jakiro
Author: danny; Source: X, @agintender
“The world’s general trend, long-term division will lead to unity, and long-term integration will lead to unity.” This is a famous saying at the beginning of “Romance of the Three Kingdoms”.It describes the cycle of historical dynasties, but if we focus on the blockchain and crypto worlds, is this fate reenactment?Decentralization was originally an ideal born in the name of fighting monopoly and breaking authority, but in the evolution of PoW and PoS, we have seen the trajectory of the comeback of “centralized forces”.No matter how hard it is to fight alone, it can only rely on the mining pool; in the world of PoS, the more capital it is, the more stable the right to speak.At the end of decentralization, there seems to be always the shadow of centralization.
1. PoW’s ideal and the reality of mining pools
Bitcoin’s white paper depicts a fair world: as long as you have computing power, you can participate in consensus and get rewards.This is a typical decentralized vision – everyone is equal and nodes are autonomous.
With the fierce competition for computing power, it is almost impossible for a single small miner to mine a block independently.The computing power of hundreds of T can only be countered with the scale of tens of thousands of P in the mining pool.Therefore, the small miners could only aggregate under the mining pool and contribute their computing power in exchange for a proportionally distributed reward.
PoW’s “license-free” ideal also faces challenges in economic reality.For a mature PoW network like Bitcoin, it is no longer realistic for small miners to independently mine. The computing power competition in the Bitcoin network has reached an industrial scale, and it requires huge investment in expensive ASIC mining machines and cheap electricity. This is no longer a competition for independent work.
The mining pool has become the center of new power.They schedule computing power, select blocks, and may even launch “computing power attacks” in extreme cases.PoW has not moved towards purely decentralization, but has been swept up by the effect of scale and reconstituted the “centralized alliance”.
2. The capital logic of PoS: currency power is king power
If the inequality of PoW comes from the capital threshold of computing power equipment, then PoS is a naked financial capital logic.
In the PoS world, holding coins is power, and the more pledges means the higher the chances and returns of blocks.This means that large capital accounts (exchanges, funds, early giant whales) naturally have a stronger compound interest effect: the richer people are, the more money they can get, and ultimately monopolize the governance and security of the network.
It is difficult for new entrants to achieve leapfrog success, which is the so-called difficulty in producing a “noble son”.This is determined by its internal economic model, except thatThe Matthew Effect of Capital, Large holders receive more rewards, and further increase their equity and future returns after reinvestment, and their influence will expand like a snowball.
The high entry capital also limits the entry threshold.The recentralization of the staking pool has also led to a new centralization, with a large amount of funds gathered in the hands of a few large service providers (such as Lido and Coinbase), and these entities have become new power centers.
This is almost a mirror image of capital society: it is difficult for poor families to have noble children because the poor have no chance to accumulate, while the rich continue to use compound interest to expand their advantages.Here, decentralization gradually evolved into the self-replication of capital oligarchs.
3. The dilemma of decentralization: technical ideals vs. real power
Whether it is the mining pooling of PoW or the capital oligopoly of PoS, it is revealing a fact: decentralization is just the starting point, and centralization is the result of the process.
This is no different from the real world.The capitalist market claims to be free competition, but it often turns into oligopoly; political and social emphasis on dispersion of power, but ultimately tends to centralize.As an experiment in the “digital society”, blockchain naturally cannot escape this historical trend.
4. Centralized “rich-making machine”: the birth of foundations, exchanges and newcomers
The ideal of decentralization emphasizes that everyone participates equally, but in reality, if a new project wants to be seen by the market, it is almost impossible to avoid several centralized “rich-making machines”.
1. The foundation’s support.The ecological prosperity of many public chains is not natural growth, but blood transfusion from the foundation.
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Ethereum Foundation: Through funding, hackermasters, research grants, we have created prosperity such as DeFi, Layer2, ZK technology.Without the long-term investment of the foundation, the Ethereum ecosystem would not have formed its current moat.
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Solana Foundation: In the 2021 bull market, we will continue to invest in projects such as DeFi (Serum), NFT (Magic Eden), GameFi (StepN), and use funds and resources to quickly build a new public chain into an ecological matrix.
Without the blood transfusions from these foundations, it is almost impossible for a single development team to break through the complex and fierce competition in public chains.
2. Star-making effect of exchanges.In the crypto market, exchanges are traffic entrances.Who can get on Binance, Coinbase, and OKX often determines whether the project can trigger global attention.
