Ethereum News Today: Ethereum’s Supply Centralization Threatens Market and Network Stability

Over 51% of the Ethereum supply is currently controlled by just 10 of the largest wallet addresses, according to recent on-chain analytics provided by Santiment [1]. This concentration of ownership highlights a level of centralization that raises questions about market stability and network security within the Ethereum ecosystem. Santiment's analysis compared Ethereum with other ETH-based tokens and revealed that Ethereum ranks just below Shiba Inu (SHIB) and Uniswap (UNI) in terms of supply concentration among the top 10 holders. Specifically, Shiba Inu was found to be the most centralized, with 62.3% of its supply held in the top 10 wallets, followed closely by Uniswap at 52.2% [1].

This level of centralization can have significant implications for the market dynamics of Ethereum. When a small number of addresses control a large portion of a cryptocurrency's supply, it becomes easier for them to influence price movements through coordinated selling or buying actions. This concentration can also lead to a lack of liquidity for smaller investors, as price volatility becomes more susceptible to large-scale transactions. Santiment's report notes that this pattern is not unique to Ethereum but is also observed across other tokens in the Ethereum ecosystem [1].

Beyond market influence, supply centralization poses potential risks to network security. Ethereum's Proof-of-Stake (PoS) consensus mechanism relies on validators—known as stakers—who are selected based on the amount of cryptocurrency they hold and are willing to "stake" as collateral. In this system, the greater a validator's stake, the higher the likelihood of being chosen to validate a block. If a single entity or a small group of entities controls over 51% of the supply, it theoretically could gain control over the blockchain, enabling them to alter the network's operations or even perform a "51% attack" [1]. While the likelihood of such an event remains low, the possibility exists if these top holders were to coordinate efforts.

The report also highlights that Ethereum's level of centralization is higher compared to other tokens like USDC, DAI, and Chainlink. These tokens, with supply concentration levels of 28.6%, 31%, and 31.5% respectively, are considered to be in a healthier range in terms of distribution [1]. This contrast suggests that while Ethereum is not the only token to face concerns over centralization, it is among the more concentrated.

The recent movement in Ethereum’s price also adds context to the discussion. Over the last 24 hours, Ethereum saw a rise of nearly 4%, reaching $4,380 [1]. While price fluctuations are a normal part of cryptocurrency markets, the interplay between market sentiment and underlying structural issues like supply concentration can significantly influence investor confidence and long-term stability.

Source:

[1] Just 10 Wallets Control Majority Of Ethereum Supply (https://www.mitrade.com/insights/news/live-news/article-3-1094330-20250904)