Questions

How centralized or decentralized is NEAR, really?

• Choose at least two distinct measures of decentralization that can be explored with on-chain data; clearly define those metrics, and outline how NEAR performs based on those metrics

• In your view, is NEAR becoming more centralized or decentralized over time?

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Introduction

What is NEAR Protocol?

Near Protocol is a decentralized application (DApp) platform that focuses on usability among developers and users. As a competitor of Ethereum, NearProtocol is also smart-contract capable and a proof-of-stake (PoS) blockchain.

NEAR operates in a similar manner to other centralized data storage systems like Amazon Web Services (AWS) that serve as the base layer on which applications are built. But rather than being run by a single entity, NEAR is operated and maintained by a distributed network of computers. 

Just as AWS allows developers to deploy code in the cloud without needing to create their own infrastructure, NEAR facilitates a similar architecture built around a network of computers and its native cryptocurrency, the NEAR token. (Source 1,2)

Methodology

• In this dashboard, the decentralization of the NEAR network has been analyzed in 5 Sections:

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  • Comparing Users of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap
  • Comparing Transactions of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap
  • Comparing Liquidity Pools of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap
  • Validators Comparison ( NEAR vs Solana )
  • Delegators Comparison ( NEAR vs Solana )

• This dashboard uses the Arbitrum, Ethereum and Polygon databases an,d the following tables to extract information:

  • near.core.ez_dex_swaps
  • ethereum.core.ez_dex_swaps
  • ethereum.sushi.ez_swaps
  • near.core.fact_actions_events_function_call
  • near.core.fact_transactions
  • solana.core.ez_staking_lp_actions

• The Max time frame provided in this dashboard:

  • From December 2021 until today

Comparing Users of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap

The biggest Platforms on NEAR and Ethereum

Users Analysis

• Near top DEX (Ref Finance) is way smaller than its main competitor which is Ethereum's top DEX (Sushiswap) by more than 100x! Almost 501k users on Sushiswap have done swaps since the first day of 2022 and this number is only 4820 for the Ref Finance
• To show the change in Users over time, I made a logarithmic chart because the difference between the 2 platforms is very big. With that said we can observe that the number of users on both apps has declined since January. Sushiswapusers have declined from almost 10k daily swap users down to 3-4k. Ref Finance has between 100-500 daily users for the first 2 months of the year but after that, in the first week of March, we can see a sharp decline in the number of daily users from +100 down to 13 users in the next days. Since then there is no substantial increase in the number of users and Ref Finance maintained a range between 12 - 27 daily users

The NEAR biggest DEX is way smaller than the biggest ones in the industry like Sushiswap on Ethereum. So we can conclude that in the swap sections of a decentralized system there is more work need to be done to attract much more users to be at a level to be compared to the biggest decentralized exchanges in the crypto

Comparing Transactions of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap

Decentralizations of NEAR by comparing its performance to the most decentralized smart contract platform: Ethereum

Transactions Analysis

• In terms of the number of transactions in these DEXes, we can see better numbers for Ref Finance compared to the user numbers we looked into earlier. More than 546k transactions have been made on Ref Finance since the beginning of 2022 which is around 15.7% share compared to the same metric for Sushiswap. Although the number of users for Ref Finance is way lower than Sushiswap, this small number of users made a respectable amount of transactions
• For showing the number of transactions for these 2 apps I didn't use a log chart as the difference between 2 DEXes transactions is acceptable on the linear chart. Both Dexes have periods with high and low transactions like a Sin wave based on the volatility and market conditions

The interesting thing about the overtime chart is that both Sushiwap and Ref Finance have shown the same up-and-down patterns over time. ( Not exactly but overall) which shows that Ref Finance just like a perfect decentralized DEX like Sushiswap has the same up and down in the number of swaps and transactions based on the market moves which is a good sign for decentralization and maturity for a DEX on NEAR

