Is there a risk for Tezos to fall under centralization and control by large bakers?

Since a lot of people delegate their coins to bakers to earn rewards, then bakers get more tokens over time and grow bigger, faster than the delegators. Isn’t this going to create centralization problems in the future, in which bakers with a lot of coins would be able to vote on proposals and affect voting?

What I mean is that the big bakers can join and vote together to uphold their interests over the interests of smaller token holders and the larger community.


There is always a risk. I think at this point it’s negligible but in the future, of course. If you place a cap on a baker, nothing is stopping them from moving into smaller accounts to just cast a second vote. With that being said, the way I see it is this:

In order to stop dilution, users delegators earn rewards. So in theory, the amount of voting power is equally proportional. 1 Tez, 1 vote. Granted, make slightly higher returns but that is to cover the costs of running the nodes. If they decide to keep the XTZ instead of selling to fund their operation, they would start to gain more power. On the same note, if they sell the XTZ to fund their consumption, they could simply invest the money they didn’t spend on power to buy more voting power.

The thing that you have to be reminded is this. The bakers need a healthy ecosystem. Why devote all this time in gaining voting power only to vote maliciously to tank the system. Tezos doesn’t NEED to fork but in a doomsday scenario, it certainly COULD. I think on the surface it looks like a threat, but in reality, it would be moronic to destroy something you’ve helped build, ensuring you loose millions if not billions in future profits.


Also, with the LPoS, if you don’t like the way your baker is voting, you can find one that has more common goals. Bakers could “join and vote together” now if they choose. The way the system is built is meant for exactly that, consensus.


I touched on this topic on a previous post here:

I would argue that all democracies have an element of plutocracy whereby the people/entities with the most resources have undue influence. For example, in Russia you have the oligarchs and in the USA you have lobbyist. The question really is to what degree these large entities/people can influence their power for themselves at the cost of society. Assuming they want to sustain their power/status then it is in their interest to not overly exert their power which could lead to civil unrest jeopardizing their power/status. The ideal state is for them to act what’s in their best interest with as little harm to the masses/network. This is analogous to a parasite. The parasite that overly exerts its power will eventually kill its host and itself. A sustainable parasite will have a perfect resource usage equilibrium shared between itself and its host. Ideally, that parasite will also benefit its host (i.e., mitochondria).

In Tezos, if large bakers over exerted their power and harmed the masses, this could lead to a hard fork which could undermine their power and harm their wealth. I would argue it’s in the interest of large bakers to advocate for decentralization and to avoid overly exerting their power if they want to preserve their power. It is in their long-term financial interest to do what’s best for the chain and to avoid forks.


What I most worry about is misinformation. When the voters don’t utilize their power of the vote. In the US (regardless of how you feel about politics) there are a huge number of voters who fail to follow politics. They will believe what the lobbyist or politicians spoon feed them until one day you end up storming your own democracy in a terrorist act while believing you’re doing to for the right reasons. I can’t imagine a proposal coming up that would divide the voting base to such extremes but, if it ever does, it will be the minority that has to inform people. The minority being the programmers that understand the language and what the potential damage is to the system. Programmers will be the ones required to inform enough people for the word to spread. But what about the investor that doesn’t use crypto daily? The mom and pops that saw an investment into tech that they didn’t understand. How do we inform and teach them how to vote? Like I said, I don’t think (or hope) that this would ever become a tangible problem… but if it does, it would be hard to rally the troops.

I don’t think it works that way. People care about themselves more than ‘something that they helped build’, otherwise you wouldn’t see any corruption anywhere.

I think huge baking pools can hurt smaller people if it’s going to mean more profits for them, especially if Tezos’s price increases a lot. For example, see here in ETH the community is split, with the pools of the large exchanges teaming together

What if for example, in the future there is a push from the community to make setting up a node easier via a protocol upgrade, which would mean that anyone can set up a node easily, and the people with all the voting power (bakers) don’t want to have the average joe NOT delegate to them?

