Input Output Global (IOG), creator of the decentralized finance (DeFi) cryptocurrency project Cardano (ADA), has unveiled the world’s first blockchain decentralization index.
The tool, dubbed the Edinburgh Decentralization Index (EDI), is a partnership between IOG and the University of Edinburgh that aims to create a transparent mechanism for assessing the level of decentralization of public blockchain initiatives, according to an IOG blog post published Nov. 18.
Notably, EDI will operate in real time, relying on an ongoing “calculated and validated methodology” led by a team from the University of Edinburgh.
How EDI works
In setting the level of decentralization of the project, EDI will reportedly focus on the risk factors associated with the crypto space. According to IOG, the decentralization review process aims to address the volatility of the crypto market and innovation in the blockchain space.
According to Cardano founder Charles Hoskinson, the creation of the index is part of an initiative aimed at empowering users and investors.
“Decentralization is at the heart of what makes blockchain technology so unique and potentially revolutionary. By decentralizing the system, we return power to the hands of ordinary users and investors. What we currently lack is generally accepted industry standards that determine the degree of decentralization of projects,” Hoskinson said.
After all, EDI aims to preserve the principles of blockchain technology by promoting transparency, censorship, resilience, and integrity as the benefits of decentralization.
Over the years, most of the projects launched in the crypto sector have positioned themselves as decentralized without any specific industry measures. In this case, IOG stated that EDI could lay the groundwork for classifying cryptocurrency projects.
At the same time, according to the Finbold report, Hoskinson expressed frustration with projects that are rated as decentralized, but which implement the principles of centralization.
“I’m tired of working in an industry where every person says; we are decentralized. What does it mean? We don’t have a way to measure. It’s like saying we’re performing. <…> It’s just fluffy. These are just words. The problem is that decentralization is a measurement of sustainability. This is the dimension of control. This is a measure of reliability, and it is determined by how protocols are developed,” he said.
In this case, Hoskinson pointed out that decentralized projects should be evaluated in terms of sustainability, control and reliability.