Centralization Concerns Mount in MATIC, SHIB, and Even ETH As Top Wallets Accumulate Holdings

High centralization can lead to increased influence by a few entities, potentially undermining the decentralized ethos that crypto strives to uphold.

A recent analysis by Santiment has highlighted varying degrees of centralization among major cryptocurrencies, with some exhibiting high concentrations of holdings in the top wallets.

According to the data, Polygon (MATIC) and Shiba Inu (SHIB) lead the pack with notably high centralization. The top ten wallets hold a staggering 69.4% and 61.2% of the total market capitalization for MATIC and SHIB, respectively.

This high concentration raises concerns about the impact on market stability and governance for these widely traded assets. It also heightens the risk of price manipulation and volatility, as large holders can influence market dynamics more significantly compared to smaller investors.

For instance, regarding market cap, ApeCoin (APE) leads the list with 82.3% concentration in the top ten wallets. However, due to its recent launch and massive price appreciation, this metric might shift over time.

Among the top ten crypto assets by market cap, Uniswap (UNI) has 50.8% of its total market cap held by the top ten wallets, indicating a significant concentration of power among a few holders.

Closely trailing is the Pepe (PEPE) meme coin, with 46.1% of its supply concentrated in the top wallets. Despite its amusing nature, PEPE has attracted substantial attention and price appreciation.

Interestingly, Ethereum (ETH), known for its broad adoption and decentralized governance efforts, still sees 44.0% of its market cap controlled by the largest wallets. This is primarily due to staking in the ETH 2.0 contract, which centralizes significant amounts of Ether.

As for the stablecoins, Tether (USDT) has 33.1% of its supply in the top wallets, reflecting its widespread institutional adoption. However, this concentration also hints at potential liquidity risks if these holders decide to move large amounts simultaneously.

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 LINK, this reflects the necessity of large holdings by nodes to secure the network, while Toncoin’s concentration is partly attributed to its recent growth phase, as per Santiment.

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

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