Minimum Decentralization Test

Definition ∞ A minimum decentralization test is a hypothetical or actual assessment designed to determine if a blockchain network or digital asset system meets a predefined threshold of distributed control and influence. This test typically evaluates factors like the number of independent validators, the distribution of token holdings, and the concentration of governance power. The objective is to verify that the system is sufficiently resilient against single points of failure or undue centralized control. Passing such a test confirms adherence to core decentralized principles.
Context ∞ The concept of a minimum decentralization test gains prominence in regulatory discussions and technical evaluations within the crypto space. News often covers proposals for such tests by regulatory bodies aiming to classify digital assets based on their decentralization levels. Protocols may also voluntarily undergo these assessments to demonstrate their commitment to decentralized principles, thereby enhancing their credibility and market appeal. The outcomes influence investor perception and regulatory standing.