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Blockchain consensus mechanisms and fragmentation

Author

Listed:
  • Daniel Eidan
  • Jon Frost
  • Rudraksh Kansal
  • Ulf Lewrick
  • Sang Hyuk Lim
  • Tomasz Rybarczyk

Abstract

While all permissionless blockchains use token-based incentives to sustain honest validation, differences in how validator rewards, coordination and participation are structured lead to distinct equilibria and trade-offs between decentralisation, security and scalability. These trade-offs underpin the emergence of multiple layer 1 networks and the expansion of layer 2 solutions, resulting in fragmentation of infrastructure, liquidity and assets across and within chains.Tools to mitigate fragmentation – eg bridges and native multi-chain issuance – can reduce frictions, but they reintroduce new dependencies on trust, governance and operational resilience.

Suggested Citation

  • Daniel Eidan & Jon Frost & Rudraksh Kansal & Ulf Lewrick & Sang Hyuk Lim & Tomasz Rybarczyk, 2026. "Blockchain consensus mechanisms and fragmentation," BIS Bulletins 126, Bank for International Settlements.
    • Handle: RePEc:bis:bisblt:126
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