How Does Decentralization Affect a Token’s Classification under Howey?

A key factor in avoiding security classification is sufficient decentralization, as argued by the SEC's framework. If a network is truly decentralized, meaning no single person or group has control over the network's success, the "efforts of others" prong of the Howey Test may not be met.

This is often referred to as the 'Sufficient Decentralization' theory. The more decentralized a network becomes, the less likely its token is to be considered a security.

Full decentralization shifts the expectation of profit from the promoter's efforts to the network's overall success.