🏆Decentralization Rank

Evaluating the decentralization of DeFi protocols is an important aspect of understanding their risk profiles and the trust assumptions involved when interacting with them. This page offers a comparative perspective on various protocols, focusing on key metrics related to decentralization.

The framework presented here aims to assist users in their due diligence. It's inspired by resources like L2beat, which provides transparency for Layer 2 solutions. Decentralization is a complex and multifaceted concept, and the information below represents one approach to its assessment. Understanding these characteristics can help clarify how different protocols manage security, governance, and operational changes.

Below is a table comparing different protocols across several attributes relevant to decentralization:

Name	Upgradability	Admin Power	Real Yield
Wise Lending	No	Low	Yes
Uniswap	No	Low	Yes
Curve	No	Low	Partial
Pendle	No	Low	Partial
Aave	Yes	High	Yes
Paraswap	Yes	High	Partial
Bend DAO	24hr Delay	High	Partial
Penpie	Yes	High	Partial
Stella	Yes	High	Partial

Key Terms Explained:

Upgradability: This assesses whether the core smart contract code is immutable (cannot be changed after deployment) or if it can be modified by an admin, a multi-sig, or a governance vote. * No: Indicates that the primary logic of the deployed contracts is generally not designed to be changed. * Yes: Indicates that mechanisms exist to upgrade or alter the contract logic. * Time Delay: Some protocols implement a mandatory waiting period before an upgrade can take effect. This can provide users with an opportunity to review changes and react, though the practical ability to withdraw funds or mitigate risk depends on various factors.

Admin Power: This considers the extent of control that administrative roles (e.g., team multi-sigs, specific admin keys) have over the protocol's operation. * Low: Administrative functions are typically limited, for example, to adjusting minor, non-critical parameters or executing routine maintenance functions governed by strict rules. * High: Administrative roles have significant capabilities, which might include pausing core functionalities, changing critical parameters that affect user funds or risk, or even directly managing aspects of the protocol that could impact users significantly.

Real Yield: This distinguishes whether the yield distributed to users primarily originates from organic protocol revenues (e.g., trading fees, interest paid by borrowers) as opposed to being heavily reliant on the protocol's own token emissions. * Yes: Suggests that yield is largely sustained by the economic activity within the protocol. * Partial: Indicates a mix, where yield comes from both protocol revenues and token incentives.

This comparative overview is intended as a starting point for research. Evaluating decentralization involves considering many factors, and users should always conduct their own thorough investigation before engaging with any DeFi protocol.