Threats of centralization appear as Polygon and Shiba Inu show high concentration among the main portfolios

High centralization can increase the influence of a few entities, which can undermine the decentralized ethos that crypto strives to maintain. However, centralization remains one of the main points of contention in the space.

As such, the tokens of popular projects – Polygon (MATIC) and Shiba Inu (SHIB) – have emerged as the main examples of high concentration of holdings among the main portfolios.

Centralization concerns in MATIC and SHIB

According to data shared by Santiment, Polygon’s top ten wallets collectively control a staggering 69.4% of its total market cap, making it the most centralized of the major altcoins. Similarly, Shiba Inu’s top ten portfolios hold 61.2% of its market cap.

This significant concentration raises critical questions about the impact on market stability and governance of these widely traded assets. Such concentration can also exacerbate risks such as price manipulation and volatility, as large holders have the power to affect market dynamics more substantially than smaller investors.

Meanwhile, Uniswap (UNI) shows that 50.8% of its total market capitalization is held by the top ten wallets, indicating a significant concentration of power among a few holders. Close behind is meme coin Pepe (PEPE), with 46.1% of its supply concentrated in the top wallets.

Ethereum (ETH), despite its widespread adoption and decentralized governance efforts, still sees 44.0% of its market cap controlled by the largest wallets, primarily due to participation in the ETH 2.0 contract, which centralizes significant amounts of Ether.

Tether (USDT), the most widely used stablecoin, has 33.1% of its supply held by the largest wallets, reflecting its widespread institutional adoption, but also hinting at potential liquidity risks if these holders decide to move large quantities simultaneously.

Moderate centralization in LINK and TON

Chainlink (LINK) and Toncoin (TON) show slightly lower concentrations, with 31.1% and 27.5% of their respective market caps held by the top ten wallets. For the former, this reflects the need for large stakes per node to secure the network, while Toncoin’s concentration is partly attributed to its recent growth phase, according to Santiment.

On the other hand, stablecoins like Circle USDC and Multi Collateral Dai (DAI) have more decentralized holdings, with the top ten wallets controlling only 19% and 24.5% of their market caps, respectively. respectively.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!