Decentralization has become a buzzword in the world of cryptocurrencies, with many new blockchain projects claiming to be fully decentralized. However, Solana is one of the few projects that truly lives up to this claim.

Solana is a high-performance blockchain that is on the top in terms of transactions per second (TPS), making it one of the fastest blockchains in existence. This speed is achieved through a unique combination of technologies, including a novel consensus algorithm called Proof of History, which allows for fast transaction confirmation without compromising decentralization.

But why is decentralization so important in the world of crypto? Decentralization means that no single entity has control over the network, which makes it resistant to censorship and manipulation. In contrast, centralized systems are vulnerable to attacks and have a single point of failure. By decentralizing, Solana ensures that its users can trust the network and that their transactions are secure.

Moreover, Solana is designed to be developer-friendly, which means that building decentralized applications (dApps) on top of the network is much easier than on other blockchains. This has led to a growing ecosystem of dApps on Solana, ranging from NFT marketplaces to DeFi protocols. In summary, Solana's combination of speed, decentralization, and developer-friendliness makes it a promising blockchain for the future of crypto. As the world continues to move towards decentralized systems, Solana is well-positioned to lead the way.

The main purpose of this analysis is to take a dive deep on the evolution of decentralization on Solana ecosystem since 2023. To do that, I used on-chain data provided by Flipside Crypto to conduct your analysis. This is a great way to gain insight into the network's activity and performance over time.

To measure the level of decentralization on Solana, I used several metrics such as staking actions, delegators*, and validators**. Staking actions refer to the number of times that users have locked up their SOL tokens to participate in the network's consensus and earn rewards. The increase in staking actions over time indicates a growing interest in the network and a willingness to contribute to its decentralization.

• .*. What are delegators? Delegators are users who delegate their staked SOL tokens to validators to participate in the network's consensus. By measuring the number of delegators on the network, you can assess the level of participation in the decision-making process, which is another important aspect of decentralization.

• .**. What are validators? Validators are nodes that participate in the network's consensus and are responsible for verifying transactions and adding them to the blockchain. The increase in the number of validators on Solana indicates a growing level of decentralization as it means that there are more nodes involved in the decision-making process, making it harder for any single entity to control the network.

In addition, I also looked at interesting decentralization metrics such as the Nakamoto or top 10 validators' performance as well as the repsentation of the toal staked by this top 10 validators.

Staking and unstaking are two important actions on Solana's blockchain that contribute to its decentralization. Staking involves locking up SOL tokens in order to participate in the network's consensus and earn rewards. This is an important process that helps to secure the network and distribute control among its participants. Unstaking, on the other hand, involves withdrawing staked tokens from the network, which can be done for a variety of reasons such as wanting to move tokens to a different network or wanting to sell them.

Merge and split actions are also important on Solana and are related to staking. Merge involves combining two or more staked tokens into a single stake, while split involves dividing a single staked token into multiple smaller stakes. These actions can be used to optimize staking rewards and to better manage the distribution of tokens among different validators.

Looking at the data, we can see that in the early period from January to mid-February, the total liquidity transactions were below 10k, with a dominance of staking and unstaking transactions. However, from mid-February onwards, merge and split actions became more prevalent, and the total number of transactions increased to over 40k in the majority of the days. This indicates a growing interest in the network and a willingness to participate in its decentralization through staking and other related actions.

Looking at the delegator activity on Solana, we can see that there was some uncertainty in the early days of the year as more delegators joined and left the network on different days. However, since February, the situation has changed, and the majority of days have been positive for Solana, with a consistent increase in the number of delegators.

Delegators play a crucial role in Solana's decentralization process by delegating their staked SOL tokens to validators, who then participate in the network's consensus and earn rewards. By analyzing the number of delegators on the network, we can assess the level of participation in the decision-making process and evaluate the network's level of decentralization.

