On-chain centralization refers to the concentration of power or control within a blockchain network, often manifested in a small number of entities holding a disproportionate amount of tokens, hashing power, or validator nodes. This can compromise the decentralized nature of the network, making it susceptible to censorship or single points of failure. Such concentration contradicts the core principles of distributed ledger technology. It poses risks to the security and integrity of the system.
Context
The issue of on-chain centralization is a persistent concern and a subject of continuous debate within the digital asset community. Discussions often revolve around the distribution of mining rewards, staking power, and governance tokens. Future developments focus on designing more equitable distribution mechanisms and consensus protocols that actively resist the accumulation of excessive control by a few participants, aiming to preserve network decentralization.
A new batch-processing AMM mechanism uses a constant potential function to ensure arbitrage resilience and strategy-proofness, fundamentally mitigating MEV.
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