Decentralization is a Lie — But Truth (and Change) for Data Management is Still Possible

// July 31, 2023

If history has taught us anything, it’s that we often struggle to align aspiration and reality. In technology’s case, this means we tend to build with intention but make sacrifices along the road to creating our dream applications. As humans it’s no surprise that we’re easily swayed toward what’s popular, beneficial to our self-interests, or just plain easier or cheaper, which can cloud our judgment as we develop and engage with products and industries.

But web3 and its promise for decentralization (not to mention essential core values like trustlessness, permissionlessness, privacy, and self-sovereignty) is one of the great historical opportunities of our time. We cannot, we must not fail here. The idea that ownership, governance, and development can be shared among people building toward something greater than the sum of its parts versus a single, centralized entity has countless benefits if done correctly — and truthfully. Over the last decade, from Satoshi to Vitalik, DeFi to DeSo, blockchain and its many builders and visionaries have brought to life countless opportunities for decentralization across digital currencies, applications, and communities.

But too often we’ve fallen short of the visionary end-game. The sad truth is that most of these “on-chain,” so-called decentralized applications aren’t what they say they are. In reality, decentralization has become nothing more than a common lie.

How We Got Here

The definition of decentralization has grown messier over time. In his 2017 blog post on the subject, Vitalik Buterin outlines some of the (controversial and heavily nuanced) definitions/placements of decentralization across familiar entities: traditional corporations (politically centralized), languages (logically centralized), civil law (logically and architecturally decentralized), and blockchains, which he argues are a mix of all three. He notes how many suggest that blockchain benefits from the convenience of “one central database,” where a level of centralization is logical and even arguably good.

Fast forward to the six years following Vitalik's blog post, and we've experienced several debacles where the dream of decentralization has fallen victim to its prevailing trilemma; the sacrifice many developers, protocols, and applications must make between decentralization, scalability, and security. These challenges have led to a gradual decline in decentralization — and the consequences have been real and, at times, disastrous.

But while headline-grabbing, market-crushing collapses like Three Arrows Capital, Celsius, BlockFi, and FTX put the failing of centralized finance on the world's stage, we mustn't overlook the false claims of decentralization that pose a danger not just to massive exchanges and marketplaces but the many applications — and more critically, user data within them — of the web3 ecosystem that’s at risk to single points of failure.

Centralization — and Centralized Data’s Many Risks

The risks of centralization — and misleading claims of decentralization — exist right before our eyes (even if, as we said above, few want to admit it). We've seen these dangers on Ethereum, where the majority of 4,653 active Ethereum nodes operate on centralized web servers like Amazon Web Services (AWS). An early warning sign here came to light in 2021 when Ethereum's key service provider, Infura, went down, sparking debate over the actual level of decentralization of the network. This is in addition to the fact that 25% to 50% of Infura nodes actually run on AWS servers. For the data, funds, digital assets, and even identities stored on Ethereum and these centralized servers, a single point of failure poses serious risks to access, data, ownership, privacy, and anonymity — all guiding principles of web3.

This leads us to the realization that in web3 today, no decentralized application truly exists — and one of the greatest reasons for this boils down to data management and the role that databases play. If we look at data’s journey between typical decentralized storage, compute providers, and protocols as a journey across bridge, the data that’s traveling across it currently experiences many fragmented (and centralized) potholes that can set it off course on the journey to its (supposedly decentralized) destination, leading to damage of your vehicle, or complete failure.

Let’s look at IPFS, the distributed file storage protocol, and giant peer-to-peer network, which historically, many are quick to refer to as a decentralized storage network for many of web3’s apparent “dapps.” In truth, IPFS is a gateway between dapps, their developers and data, a blockchain, and IPFS’s centralized nodes, which ultimately run on a centralized cloud services provider like AWS or Inufra, which, as we said above, runs the majority of its nodes on AWS (subject to a single point of failure). Confusing? Yes. Dangerous? Often. This fragmented process defeats the entire purpose of a dapp, which has decentralized in its acronym — right at the top.

From NFT metadata to funds in DeFi and identity data found throughout web3 social, the approach we outlined above carries countless dangers to users whose privacy, ownership, and management of their data fall out of their control more than they ever realize (which for many is probably not at all). When discussing the risks of centralized exchanges and marketplaces, we often say, "Not your keys, not your crypto." At Source, we want people to understand this goes much deeper than funds into the (often centralized) data that powers all web3 applications. "Not your keys, not your data" is more accurate — and essential to our vision and products.

A Truly Decentralized Journey for Data, Powered by Source Network

It’s not all doom and gloom. At Source Network, we’ve built a powerful solution to truly decentralized data management. Through the potential of our stack — i.e. DefraDB, our peer-to-peer, decentralized, NoSQL database layer and SourceHub, the trust layer that complements DefraDB — we’ve democratized access to data thanks to the power of a truly decentralized database.

Our stack bucks the common web3 trend of relying on centralized gateways or APIs to access data, instead bringing control back to the application developers and their end users, who gain sovereignty and choice over who can access their data, where it lives (i.e., where it’s stored/computed), and how. Our database acts as a manager of the data (whether on or off-chain) we can trust and rely on across all touchpoints of its application journey, offering full power back to the true owners of that data, or anyone who they wish to allow access. Across our stack (or bridge if you want to travel back to our analogy above), there’s no fragmented detours to centralization, but rather a one way trip to a fully decentralized destination.

Does this mean that data within our database is siloed and can't engage with any of the web3 data ecosystems — from storage (Filecoin) to retrieval (IPFS) or oracles (Chainlink)? Not at all. Because at Source, we don't store data but manage it so that its entire journey between developers, applications, and end-users can be fully decentralized and private.

Through the power of our product, we protect data from falling into the hands of those who are decentralized in name only — i.e., a D.I.N.O — but rather maintain integrity over the true decentralization that’s critical to realizing web3’s vision and potential.

Dive Deeper

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