I see where you’re coming from, but I see the community as the innovators. DidKit has now made the innovation easier. I fully understand what you’re saying, but with Dexter, Quipu, and Tezfin out, a lot of those pools will be deflated (hopefully by a lot) in the near future. If the users wanted easier ways to set up nodes and the exchanges blocked it, I assume the community could not only stop using the exchange en masse but also innovate new exchanges, and new pools. Then the exchange isn’t just losing delegators, it’s losing customers. Like I said, I agree that it’s possible. I just don’t think that there are many scenarios where the execution would be likely.

That something they helped build is part of the part that makes it wrapped in self preservation. They can build their wealth, which in reality is just not dilute their stake in the coin, but if they cause gridlock, they’re losing cash intake.

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I think one way that it could reduce the risk of this problem (and misinformation as you pointed out in your previous post) is to have wallets show you HOW your delegators voted on each cycle. I know there must be a website that publicly shows each baker’s votes, but many people just go on Telegram and ask ‘hey did we vote on X yet?’ and the baker says ‘yes, we voted yes’. As you can see, there can be manipulation there.

By logging into my wallet (at least maybe for browser-based wallets?) there could be a section under the delegator details that show you how they voted in each cycle. That would also maybe prompt the users to think ‘hey, what is this Edo proposal that my baker voted no to? Let me check…’

Maybe an idea for Kukai @Klassare ?


I would love to see a “how we plan to vote” that could be more helpful because after the vote is cast, it’s too late… and of course a follow up, this is how we voted. That also puts more responsibility on the bakers but I don’t think it’s too much to ask. With the process of the tzip, peer review, and length of time it takes for an upgrade to happen, anything that is controversial would be blasted on all of the media platforms. I don’t think it will be a secret long. All the same, for those of us who care and follow, it would reduce a step of finding out how a baker plans to vote. No complaints on that aspect from this guy. Cheers!

Every blockchain has that risk in varying likelihood and severity.
It’s up to us to react accordingly to prevent it.
Similar to when ghash had more than 50% of the bitcoin mining hashrate…

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The OP seems to want equality, between delegators and delegates in the terms of what they both earn, he doesn’t take the fact, that the delegates are putting XTZ in bonds and those are frozen, those bonds are at risk, the delegators have the advantage they are not risking their XTZ and their XTZ is LIQUID.

This is a socialism proposal. The OP seems to think that this will lead to centralization, i will argue the opposite, if you respect the ownership rights of bakers, which is their ability to VOTE and their incentives, then more people will be attracted to run a baker node, leading to more descentralization.

The OP says Bakers will join together and vote to form a cartel, this is just too much of a excuse for implementing socialism equality into tezos, governance will fail, nobody will want to run a baker node then. I remind the OP that Delegators can also associate together and form their own bakery and represent themselves in the governance system and get the same incentives as bakers, IS NOT A CLOSED SYSTEM.

I define the concept of blockchain as a global and opened association of private individuals, bakers are business owners (business owners always risk they money to open a business), delegators are the workforce since they provide bakers the opportunity to find more blocks in less time, consumers are dapp users since they pay gas fees. Bakers and delegators reach an agreement of which % fee is going to be paid to the workers (delegators), these are VOLUNTARY agreements. People seems to think bakers are being paid, and in reality, if you think about it, it is the opposite, bakers pay delegators for their workforce, which they put in the form of XTZ coins, that are NOT at risk and NOT frozen, like the delegates.

I quote Arthur for this:

This socialism mentality has to stop, this is the same kind of proletariat revolution mentality that led to socialism, in which workers wanted privileges and resulted in a decrease in property rights for business owners. Who were actually shooting themselves on their own feet because the day they want to start a business (bakers) they will face the same obstacles by having to comply with “rights of the proletariat” (rights to a collective) which by definition violates property rights (rights of the individual).

