DeFi tokens and meme coins in the Ethereum ecosystem have the highest centralization, with the top 10 investors controlling the lion’s shares.
The Ethereum (ETH) network has grown to a major Web3 hub supporting dozens of rollups to enable in the past few years. The top-tier smart contract-based network has been acclaimed for achieving a high level of blockchain trilemma through its layer-two scaling solution. However, a recent study by market intelligence platform Santiment shows that Ethereum-based projects are still highly centralized from an investors’ point of view.
Top Centralized Projects on the Ethereum Network
Specifically, the top DeFi-based tokens and meme coins on the Ethereum network are heavily controlled by the 10 largest investors. With most of the ETH-based projects tapping on community DAOs for governance, the top ten largest holders get to make the decisions for the rest of the investors.
On the top list is Polygon (MATIC), a layer two scaling solution with $890 million in total value locked and over $2 billion in stablecoins’ market cap, which has 69.4 percent of the total tokens supply controlled by the 10 largest holders.
Uniswap (UNI), a top-tier multichain decentralized exchange platform based on the Ethereum ecosystem, has 50.8 percent of the total tokens’ supply controlled by the top ten largest holders.
Shiba Inu (SHIB) and frog-themed Pepe (PEPE) have about 61.2 percent and 46.1 percent of their respective total supply controlled by the top ten largest addresses.
Meanwhile, since the Ethereum network transitioned from the proof-of-work consensus mechanism to the proof-of-stake, the supply of the top ten largest holders has risen to 44 percent. However, the high supply of Ether’s top ten largest addresses is largely based on the staking programs including Lido (LDO).
🪙 "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… pic.twitter.com/s4QY3kv8ww
— Santiment (@santimentfeed) August 29, 2024
Market Picture
The Ethereum network has grown to more than 281 million unique addresses but has been steadily outshined by other layer-one chains led by BNB Chain. The recent approval of spot Ether ETFs in the United States and Hong Kong has played a major role in the mainstream adoption of Ethereum fueled by institutional investors.
However, Ether price against the Bitcoin and the US dollar has suffered bearish sentiments since the approval of spot Eth ETFs, sparking the speculation of a sell-the-news narrative.
Ethereum is in a bullish trend
“#Ethereum hasn't lost the realized price it broke through despite the sharp price decline over the past five months, and the realized price is acting as support.
Historically, altcoin bull markets have started when Ethereum is stronger than its… pic.twitter.com/CDiKFldfA5
— CryptoQuant.com (@cryptoquant_com) August 30, 2024
Nevertheless, analysts at CryptoQuant believe Ethereum price has not yet lost its long-term bullish momentum despite the notable bearish performance in the last five months.
With the anticipated interest rate cuts in the United States amid the upcoming general elections, Ethereum price action could trigger the inevitable altseason.
Moreover, Bitcoin dominance has been forming a macro reversal pattern, whereby the weekly time frame shows a rising wedge coupled with bearish divergence on the Relative Strength Index (RSI).
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