Study: most DeFi projects remain centralized.

According to a joint report by the analytical firm DappRadar and the Monday Capital fund, most DeFi projects have a high degree of centralization due to the token distribution model.
The authors of the report said that in the projects MakerDAO, Curve, Compound and Uniswap tokens are unevenly distributed, which creates favorable conditions for large holders. At the same time, the Maker management system is the most “mature.”
At the forum, MakerDAO community members can conduct a preliminary analysis and discuss proposals that are put to the vote. The forum is open even to those who are not holders of MKR. However, the Maker voting process can be controlled by large token holders. These include 20 addresses, on which 24% of the total MKR volume is concentrated. However, analysts concluded that compared to other projects, the distribution of tokens in Maker is most fair.

As for Compound, the main holders of COMP tokens were venture investors, team members and some projects, in particular, Dharma and Gauntlet. Only 2.3% of addresses have the possibility of delegation. This means that only this small part of the community can participate in project management, and if you exclude stock addresses, this figure may be even lower. Similar problems arise in Uniswap and Curve projects. In the case of Curve, one address controls 75% of all votes.

Analysts named three main factors that contribute to centralized project management. DeFi Firstly, many users do not consider their tokens as a voting tool, but use them to participate in income farming. Network members receive voting tokens as remuneration. At first glance, the idea seems good – management goes to those who use the product. But in this case, material motivation becomes stronger than the desire to manage.

Secondly, such systems work according to the principles of plutocracy, when wealth determines power. This is a lack of minimum requirements for voting participants to ensure the necessary level of decentralization, and no one is able to compete with large token holders. Identification of participants in decentralized protocols is quite difficult, and plutocracy becomes the only method of management.

Third, initial investments also play an important role in centralizing governance. Venture capital companies and other investors often own large volumes of tokens, and for this reason, other users lose interest in voting. Analysts concluded that it is distribution mechanisms that encourage centralization of management, so the current result should not surprise anyone.

According to researchers MolochDao, when switching to Ethereum 2.0, applications DeFi may be in danger due to reduced liquidity, which can also lead to centralization

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