CandleFocus The DeFi market lacks decentralization: Why is this happening?
2024-11-22
Author: Content Editor
The Bank for International Settlements (BIS) has found that liquidity on decentralized exchanges (DEX) is concentrated among a few large providers, reducing access to the decentralized finance (DeFi) market. The study analyzed the 250 largest liquidity pools on Uniswap and found that a small group of participants holds 80% of total locked value and earns significantly higher returns than retail investors. Retail liquidity providers receive a smaller share of trading fees and have lower investment returns compared to institutions. The study suggests that the factors driving centralization in traditional finance may also apply to DeFi. In addition, experts have reported that centralization is growing in the DeFi market, with four platforms controlling 54% of the DEX market and 90% of liquid staking assets concentrated in four projects. These findings raise concerns about unequal access and liquidity in the DeFi market and highlight the need for further research and development to create a more inclusive financial landscape.
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