Looking at the data, we can see that since the start of the year, the number of delegators on Solana has consistently increased, with a net growth of over 10k delegators. In the early period, there was some fluctuation in the number of delegators, with some days seeing more delegators joining the network, while others saw more leaving. However, since February, the trend has been consistently positive, with the majority of days showing an increase in the number of delegators.

This growth in delegator activity is a positive sign for Solana's decentralization process and indicates a growing interest in the network. As more users delegate their tokens to validators, the decision-making process becomes more distributed, which is an important aspect of decentralization. Moreover, this increase in delegator activity suggests that users are becoming more confident in the network and are willing to participate actively in its governance and decision-making processes.

Looking at the first decentralization metrics regarding the amount of SOL staked and the total number of active validators, we can see that while the amount of validators and staked volume increased over the first weeks of the year, there has been a recent decline in the number of active validators. This decline in the number of validators is not a good sign for decentralization as it could lead to centralization of decision-making power within the network.

However, the Nakamoto coefficient provides a more nuanced view of Solana's decentralization process. The Nakamoto coefficient measures the number of validators needed to halt the network, and a higher coefficient indicates greater decentralization. Since the decrease after the FTX crash, the Nakamoto coefficient has been decreasing. However, over the past weeks, it has shown some improvement, increasing to over 25, which is a positive development for decentralization.

Another important metric for assessing decentralization is the dominance of the top validators in the network. Looking at the top 10 validators' dominance in SOL staked, we can see that while the

Sure! When comparing the Nakamoto coefficient of Solana with other major chains, such as Near, Cosmos, and Osmosis, we can see that Solana has been consistently ranked higher in terms of decentralization. While other chains have remained stable with Nakamoto coefficients below 12, Solana has been steadily increasing and currently sits at a coefficient of over 25. This is a promising sign for Solana's efforts towards decentralization and positions it as a strong competitor in the decentralized space. Despite facing challenges such as the FTX crash and SVB collapse, Solana's efforts towards increasing decentralization seem to be paying off and could potentially lead to increased adoption and investment in the network.

• Since mid-February 2023, Solana has seen a significant increase in activity on the network, with a dominance of merge and split transactions.
• The number of delegators on the Solana network has been consistently increasing since February, with the majority of days being positive for Solana. This trend has led to a net growth of over 10,000 delegators since the start of the year.
• While the amount of staked SOL has been increasing over the past few weeks, the number of active validators on the network has been decreasing. This is not a positive sign for decentralization as it could lead to centralization of decision-making power within the network.
• The Nakamoto coefficient has been decreasing since the FTX crash, but it has shown some improvement over the past few weeks, increasing to over 25, which is a positive development for decentralization.
• In terms of the dominance of the top validators in the network, Solana's top 10 validators' percentage of SOL staked has been decreasing, which is a positive sign for decentralization.
• When comparing the Nakamoto coefficient with other major chains, Solana consistently ranks higher in terms of decentralization, with a coefficient of over 25 compared to other chains with coefficients below 12.

Since 2023, Solana has shown steady growth in terms of decentralization, with a notable increase in activity since mid-February. Looking at on-chain data provided by Flipside Crypto, we can see that the total liquidity transactions on Solana increased significantly since that time, with a dominance of staking and unstaking transactions in the early period, but later on, merge and split actions became more prevalent.

The Gini coefficient is a statistical measure that is commonly used to quantify the degree of income inequality within a population. It ranges from 0 to 1, where 0 represents perfect equality (everybody has the same income) and 1 represents perfect inequality (one person has all the income).

In the context of Solana's decentralization, we can use the Gini coefficient to measure the distribution of staked tokens among validators. A high Gini coefficient would indicate that a small number of validators hold a large proportion of the staked tokens, while a low Gini coefficient would indicate a more evenly distributed staking landscape.

The analysis shows that Solana's Gini coefficient has seen an increase during March 2023, indicating a greater concentration of staked tokens among fewer validators. However, since then, the coefficient seems to have started to decay, suggesting that there has been a more even distribution of staked tokens among validators.