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Binance: Without airdrop, there will be no currency listing and no liquidity, but this is the liquidity “destination” of each project.
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Coinbase/Upbit Coin Listing Effect: Although the effect is weakening, it is still regarded as a treasure by the project party.
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OKX/Bybit Launchpool: Also through the “mining is to register coins” model, new projects can quickly gain exposure and user base.
In the US dollar market capitalization ecosystem, small teams have almost no chance of independent game and must rely on the exchange’s endorsement and vote.
3. VC, capital network and KOL.The famous VCs (a16z, Paradigm, Yzi Labs, Multicoin, etc.) are not only fund providers, but also narrative makers and discourse power amplifiers.
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a16z: During the DeFi Summer period, he promoted Uniswap and Compound, and later promoted the NFT and Web3 concepts.
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Yzi Labs: Investing in and promoting the BNB Chain ecosystem, not being able to enter the core circle means not being able to receive ecological support.
Without the spotlight of these capitals, most agreements may be buried even if they are technically good.
5. The dilemma of poor families: Why is it becoming increasingly difficult for newcomers to be born?
Today’s blockchain ecosystem is an open and decentralized network on the surface, but in fact:
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Uneven resource allocation: Foundation money, exchange traffic, and VC capital are more concentrated in the “relationship network”.
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Narrative control: The top capital and exchanges can determine market popularity and define what is the “next trend”.
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The cost of sunk is high: If a new project does not have sufficient financial support (market maker) to obtain market recognition and liquidity, let alone the possibility of going to the institute.
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Exchange > Market Maker > Traffic > Project party, the project party is at the bottom of the food chain
This leads to the “decentralized poor family”, that is, ordinary developers or grassroots teams, which are increasingly difficult for ordinary developers or grassroots teams to break through the siege by relying solely on technology or concepts. In the end, they can only rely on the “centralized power network” and then they can grow into “centralized upstarts”.
6. The Last Carnival: When the way out is blocked, Meme becomes the only game
When the upward channel of serious innovation is firmly controlled by the capital and power network, the newly entered the circle will naturally find new ways out.Since they couldn’t play with the giants at the “value investment” table, they turned to another game that seemed fairer and crazier – Meme.This is exactly the current phenomenon: newcomers are no longer obsessed with white papers and technical narratives, but flock to Meme and Pump fun, because in the old paradigm, they no longer see a way out.
The rise of Meme coins is essentially a rebellion against the VC-dominated crypto world.It abandons complex utility and roadmap and returns to the purest core of the Internet culture: community, entertainment and virality.For newcomers who don’t see hope, Meme has become an “obvious” way out.This lottery effect is driven by psychological factors such as FOMO, community belonging and stimulating dopamine pleasure, which attracts a large number of speculators who are eager to make quick profits.
Newcomers to Meme and Pump fun are not out of ignorance, but a rational choice after seeing the rules of the “centralized son” game.When the road to class crossing through technological innovation is blocked, joining a Meme frenzy with high risk, high returns and more transparent rules becomes the only way out they can see and are willing to participate.This is a helpless cry and a deconstructive carnival of the old power structure.
Sadly, even Meme has now become a product of the dealer’s assembly line, becoming a capital game of thrills wrapped in cultural memes and attention economy.
7. Thinking: The historical cycle of separation and union
So, is decentralization just an illusion?not necessarily.
Decentralization is not an ultimate state that can be solved once and for all, but a continuous and dynamic struggle.It is an ideal and countermeasure to combat the inherent efficiency advantages of centralization and the natural tendency of centralization.
It is more like another cycle of reincarnation of the “law of historical division and integration”.Just like the dynasties changed in Chinese history: long-term separation will lead to unity, and long-term harmony will lead to unity.Centralization can bring order, efficiency and security, but it will inevitably accumulate rigidity, corruption and oppression; decentralization releases freedom, innovation and diversity, but it can easily lead to division and inefficiency.
Technology just accelerates the cycle and cannot break it.PoW and PoS may be just different cycle stages. One emphasizes “computing power democracy” and the other emphasizes “capital order”, but they all find it difficult to escape the destination of “the strong will always be strong”.
postscript
“It is difficult for a decentralized poor family to have a centralized noble son.”
This is not pessimism, but a cold perception of reality.Decentralization is not the end point, but a cyclical force that impacts the old order and creates new possibilities, but will eventually nurture new centralization.
The question is not “whether decentralization will go centralized”, butBetween the next round of separation and union, can we build a more just, transparent and sustainable order?.This may be the true fate of blockchain.
