percentage of total staked NEAR held by the top validators and dividing it by the Byzantine fault tolerance (BFT) percentage. A higher Nakamoto Coefficient indicates a higher degree of decentralization in the network, meaning that the power is distributed among more validators. A lower coefficient indicates a higher degree of centralization, meaning that a few validators hold most of the power.

GINI Coefficient: This metric is used to measure the level of inequality in the distribution of staked NEAR tokens among validators. It is calculated by comparing the actual distribution of NEAR tokens among validators to a hypothetical equal distribution. A GINI coefficient of 0 means that there is a perfectly equal distribution, while a coefficient of 1 means that one validator holds all the NEAR tokens. The higher the GINI coefficient, the more unequal the distribution of tokens is.

In summary, the NEAR Staked per Validator metric shows the individual influence of each validator, while the Nakamoto and GINI coefficients provide a broader view of the network's decentralization and token distribution. The evolution of the Nakamoto and GINI coefficients over time shows whether the network is becoming more or less decentralized and equal in token distribution.

NEAR Protocol Staking Metrics:

• The amount of total NEAR staked has been steadily increasing since late 2022, indicating growing interest in the protocol.
• The top 50 validators are decreasing in percentage, suggesting that the protocol is becoming more decentralized.
• The number of active validators has been increasing, but the proportion of NEAR staked to validators has remained stable since the surge to 400M, also indicating decentralization.
• The staking ratio has decreased over time due to the increase in NEAR staked, making it difficult for validators to maintain high average stakings.

NEAR Protocol Validator Metrics:

• Figment is the top validator in terms of NEAR staked, followed by Staked Pool and Astrostakers.
• The Nakamoto Coefficient increased rapidly in the early months and then decreased to 5, increased again in late 2022, and decreased to 6.
• The GINI coefficient has been increasing since 2021, reaching almost 0.8 in Jan 2022, but has now stabilized below 0.8.

Overall, the data suggests that the NEAR Protocol is growing and becoming more decentralized over time, with a diverse group of validators and a high level of interest from investors. The fluctuating Nakamoto Coefficient and increasing GINI coefficient indicate that there are still some centralization concerns, but the overall trend seems to be towards greater decentralization.