Decentralization is a foundational principle of blockchain technology, and at Hedera, it is the cornerstone of building the Hedera network to sustain security, longevity, and sustainable operations.
The importance of a public network that is not only decentralized but also secure, scalable, performant, and cost-effective, cannot be understated. This is especially necessary during the initial phases of Hedera’s “path to permissionless validators”, as it lays a foundation for the network to reliably scale while ensuring proper decentralization. Anchoring Hedera’s approach to achieving this blend of characteristics are five foundational pillars:
Technical: Hedera network validators operate across multiple deployment models and facility types (public, private, and on-premises). This approach fosters a robust and flexible system architecture.
Operational: Operational risks are mitigated by limiting hosting provider concentration. This precaution ensures that business decisions by individual providers cannot significantly impact the overall services and availability of the network. The decentralization of provider authority enhances operational resilience and protects the network from monopolistic influences.
Geographic: Hedera's geographically dispersed network enables close access to global markets, enhancing Hedera's relevance and accessibility to a worldwide user base. This also insulates service availability from potential adverse effects of regional geopolitical decisions. A geographically diversified setup also reduces the risks of natural or man-made disasters in any location.
Industry: Hedera's governance model features a global Governing Council representing various economic sectors and cultural perspectives. This diverse representation helps ensure that decisions reflect various interests, contributing to more balanced and equitable outcomes.
Contributor: Hedera promotes open-source contributions and values intellectual input from its community. It encourages participation through Hedera Improvement Proposals (HIPs), workshops, and other collaborative initiatives. These platforms enable the community to share insights, propose improvements, and contribute to the continuous evolution of the Hedera ecosystem.
In this blog post, we will delve into the nuances of Hedera mainnet nodes' decentralization. We will explore the current state of the Hedera network's distribution of validator nodes across unique hosting providers, their geographical dispersion across various countries and continents, and the equal distribution of stakes among hosting providers. Join us as we dissect these components crucial to understanding the nature of decentralization on the Hedera network.
Hedera is a public, open-source, leaderless proof-of-stake (PoS) network. Since Hedera is a publicly accessible infrastructure, anyone can buy $HBAR on an exchange and pay network transaction fees to use or deploy decentralized applications.
Hedera is governed by 29 leading organizations across the globe with maximum participation of up to 39 organizations. These organizations include Web3 projects, enterprises, and educational institutions, including Google, Shinhan Bank, Chainlink Labs, IBM, Ubisoft, FIS, University College London, EDF, and many more.
Hedera's governance design is separated from consensus and assures no single company—or a small group of developers or node operators—has undue influence or control over the network. Members of the Governing Council operate independently and have equal voting rights. These organizations are decentralized across global legal jurisdictions (geography) and industry (special interests), and are limited to two terms of three years each (time).
Governing Council Members meet regularly throughout the year, both virtually and physically, with the most recent Governing Council meeting hosted at Google’s headquarters in Mountain View, CA on May 22nd, 2023. Meeting minutes from every convening are made publicly available, along with the Governing Council Agreement document in full.
Although Hedera Governing Council members cast votes on numerous technical elements of the network, including codebase modifications, the Hedera developer community, application ecosystems, and core contributors are pivotal in shaping its development and innovation. They contribute substantially to establishing and progressing standards, such as tokens, interoperability, and metadata. Moreover, they drive codebase adaptations to ensure Hedera's seamless evolution with the ongoing progress of Web3. This process is conducted through the Hedera Improvement Proposals (HIPs) program.
On the Hedera mainnet, 23 validators are independently hosted by Governing Council members and six validators are temporarily hosted for members by the core Hedera team. Validators hosted for Governing Council members today are considered "transitional nodes" — these are initially set up by Hedera core engineering and become independently hosted by Governing Council members after their technical integrations are complete, at which point validators are hosted in four possible configurations:
Private data center (using owned hardware)
Colocation data center (using owned hardware)
Leased hardware (bare-metal hosting)
Cloud (in the traditional sense such as GCP, AWS, Azure)
The goal is to ensure that at most one node is hosted in any given cloud or data center to ensure decentralization at the lowest layer.
Anyone can operate a mirror node, which helps ensure decentralization of “on-chain” data. We anticipate that thousands of public nodes will join to support the network's decentralized consensus and growth, starting with community nodes in 2024. Hedera’s “Path to Permissionless” whitepaper can be read here.
Validator nodes and their current operational status can be viewed at https://status.hedera.com/
Hedera ensures decentralization of consensus through individual validators operating in public (cloud) or on-premises data centers across the globe. This strategy ensures that no single validator controls a significant portion of the network, which enhances the network's resistance to attacks and promotes the integrity and reliability of the network as it continues to scale with the addition of community nodes and eventually permissionless nodes.
