Nakamoto Coefficient Metric

Definition ∞ The Nakamoto Coefficient Metric is a quantitative measure used to assess the decentralization of a blockchain network. It represents the minimum number of independent entities required to compromise a specific subsystem of the network. A higher coefficient indicates greater decentralization and enhanced resistance to collusion or attack. This metric provides an objective way to evaluate network security.
Context ∞ The Nakamoto Coefficient Metric is frequently cited in crypto news to discuss the decentralization status of various proof-of-stake blockchains and layer-2 solutions. Debates often concern the methodology for calculating the coefficient across different network components, such as validators, mining pools, or governance participants. Monitoring this metric helps assess the long-term security and censorship resistance of digital asset protocols. It is a key indicator for network health.