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Decentralized Finance, Centralized Ownership? An Iterative Mapping Process to Measure Protocol Token Distribution

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  • Matthias Nadler
  • Fabian Schar

Abstract

In this paper, we analyze various Decentralized Finance (DeFi) protocols in terms of their token distributions. We propose an iterative mapping process that allows us to split aggregate token holdings from custodial and escrow contracts and assign them to their economic beneficiaries. This method accounts for liquidity-, lending-, and staking-pools, as well as token wrappers, and can be used to break down token holdings, even for high nesting levels. We compute individual address balances for several snapshots and analyze intertemporal distribution changes. In addition, we study reallocation and protocol usage data, and propose a proxy for measuring token dependencies and ecosystem integration. The paper offers new insights on DeFi interoperability as well as token ownership distribution and may serve as a foundation for further research.

Suggested Citation

  • Matthias Nadler & Fabian Schar, 2020. "Decentralized Finance, Centralized Ownership? An Iterative Mapping Process to Measure Protocol Token Distribution," Papers 2012.09306, arXiv.org.
    • Handle: RePEc:arx:papers:2012.09306
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    References listed on IDEAS

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    1. Ioanid Rosu & Fahad Saleh, 2020. "Evolution of Shares in a Proof-of-Stake Cryptocurrency," Working Papers hal-02896092, HAL.
    2. D'aniel Kondor & M'arton P'osfai & Istv'an Csabai & G'abor Vattay, 2013. "Do the rich get richer? An empirical analysis of the BitCoin transaction network," Papers 1308.3892, arXiv.org, revised Mar 2014.
    3. Dániel Kondor & Márton Pósfai & István Csabai & Gábor Vattay, 2014. "Do the Rich Get Richer? An Empirical Analysis of the Bitcoin Transaction Network," PLOS ONE, Public Library of Science, vol. 9(2), pages 1-10, February.
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    Cited by:

    1. Sam M. Werner & Daniel Perez & Lewis Gudgeon & Ariah Klages-Mundt & Dominik Harz & William J. Knottenbelt, 2021. "SoK: Decentralized Finance (DeFi)," Papers 2101.08778, arXiv.org, revised Sep 2022.

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