A new analysis says that 500 coin holders own 90% of DeFi tokens

on Aug 7, 2020
  • A new analysis revealed that most tokens belonging to the DeFi sector are held by only 500 addresses.
  • This indicates that DeFi coins are not well-distributed, especially when it comes to newer projects.
  • Results of the analysis differ from one analyst to another so the true state of things is still up for debate.

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The decentralized finance (DeFi) sector has seen a huge popularity boost in 2020, which led to its rapid expansion. However, it would seem that most DeFi projects are not as widely distributed as it was originally believed.

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A new analysis published by CryptoLab’s head of Digital Asset Investments, Simone Conti, shows that up to 90% of tokens from nearly every DeFi project out there is held by only 500 different addresses.

The distribution of DeFi tokens

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Conti, who also co-founded DeFi Italy, concluded that three projects have up to 99% of their coins in the possession of these 500 addresses.

The most concentrated of the top 10 projects that Conti examined is Compound, which is currently the second-largest DeFi project by TVL (Total Value Locked). The project has up to 96% of its supply owned by less than 50 people.

Meanwhile, Conti also reports that there are 5 addresses that hold over 40% of the majority of DeFi’s respective total supplies. The only project that doesn’t fit this situation is Bancor, but even this project is not truly ignored, as the top 5 addresses hold about 33% of its supply.

According to Conti, this hoarding of DeFi tokens seems to have started quite recently, as the DeFi sector started gaining popularity. This conclusion comes from the fact that older projects have a much more distributed total supply than the new ones, indicating that the growing popularity of the sector attracted DeFi whales.

The results of the analysis are debatable

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It is also worth noting that it is rather difficult to track DeFi token distribution, and that different analysts often end up with different results. This mostly depends on their choice of addresses that they include, so the results are not always completely reliable.

For example, Spencer Noon of DTC Capital believes that the most distributed token on Ethereum comes from Yearn.Finance, and that the top 5 addresses only hold 10% of its supply, or less.

Conti, on the other hand, believes that the top 5 addresses hold nearly 60% of this project’s supply, which is quite a gap between the two assessments.