Perceived centralization could kill PoS networks: ShapeShift report

A new report indicates that Cosmos, Polkadot, and NEAR may fail to boot if it is realized that they have a problem with centralization – as the EOS example shows.

ShapeShift crypto-asset exchange not subject to custody has published a report that expects the scalable smart contract networks, Polkadot, Cosmos and Near, to be fully tested this year.

The report predicts that the networks’ claims of increased scalability without sacrificing security or decentralization will be tested soon. Shapeshift notes that the native token distribution of both Polkadot and NEAR appears completely centralized due to its “relatively high internal token allocations,” while Cosmos’ pluralistic architecture requires each of its individual “regions” to recruit independent validators – making it more difficult for each region to ensure Strong security.

In the end, the author of the document, Kent Barton, speculates that the perceived degree of centralization of the platforms involved will most likely determine which blockchain will flourish from those that fail to gain traction, asserting:

“This dynamic has already surfaced in EOS, as it appears that evidence of auditors collusion has played a role in the growth of the platform’s anemia developer over the past year.”

ShapeShift expects to test the interoperability of the smart contract platform this year, and predicts that “value and data will begin to flow in confidence between the various cryptographic systems.”

But the report also asserts that it will be a challenge to design systems that mask the complexity of blockchain interoperability:

“Adoption at scale will likely require that the complexities of interoperability be nearly invisible to users.”

Noting that there is no “one size fits all” smart contract solution, ShapeShift expects exchanges and decentralized applications to adapt to the unique capabilities offered by different smart contract platforms.

However, the report warns that platform innovations will also bring new vulnerabilities as evidenced by the myriad of rapid loan exploits plagued by DeFi protocols in late 2020.

“Emerging ecosystems in the blockchain will likely have their own version of fast loans – powerful new capabilities that expose users to losing money,” the report said.