Miners Vs. Validators

• Although the structure of confirming transactions and evaluating data for them to be inserted in a block has fundamentally changed through the Merge, the miner-validator transition has resulted in a similar output in terms of decentralization;
• While different players, at least in terms of addresses, are involved in the validation process compared to the mining, the distribution of power among the top players has remained unchanged;
• It is worth mentioning that before the merge, the miner addresses generally belonged to private entities which were responsible for the whole mining process. However, in the post-merge era, even though on the surface one particular address has been responsible for the validation of a large number of blocks, those addresses belong to entities such as Lido or Coinbase, which are consisted of numerous delegators who staked their ETH using their platform to obtain such validation power;
• Interestingly, the pattern for the average number of mined blocks vs. the average number of validated blocks by the top 20 miners and validators, respectively, has also been quite similar, indicating the same level of decentralization both before and after the merge.

Methodology

The required data for this analysis were selected from the fact_blocks table of the core schema of the Ethereum database. The Merge happened on the 15th of September and changed the difficulty of mining/validating each block to zero. The time since this transition took place was considered the Post-Merge period. To have an equal time frame for the comparison, the exact duration before the merge data was chosen as the Pre-Merge period. For the analysis of the whole history of Ethereum, each year was filtered as a separate period and all of the metrics were averaged to be able to have a comparison using normalized values.

Introduction

The blockchain scalability trilemma, which for the first time issued by Vitalik Buterin, the creator of Ethereum, indicates that there are three main properties that a blockchain tries to achieve in its development, and ultimately, forcing developers to sacrifice one aspect as a trade-off to accommodate the other two. Security, decentralization, and scalability are the three pillars of each blockchain that all seem to strive to co-exist but struggle to live in harmony. Ethereum was considered a secure and decentralized blockchain when it used the Proof-of-Work (PoW) consensus mechanism. The Merge was a crucial part in becoming more scalable by transitioning to a Proof-of-Stake (PoS) consensus mechanism while preserving decentralization and security.

Although the Merge just happened recently and it was more of an infrastructure upgrade for the future Sharding upgrades, many PotW maxis and community members have argued that Ethereum has become more centralized after the Merge. This analysis aimed to tackle the scalability and decentralization aspects of the Ethereum blockchain after the Merge to evaluate the state of the network.

Analysis

• The number of mined blocks per day had a downward trend for the past few years, especially during the pre-merge period. However, it has increased to nearly 7000 blocks per day and registered a new all-time high after the merge;
• Since the launch of the network, the number of miners dramatically decreased year over year and reached just less than 100 active miners during the pre-merge period. Surprisingly, while the requirements of being a validator are more demanding compared to only being a miner before the merge, the number of validators who were chosen to validate a block after the merge has surpassed the total number of miners in the year Ethereum launched;
• The increasing number of blocks per day, as well as the numerous validators, resulted in an incredibly low average number of blocks per validator, which in general is a positive sign indicating more decentralization;
• The time interval between each block has been reduced to a constant amount of around 12 seconds since the validators are chosen by the network instead of trying to solve a mathematical problem;
• The average transactions per second (TPS) of the network has also increased after the merge, which considering the increased number of validated blocks per day demonstrates a huge jump in the activity of the network, and the ability of the blockchain to better scale to handle higher throughputs;
• The relatively similar to slightly higher average block size has also indicated the ability of the network to store more complex transactions, regarding the development of Ethereum’s DeFi ecosystem, by only slightly reducing the average number of transactions per each block;
• While the data between 2015 and 2020 is not available, the average base fee per gas has massively dropped after the merge. Considering the same level of average used gas per block, it shows that the Merge has been a huge milestone for reducing the cost of operations on the blockchain.

Hourly Analysis

• The hourly number of validated blocks has increased to a higher and a relatively fixed number of blocks after the merge, which has resulted in fewer time intervals between the validation of each block, compared to the clustered output before the merge;
• Although the initial number of validators had a drastic jump compared to the number of active miners in the pre-merge period, it has started to decrease with a gentle slope;
• One might anticipate that the number of validators adopts a similar trend as the number of miners before the merge. However, one might argue that due to the validation process becoming more energy-efficient and cost-effective, smaller validators will remain active in the future;
• The number of hourly transactions has stayed in a similar range as the pre-merge period with a slight increase in the overall user activity;
• The amount of hourly gas used has also slightly increased to a fixed and higher range compared to values before the merge;
• While the hourly base fee per gas after the merge has remained as dispersed a

Conclusion

In conclusion, the investigation of scalability and decentralization of the Ethereum blockchain in both the pre-merge and post-merge periods has demonstrated a moderate increase in its scalability and decentralization levels. It is worth mentioning that although some metrics such as the number of validated blocks, the number of validators, or the base fee per gas explicitly show the difference and improvement compared to the pre-merge period, their primary impact has been more fundamental with a long-term prospect. While the Merge upgrade has clearly laid the foundation for a more scalable network in the future, its decentralization has also not altered negatively, at least in this short time frame since the upgrade.

Daily Validated Blocks of Top Validators

• The analysis of top validators per day has indicated that multiple addresses were involved since the Merge;
• Only two validators have been among the top 5 with their share of blocks decreasing each passing day;
• The presence of multiple addresses among the top daily validators shows a healthy balance and can be regarded as a positive metric for measuring the decentralization of the network.