How Much Does Centralization Matter? Here's Where Some of the Most Popular Coins Stand!

🪙 "Centralization" has long been a hot topic (and dirty word to often disparage a crypto asset) among traders. It refers to the concentration of power, whether through a few entities controlling protocol decisions, a small number of addresses holding most coins, or concentrated mining power.

👇 Here are the percentages of the total caps currently held by the 10 largest respective wallets for some of the most prominent altcoins (ranked from most to least centralized):

1) Polygon (MATIC): 69.4%
2) Shiba Inu (SHIB): 61.2%
3) Uniswap (UNI): 50.8%
4) Pepe (PEPE): 46.1%
5) Ethereum (ETH): 44.0%
6) Tether (USDT): 33.1%
7) Chainlink (LINK): 31.1%
8) Toncoin (TON): 27.5%
9) Multi Collateral Dai (DAI): 24.5%
10) USD Coin (USDC): 19.0%

🫰Several factors can influence whether an asset has a high or low concentration of holdings among top wallets. For example, early adopters or project insiders may hold significant amounts, leading to high concentration (as Toncoin was recently an example of until its early 2024 growth caused healthy disbursement).

🧑‍💻 Alternatively, the coin could be heavily used in staking or governance, requiring large holdings by validators (as is the case with Ethereum and its ETH 2.0 deposit contract, which currently holds 35.4% of the available supply).

🪂 Lastly, coins that are widely distributed through airdrops or community rewards might have a more decentralized distribution (such as Arbitrum, which is not pictured among these assets).

🤔 What is your hot take about the topic of centralization? Does it matter? Let us know. 👍