Perceived centralization could kill PoS networks: ShapeShift report
ShapeShift believes the public perception of a network’s centralization could make or break the current generation of smart contract platforms.
A new report suggests that Cosmos, Polkadot and NEAR could fail to take off if they are perceived to have an issue with centralization — as the example of EOS demonstrates.
Non-custodial crypto asset exchange ShapeShift has published a report predicting that Proof-of-Stake scalable smart contract networks Polkadot, Cosmos, and Near will be thoroughly put to the test this year.
The report forecasts the networks’ claims of increased scalability without sacrificing security or decentralization will soon be tested. Shapeshift notes the distribution of Polkadot’s and NEAR’s respective native tokens appears quite centralized as a result of “relatively high insider token allocations,” while Cosmos’ pluralistic architecture requires each of its individual “zones” to recruit independent validators — making it more difficult for each zone to ensure robust security.
Ultimately, the document’s author, Kent Barton, speculates the perceived degree of centralization of the respective platforms will likely determine which blockchain will thrive from those that will fail to gain traction, asserting:
“This dynamic has already played out in EOS, where evidence of validator collusion seems to have played a role in the platform’s anemic developer growth over the past year.”
ShapeShift predicts the promise of smart contract platform interoperability will be put to the test this year, forecasting that “value and data will begin to flow trustlessly between different crypto ecosystems.”
But the report also emphasizes it will be a challenge to design systems that conceal the complexity of blockchain interoperability:
“Wider adoption will likely require that the complexities of interoperability are made nearly invisible to users.”
Noting the absence of a “one-size-fits-all” smart contract solution, ShapeShift predicts that decentralized exchanges and applications will adapt to the unique capabilities offered by different smart contract platforms.
However, the report cautions that the platforms’ innovations will also bring new vulnerabilities as demonstrated by the myriad of flash loan exploits suffered by DeFi protocols in late 2020.
“Emerging blockchain ecosystems will likely have their own version of flash loans—powerful new abilities that expose users to a loss of funds,” said the report.
