Token Concentration

Definition ∞ Token concentration refers to a situation where a significant portion of a cryptocurrency’s total supply is held by a small number of addresses or entities. This distribution pattern can influence market stability, governance decisions, and the overall decentralization of a project. High concentration often indicates potential for market manipulation or centralized control.
Context ∞ Token concentration is a widely discussed metric in evaluating the decentralization and potential risks of digital asset projects. It raises concerns about governance influence and the possibility of large holders impacting market prices through coordinated actions. Projects often aim to diversify token distribution over time to mitigate these concerns and promote broader community participation.