New on-chain data reveals an extreme concentration of capital in the DeFi ecosystem’s yield protocols. Although retail activity is high in transaction numbers, accounting for at least 62% of inflows, the value is controlled by whales. A recent analysis highlights that only 5.4% of user deposits (whale wallets) make up an overwhelming 94.3% of the Total Value Locked (TVL) on these platforms.
This whale dominance in DeFi is replicated in the largest lending protocols: on Aave, the top 10 depositors control 51% of the TVL, while on Morpho, the top 10% own 90%. This directly impacts the ecosystem, as large entities capture the majority of airdrop and point farming rewards, while retail investors, despite generating a majority of the activity and fees, receive minimal allocations.
Now the industry is observing a clear evolution toward “institutional-grade DeFi,”created to attract capital from whales and institutions with larger reserves. However, this trend brings limitations such as KYC and restricted assets, altering the original “permissionless” nature of DeFi. Meanwhile, the sector’s total liquidity has contracted, falling 16% in the last month to $125B, reflecting a more conservative market.
Source: https://x.com/SentoraHQ/status/1990357799130309095
Source: https://defillama.com/protocols/yield
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