Another Look at Decentralization

The ability to provide security for decentralization is essential to the value blockchain technology promises and the level of security a blockchain can provide is a quantifiable property which can be approximated by the cost of running an attack. How much that cost is reflects how much security there is. Security is the good or service produced by the set of consensus forming nodes who serve as producers in a blockchain network. The basic principles of economics dictates that, for producers in a perfectly competitive market, the marginal return will equal to marginal cost at equilibrium. In other words, when the consensus algorithm creates a market with perfect competition, the equilibrium where supply meets demand will be at where:

Again, for every unit of marginal security supplied, producers need to pay an equal amount as the cost of production. This seems to be at odds with the claim that PoS makes about being able to supply the same amount of security at 1/10 even 1% the cost. One must wonder why PoS is easily an exception to the rules of economics.

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