Power Distance, adapted to the systems architecture of crypto, refers to the degree of inequality in the distribution of influence or control within a decentralized network or protocol. It measures how centrally decision-making power resides, despite nominal decentralization.
Mechanism
In ostensibly decentralized systems, power distance can manifest through concentrated token holdings, where a small number of addresses control significant voting power in governance proposals, or through the influence of core development teams on protocol upgrades. It also appears in centralized entities operating within the crypto ecosystem, such as exchanges or large institutional validators, whose decisions disproportionately affect market dynamics.
Methodology
Assessing power distance involves analyzing on-chain governance mechanisms, token distribution patterns, validator stake concentrations, and the influence of major institutional actors or stablecoin issuers. This methodology provides insight into the actual decentralization of a protocol, helping investors evaluate the risk of central points of control or potential manipulation, which is critical for understanding the systemic integrity and long-term viability of crypto assets.
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