To further augment the decentralization of Hedera, nodes are widely distributed across various geographic regions and legal jurisdictions. This geographical dispersion of nodes helps to protect the network against localized events and disruptions, fostering resilience and continuity of the network on a global scale.
Hedera is a leaderless PoS network, meaning that any node on the network can receive transactions submitted to it by clients and that nodes require Hedera’s native cryptocurrency, HBAR, to be staked in order for them to actively participate in consensus.
Staking HBAR to a validator increases the weight of a validator’s ability to contribute to consensus. HBAR holders are incentivized to stake to nodes that are consistently online, available to receive transactions, and contribute to network consensus as, in the future, rewards will only be distributed within the 24-hour reward cycle if funds are staked to a node that was online during that period; this consequently incentivizes node operators to maintain operational uptime.
A more equitable distribution of stake in a permissionless PoS network environment prevents a group of colluding nodes from dominating the network by having a combined stake greater than 1/3rd, thereby reinforcing the network’s decentralization. Today, the Hedera network is permissioned with nodes hosted and operated by Governing Council members; there are explicit bounds on how much consensus weight a single node can have with max limits on staked HBAR contributing to consensus weight restricted to 50B HBAR/n (n = # of nodes on the network).
Hedera’s governance model requires its members—composed of global organizations, Web3 projects, and universities—to independently operate validator nodes. This provides a high trust model for users submitting transactions to the network, knowing which organizations are running which nodes, where, and their behavior. From this basis of 29 consensus nodes, Hedera will continue to grow, adding permissioned community nodes, and eventually, permissionless nodes.
Hedera ensures a robust foundation for the network as it scales by focusing on a smaller set of validators. In addition, organizations operating these validators, as well as core Hedera engineers, diligently learn from this experience and contribute back to improving the codebase's performance, reliability, and scalability. This strategy allows Hedera to grow sustainably while maintaining network performance and security at optimal levels.
In the next section, we’ll look at how Hedera will continue to scale while adding nodes to the network.
Although Hedera is currently a permissioned network, it is on a path toward being fully permissionless. This starts with opening node operation to application developers and partners in the Hedera community (otherwise known as “community nodes”) and eventually becoming a fully permissionless network, where anyone can run a node anonymously. Hedera plans to introduce community nodes first and eventually extend participation to the broader community of participants.
It’s commonly misinterpreted that Hedera’s scalable, performance, and low/fixed fees are attributed to having only 29 validator nodes. While a lower validator count can support these blockchain network features, these aspects are inherent to Hedera’s hashgraph consensus mechanism, not simply the result of a limited validator set.
On Hedera, the latency increases attributed to the addition of nodes should be sub-linear; in other words, latency increases very slowly as more validator nodes join the network. For example, if there is sufficient usage that gossip has logarithmic latency, then if latency doubles from 100 to 10,000 nodes, it would only double again going from 10,000 to 100,000,000 nodes. This slow growth in latency ensures that the network can handle a massive increase in size without a proportionate increase in transaction confirmation times. In addition, as the network scales, further improvements on hashgraph are being made to reduce latency, such as planned improvements to gossip.
It’s unknown what the maximum node count per shard will be at this time. As the number of nodes grows, the network will begin adding more shards rather than making every shard larger — this ensures that the performance and security within a shard remain consistent. The throughput of a shard is largely unaffected by the number of nodes as long as all nodes receive many transaction submissions.
As Hedera prepares to introduce community nodes, it's important to clarify that the hardware specifications for these nodes are yet to be defined. However, it should be noted that the current specifications and requirements for Hedera nodes and stake are not entry-level-friendly. This is a necessary measure to ensure the throughput and latency performance of the Hedera network. Through continuous growth and evolution, core contributors actively explore ways to make operating a node more accessible without compromising these essential qualities.
The current specs for validator node operation can be found in the Hedra documentation: https://docs.hedera.com/hedera/networks/mainnet/mainnet-nodes/node-requirements
Hedera is committed to creating a decentralized network that is robust, secure, and designed for longevity. Its approach to continued decentralization and a thoughtful path toward a permissionless state—whether through unique node hosting providers, geographical distribution, or a strategic number of validators—underscores Hedera’s commitment to building a network that will thrive and sustain over the long term.
Hedera core contributors and the community at large are excited about the introduction of community nodes next year and the continued development of codebase upgrades, standards, and greater decentralization to ensure a scalable, performant, and cost-effective platform for developers, retail users, infrastructure providers, and partners.
For more information about continued network development or to contribute your own ideas, please visit the following resources:
Hedera Network Status: https://status.hedera.com/
Hedera Roadmap: https://www.hedera.com/roadmap/
Hedera Improvement Proposals (HIPs): https://hips.hedera.com/
Update (August 17th, 2023): The estimated timeframe for community nodes has been updated from "Early 2024" to "in 2024".