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Reading at your comment, I can’t decide if this is a troll, or just a very opinionated person…

Anyway, I don’t know if you tried to strawman my original post or you didn’t understand it. I don’t know how you brought socialism and proletariats into the discussion. I simply pointed out that there needs to be a discussion around this potential threat of centralization and control, and the solution I proposed is to have wallets show what your baker voted. How did this equal to ‘governance will fail, nobody will want to run a baker node then’ in your book is trully beyond me.

Not trolling, Proletariat was an analogy.

Showing what your baker voted via UI wallets is fine, any delegator can see that in any block explorer anyway. But you also talked about an inequality of rewards between bakers and delegators and that this will lead to centralization. By talking about that you are spreading IDEAS, ideas that can lead a kind of “we need equality BS”. I didn’t meant to be irrespecutful with you in any way. But ideas are dangerous.

You say bakers will join together, i argue that delegators can associate as well and form their own delegate and have the same economic benefits and have a say in the on-chain governance.The system is not closed. Associations are valid. There is even a DAO baker project.

How did this equal to ‘governance will fail, nobody will want to run a baker node then’ in your book is trully beyond me.

Because you are spreading ideas of inequality since the OP post, and how this “might lead to centralization” you, without even realizing you are already suggesting to “regulate” the economy of the tezos blockchain. If this happens one day, bakers that are the ones that actually contribute to descentralize the network, won’t have the incentives to run a baker node.

So it was NOT only about showing what your baker voted in the UI of the wallets, you also mentioned an inequality argument, did you? or not? I am criticizing THAT argument in particular, because it has an epistemological error, bakers need incentives, and a inequality argument (the unfairness of bakers earning more than delegators) will just spread the wrong idea.

I think we was more talking about their collective pool earned. As the delegator’s pot grows, so does the baker, in turn, their voting power. That’s why I talked about dilution. I truly don’t think he was saying that everyone has to be equal, just simply saying that something along the lines of "If everyone keeps their Tez on Coinbase, eventually, Coinbase is going to hold 35% of the voting power. If you do the same with Binance, those two exchanges could have 70% majority.

It’s almost impossible to to reach that point but I think that was his train of thought.

Nope, this in particular was the main idea of the OP post, this idea is dangerous. Is implying inequality. When the bakers are actually risking their XTZ and having their XTZ frozen, and delegators are not risking their XTZ and remains liquid.

I mean, if I’m playing devil’s advocate, some bakers pay higher rewards. So he’s not wrong. It’s just almost negligible.

Some bakers pay higher rewards, that doesn’t mean it will lead to centralization. Some bakers like exchanges pay higher rewards but have custody of your tezos. Let’s let the delegator decide which baker voting philosophy they want to follow and % fee. It’s a free market. If they decide to give up their custody for a low fee, then is their choice.

I agree tezoswakenbake… I’m just saying I don’t think it was as malicious as it might have sounded. I appreciate your passion for sure though.

Well, I’m sure he didn’t mean to be malicious, but ideas can be dangerous regardless. This is a philosophy and economics subforum of tezosagora. Marxist philosophers also don’t mean to be malicious because they actually believe in them, but their ideas are destructive and evil, we can see that in every country that goes that route, it fails. And they actually continue believing it, despise the evidence.

Look, he thought i was a trolling, for giving an objective opinion, based on philosophy and economics. I’m being objective. Ideas are really dangerous. Democracies fail because bad ideas are spread and believed.

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I understand that 100,000% I’ve recently tried to fight FUD on social media platforms regarding Tezos and, sweet baby Jesus, it’s an uphill battle filled with “supporters from the ICO” that claim they are done with Tezos a thousand time or “once it reaches “x”” It really is quite draining. I didn’t always understand why Arthur B. would get so frustrated at first, by I fully understand now. Misinformation grows to the point that it’s not even worth fighting anymore. Like wildfires that workers simply try to contain instead of combat, it’s like all you can do is stand back and watch. Don’t let it wear on you too much, if you ever need to vent or want to team up shoot me a message and we’ll knock it out. good luck, God speed, and thanks for contributing to the community.