Growing Decentralization in Cosmos

Growing Decentralization in Cosmos
Art by Shubham Dhage on Unsplash

Written by: mrodin

Governance is essential for blockchains. It is the process by which decisions are made and implemented within a decentralized network. From upgrades and improvements to managing risk and conflict resolution, governance mechanisms are key for a blockchain’s long term stability, security and scalability.

Governance is implemented by giving community members roles, decision rights, accountability and incentives. In practice, however, it is trickier.

On-chain governance for a blockchain ecosystem happens through voting. The weight of each vote depends on the number of governance tokens a voter holds. While this might sound simple, having high enough engagement for active governance is hard to pull off.

In this dashboard, MetricsDAO community analyst Ali3N used data from Flipside Crypto to look under the hood and compare governance performance on three blockchains — Osmosis, Terra and Cosmos Hub — all part of  the fast-growing Cosmos Network, a decentralized network of independent chains connected with IBC (Inter-blockchain communication) protocol, which enables free exchange of assets and data across sovereign, decentralized blockchains. Cosmos was among the first platforms to enable interoperability between different systems.

Here’s a bit more about the blockchains analyzed in the dashboard:

  • Cosmos Hub: the first blockchain to launch on the Cosmos Network. Its native token is ATOM.
  • Osmosis: DEX protocol built on Cosmos with native token OSMO.
  • Terra: blockchain built on Cosmos, with native token Luna 2.0, the second iteration of the cryptocurrency.

The analysis looked at user activity and engagement, number of unique voters, distribution of voting power and active proposals to determine governance. All of these criteria indicate how decentralized the blockchain is, and where most participants feel like they have a voice in how the chain grows. Here’s what we found:

  • All three chains are becoming more decentralized, as measured by a consistent increase in the Nakamoto Coefficient, which tracks the minimum number of nodes required to disrupt a blockchain’s network. Cosmos is the most decentralized among the three, while Terra is the least decentralized.

  • Osmosis has the most active governance among the three chains. It has the highest number of executed proposals and active voters - more than the other two chains combined. Since proposals are a means for the community to suggest changes and have their voices heard, this is an important metric for the level of decentralization.

  • Osmosis also has the highest number of active proposals per week, showing wider participation. Cosmos is catching up, and leads in the number of unique first-time voters. In all three chains, we can see a slightly increasing number of executed proposals in governance; this means that the community is active and submitting more proposals.
  • Voting power: Voting allows participants to express their proposal preferences and make collective decisions about the network’s operations and development. Osmosis members are the most active in terms of average number of executed votes and participating proposals. Voting power is well-distributed among Osmosis and Cosmos validators, less so in Terra.

  • Validators on Terra have a greater influence on voting decisions than top validators in Cosmos and Osmosis. This is because a small number of validators hold a larger portion of voting power in Terra, while decision making is more decentralized in the other chains. This is in sync with the Nakamura Coefficient figures as stated in the first point above.

In the near future, we can expect Osmosis to remain the most actively governed chain, with Cosmos catching up fast. Check out the full dashboard here: