Longhash Report: Top 1,000 Addresses Have Over 90% Of Stableccoins, Decentralization an Issue?


International economics of the traditional monetary system is plagued with the curse of the impossible trinity, which states that it is impossible to have a fixed foreign exchange rate, free capital movement, and independent monetary policy, all at the same time. Many believed that cryptocurrency was outside this paradox, yet it is not the case.

The blockchain world has derived its own impossible trinity: Being strongly scalable, Being fully decentralized, and Being perfectly secure.

Bitcoin and Ethereum are the most typical public chains with scalability issues. The former is holding up at 7 transactions per second (TPS), while the latter could double the number to 15 -20 TPS.

Stablecoins can alleviate their volatility in value through numerous mechanisms. The most common model is to associate a stablecoin’s value to an asset, such as gold, or a basket of assets like multiple fiat currencies or short-term sovereign debt. The downside to such an approach is that the stablecoin’s value would flutter with the asset on which it is built.

The only problem is decentralization. They generally guarantee liquidity and stability, but the question of decentralization still remains unanswered. Given below is an analysis of the top 5 stablecoins.

stblecoin-base.png

Tether is clearly the most decentralized of the lot, however, it is nowhere close to being a decentralized entity which can be considered as ideal.

The same is the condition of Bitcoin, which has all the three problems of the trilemma. About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings.

What’s more, the whales can coordinate their moves or preview them to a select few. Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market.

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