Economic Power Concentration

Definition ∞ Economic power concentration refers to the accumulation of significant control over financial resources, assets, or market influence within a limited number of entities or individuals. In digital asset systems, this can manifest as a small group holding a large proportion of a cryptocurrency, controlling a majority of staking power, or dominating decentralized finance protocols. Such concentration can impact network governance, market stability, and the overall fairness of the ecosystem. It raises questions about true decentralization.
Context ∞ Economic power concentration is a persistent concern in cryptocurrency news, especially regarding large holders (whales), mining pools, and centralized exchanges. Discussions often highlight the potential for these concentrated entities to influence asset prices, manipulate markets, or exert control over protocol development. The debate frequently addresses mechanisms to mitigate this concentration, such as progressive token distribution models or decentralized autonomous organization (DAO) governance structures. Addressing this issue is vital for maintaining the integrity of decentralized systems.