- Cryptocurrencies are supposed to be decentralized and to remove the restrictions that have kept retailers from the market, but whales still control the market.
- Even in the DeFi sector, which by definition should be for the masses, whales who can provide liquidity are raking in all the profits.
Satoshi Nakamoto’s vision was peer-to-peer electronic cash, as he outlined in his Bitcoin whitepaper. And while Bitcoin hasn’t lived up to this, thousands of other projects have cropped up to solve all manner of challenges and provide opportunities. But today’s market is increasingly becoming similar to traditional finance as deep-pocketed whales continue to dominate, taking over even the meme coin projects, DeFi, NFTs and the beloved Bitcoin.
Shiba Inu is one of the best-performing assets in the past year, arguably of all time, with its out-of-this-world gains in recent months. And despite its lack of utility, it continues to cement its position at the top. Even with a meme coin like SHIB, whales are still the ones dictating price movements.
Just recently, a wallet that holds trillions of SHIB moved them. The price instantly lost over 15 percent of its value as fears of a dump flooded the market. SHIB did recover from the dump fears, but its price is still being held hostage to such whales.
Shiba Inu, while it may receive most of the criticism, is not unique. Most of the smaller cryptocurrencies are majority-owned by a handful of whale wallets. When they go up, retail traders are quick to celebrate, and rightly so. But the people who really make the money are the anonymous big-money investors with billions invested in the tokens.
Anthony Juliano, the founder of dYdX, one of the big DeFi exchanges, believes that 20 to 50 cryptocurrency trading firms are pushing the overwhelming majority of cryptocurrency trading volume. He stated recently:
I don’t think it’s so totally different than the way things work in traditional finance. Big Wall Street funds push most of the volume.
Whales keep winning
Before Shiba Inu was grabbing all the headlines, it was Dogecoin that was the king of the dog-themed castle. And despite the Elon Musk connections, DOGE was also at the mercy of a few whale wallets. In fact, Musk himself once addressed this, stating:
If major dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue imo [In my opinion] … I will literally pay actual $ if they just void their accounts.
At one time in May, one single wallet held $22 billion worth of DOGE. At the time, the overall market cap for DOGE was at $70 billion. As such, one account held about a third of all DOGE in circulation.
Bloomberg’s Aaron Brown notes:
Legitimate crypto has a solid underlying economic case, its value does not depend heavily on who holds how much of it. But for crypto with no underlying economics — whose value is determined only by speculation — concentrated ownership suggests a rigged game.
The whales are even in DeFi. According to a DappRadar report, DeFi on Ethereum has emerged as a whales’ playground.
According to DappRadar, the average transaction size on Curve on Ethereum was $500,000 in September. Curve is a decentralized exchange (DEX) that is implemented on seven blockchains.
Ethereum has itself to blame for attracting whales, however. At the height of DeFi, a transaction on Uniswap was attracting as high as $200 in transaction fees. This was simply unbearable for the retail traders.