Claims that PoS projects can offer security and scalability without compromising on decentralisation will be tested says ShapeShift report
A report published by non-custodial crypto asset exchange ShapeShift suggests that Proof-of-Stake (PoS) scalable smart contract networks like Polkadot, Cosmos, and NEAR might fail to take off if they are perceived to have an issue with centralisation.
Citing the example of EOS, the report argues that the PoS projects which claim that they can offer increased scalability without the trade-off with security or decentralisation will be put to test this year.
Cosmos is a decentralised ecosystem of connected blockchains that is aimed at offering scalability, interoperability and usability.
Polkadot is a platform that links private and consortium chains, public and permissionless networks and oracles to facilitate a completely decentralised web where users are in control.
NEAR is a decentralised application platform that is focused on offering security and usability for people to manage high value assets like money or identity
Shapeshift explains that the distribution of Polkadot’s and NEAR’s respective native tokens are highly centralised at the moment as a result of huge numbers of insider token allocations. Cosmos’ pluralistic architecture, on the other hand, requires each individual zone to recruit its own independent validators, making it difficult to ensure robust security in each zone.
Authored by Kent Barton, the Head of Research & Development at ShapeShift, the report predicts that the perceived degree of centralization of the PoS projects will determine which of them will thrive and which project(s) will fail to survive.
“This dynamic has already played out in EOS, where evidence of validator collusion seems to have played a role in the platform’s anemic developer growth over the past year”, the report explained.
ShapeShift further predicts that the claims of these platforms regarding offering smart contract platform interoperability will be tested. “Value and data will begin to flow trustlessly between different crypto ecosystems”, the report explained.
The report also emphasised that it will be a challenge to design systems that conceal the complexity of blockchain interoperability. “Wider adoption will likely require that the complexities of interoperability are made nearly invisible to users”, the report said.
ShapeShift acknowledged that there is no “one-size-fits-all” smart contract solution and added that decentralized exchanges and applications will have to continue to adapt to the capabilities offered by different smart contract platforms to stay afloat.
The report also highlighted that new innovations will bring with them new vulnerabilities like the flash loan attacks on DeFi protocols in late 2020s. “Emerging blockchain ecosystems will likely have their own version of flash loans—powerful new abilities that expose users to a loss of funds,” said the report.