I considered Sushiswap as the most decentralized DEX in crypto( Smaller than Uniswap but much closer to NEAR level ) and made comparisons in different metrics between the top NEAR DEX ( Ref Finance) and Sushiswap to gain a better view of its decentralization by comparing its performance to Sushiswap

Comparing Liquidity Pools of the biggest Platforms on NEAR and Ethereum: Ref Finance vs Sushiswap

Pools Analysis

• In terms of the number of pools on Ref Finance, we have a nice 14.7% share compared to Sushiswap. This is a good number considering that Ref Finance is a new platform compared to an old app like Sushiswap. Ref Finance today includes 374 total liquidity pools and Sushiswap has almost 6x more
• The number of pools is not changing very sharply for both apps. Considering being in the bear market and not many new token lunches, this can be normal. Also, a good sign is that the pools have remained alive deep in the bear market

The Near biggest Dex seems to be decentralized enough in terms of the liquidity pool quantity. As we can see the Ref finance has around 15% of Sushiswap pools. If Sushiswap is the closest model to the most decentralized Dex right now then this number of pools for Ref can be considered acceptable as a new decentralized exchange with not much history and deep in the bear market

Decentralizations of NEAR by comparing its delegation performance to Solana

Validators Comparison

Validators Analysis

• NEAR top 10 validators have almost 72.3% dominance of the network power and the Top 10-100 validators have 27.7% of the remaining power
• Solana's top 10 validators have more than 89.5% share in controlling the network and only 8.62% of the network power goes to the top 10-100 validators

==In terms of decentralization, we wanna have power in hands of more people. This means the more power goes to non-top 10 validators the more decentralized the network becomes. Based on this fact, NEAR is more decentralized than Solana. More than 27.7% of network validators in NEAR are not in the top 10 while in Solana this number is 10.5%==

Delegators Comparison

Delegators Analysis

• Delegators are token holders who cannot, or do not want to run a validator node themselves. Instead, they secure the network by delegating their stake to validator nodes and play a critical role in the system, as they are responsible for choosing validators.
• The above charts show that NEAR has lost 5469 delegators in total since December last year and Solana has gained more than 100k delegators in this period

==In terms of decentralization, we wanna have more and more delegators participating in the network to keep validators functional. This led us to the fact that NEAR performance has been very weak this year and not only net delegators are not positive for a better decentralization it's even negative and went to a less decentralized network in the delegators aspect. While Solana has been attracting new delegators and turning into a more decentralized network by more delegators==

Conclusion and Personal thoughts

1: Decentralization can be analyzed from several points of view. In this dashboard, I looked into validators and delegators in NEAR and Solana blockchains. Why Solana? Because it's one of the biggest proof of stake networks in crypto with actual daily users. based on the data in this dashboard I find out in the validator side we have a more decentralized network in NEAR protocol compared to Solana because we have more non-10 validators in the network compared to Solana. In terms of delegators, Solana is more decentralized than NEAR because NEAR has lost many delegates this year and the net gained delegators is negative which is bad for decentralization purposes

2: From another point of view I looked into the top Dex on NEAR which is Ref Finance and compared it to one of the most successful DEX out there: Sushiswap! I assumed that Sushiswapis the ideal form of a decentralized exchange and compared some on-chain metrics between these 2 DEXes. As a result, we have seen that the number of traders on Ref Finance is around 1% of the number of traders of the ideal DEX (Sushiswap). This means the Ref exchange must grow at least 100 times to be comparable to the ideal decentralized example in the space. In terms of the number of liquidity pools and the number of trades, we can see Ref Finance is not 1% of Sushiswap but is around 15% of Sushiswaps number of pools and trades. So these 2 metrics are much closer to the ideal model (Sushiswap) and considering how new is Ref Finance and NEAR in general compared to Sushiswapand Ethereum then these results can be acceptable at this level for the NEAR decentralization on the DEX side.

Thanks for reading and thank  adriaparcerisas for the brilliant idea for this dashboard

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