Economic Security
The total financial cost an attacker would need to bear to successfully compromise a blockchain's consensus, such as by acquiring enough stake or hash power.
Economic security refers to the total financial cost an attacker would have to incur to successfully compromise a blockchain's consensus mechanism — for example, the cost of acquiring enough hash power for a 51% attack (see Kaavon's "51% Attack" glossary definition) on a proof-of-work chain, or enough staked tokens to control a majority on a proof-of-stake chain. A higher economic security figure means an attack would require a correspondingly larger capital outlay, making the attack less likely to be economically rational even before considering any slashing penalties or reputational damage involved.
Economic security is distinct from, though related to, decentralization metrics like the Nakamoto Coefficient (see Kaavon's "Nakamoto Coefficient" glossary definition): a chain can have relatively high economic security in absolute dollar terms (because its total staked or hashing capital is very large) while still being concentrated among relatively few independent entities. Economic security also depends heavily on what would happen to an attacker's capital after an attack — a chain where a successful attack would itself crash the token's price, destroying much of the attacker's own stake, offers an additional economic disincentive beyond the attack's raw upfront cost.
Examples
- A proof-of-stake chain's economic security roughly scales with the total value of staked tokens, since an attacker would generally need to acquire a large share of that stake to compromise consensus.
- A successful attack that crashes a token's own price adds an additional economic disincentive beyond the attack's raw upfront capital cost, since the attacker's own holdings lose value too.