Supply Concentration

Supply concentration refers to the degree to which a cryptocurrency or derivative asset is held by a small number of addresses or entities. High concentration implies that a significant portion of the total circulating supply is controlled by a few wallets, often referred to as whales.

This state can create significant market risk, as large-scale selling by these entities can trigger substantial price volatility. In the context of tokenomics, analyzing supply concentration is vital for understanding the potential for market manipulation and the actual decentralization of the network.

It directly impacts liquidity, as high concentration can lead to thin order books and increased slippage during large trades. Investors monitor this metric to assess the vulnerability of an asset to coordinated sell-offs or governance capture.