Clovr, a cryptographic research company, has analyzed the distribution wealth between 140,000 addresses of the four maincryptocurrencies (Bitcoin, Ethereum, Bitcoin Cash, Litecoin) and ERC20 tokens. The study revealed that the current distribution of wealth is more uneven than in 2018.
Note that most “rich” addressesbelong to exchanges. To identify individual whales, the researchers excluded all addresses that are known to or that are believed to belong to trading floors. Thus, experts concluded that most of the Litecoin coins are controlled by whales. The same goes for most Ethereum tokens.
The study notes that the 10 richest addresses store a tenth of all assets in LTC.
This is a hot topic for crypto enthusiasts, becausethat ... whales can create large fluctuations, - the researchers explained. Concentrated wealth ownership creates serious points of failure in a system that must be sustainable through decentralization.
It is noted that among 100 Ethereum tokens withas a maximum indicator of market capitalization, the average number of addresses where most of the tokens are stored was only 34. 24 of the 100 largest tokens belong to the creators of the projects.
Typically, this distribution is due tothat the creator controls the release of tokens, but this centralization carries its own risks. Often, initial coin offerings (ICOs) used to finance tokens were identified as fraud resulting in a dump. Projects lured investments, increasing the value of the token, after which the founder successfully sold his possessions.
However, among all ERC20 tokens, there are those that were not financed through ICOs, therefore, they do not expose investors to the same level of risk. One such is the Huobi token.
The higher the market capitalization of the token - theit is more likely that the distribution of wealth was evenly distributed compared to other tokens. In other words, the tokens that showed the highest concentration of wealth in the least number of addresses were tokens with a relatively small market capitalization of $ 100 million or less.
These small projects are profitable.Investments, because the return can be colossal, but the potential benefits reflect the risk, the researchers warn, Investors must conduct their own research before buying cryptocurrency.
Thus, the presence of whales and the distribution of wealth between them can play a significant role in the future fate of a particular coin, and also affect the potential profit of the investor.