June 14, 2024

Most Litecoin Coins and ERC20 Tokens Are Under Whale Control

Most Litecoin Coins and ERC20 Tokens Are Under Whale Control

Clovr, a company specializing in crypto space research, analyzed the distributionwealth between 140,000 addresses of four maincryptocurrencies (Bitcoin, Ethereum, Bitcoin Cash, Litecoin) and ERC20 tokens. The study found that the current distribution of wealth is more unequal than in 2018.

Note that the majority of the “rich”addresses belong to exchanges. To identify individual whales, the researchers excluded all addresses known or suspected to belong to marketplaces. Thus, experts came to the conclusion 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 hold a tenth of all LTC assets.

This is a hot topic for crypto enthusiasts becausewhat… whales can create large fluctuations, – the researchers explained. Concentrated ownership of wealth creates serious points of failure in a system that is supposed to be sustainable through decentralization.

Most Litecoin Coins and ERC20 Tokens Are Under Whale Control

It is noted that among 100 Ethereum tokens withthe maximum market capitalization, the average number of addresses holding the majority of tokens was only 34. 24 of the 100 largest tokens belong to project creators.

Typically this distribution occurs becausethat the creator controls the issuance of tokens, but this centralization carries its own risks. It is not uncommon for initial coin offerings (ICOs) used to fund tokens to be identified as scams ending in a dump. Projects lured investment by increasing the value of the token, after which the founder successfully sold his holdings.

However, among all the ERC20 tokens, there are some that were not funded through an ICO, hence they do not expose investors to the same level of risk. One of these is the Huobi token.

Most Litecoin Coins and ERC20 Tokens Are Under Whale Control

The higher the market capitalization of the token –the more likely it is that the wealth distribution was evenly distributed compared to other tokens. In other words, the tokens that showed the greatest concentration of wealth in the smallest number of addresses were tokens with relatively small market capitalization – $100 million or less.

These small projects are profitableinvestment because the payoff can be enormous, but the potential rewards reflect the risk, – researchers warn, – Investors should do their own research before purchasing 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.