Key Takeaways:
- Dogecoin (DOGE) is a highly centralized cryptocurrency project
- Although 4 million wallets hold DOGE, the top 1% control 95% of the active supply
- One wallet holds over 30% of the total Dogecoin supply
YEREVAN (CoinChapter.com) — Popular meme cryptocurrency Dogecoin (DOGE) is very centralized. Contrary to the talks of it being “people’s crypto,” only a handful of wallets control most of the basic supply.
Dogecoin (DOGE) rode the meme wave
With a market cap of over $9 billion, Dogecoin is the 10th largest cryptocurrency. What started as a joke has become one of the biggest movements in crypto. It is also the second-largest Proof of Work (PoW) network after Bitcoin (BTC).
Its growth is largely connected with its support from self-styled ‘Dogefather’ Elon Musk. The Tesla CEO has on several occasions rallied behind it, sending its price soaring with regular tweets.
Putting his money where his mouth is, Musk has also stocked up on DOGE. Moreover, his company Tesla began accepting the meme token for merchandise purchases on its online store.
As late as last month, Musk reiterated his support for Dogecoin on Twitter amid the brutal crypto winter.
Besides Musk, support from other big business names has kept the token soaring. Billionaire Mark Cuban is also one of its vocal supporters. Last year his basketball team, the Dallas Mavericks, announced that they would accept the DOGE as payment for tickets and merchandise.
The fanfare around the token has positioned itself ahead of more serious projects, including Polkadot (DOT), Avalanche (AVAX), and Near Protocol (NEAR), among others.
Meanwhile, Dogecoin co-creators Billy Markus and Jackson Palmer have walked away from the project.
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Doge active addresses on a decline
Active addresses with Dogecoin (DOGE) holdings peaked in March. As of March 10, 2022, as many as 748,000 addresses held DOGE, according to data available on BitInfoChart.
However, ever since, this number has been on a decline. For example, they fell below 50,000 addresses in June before making small gains in the following weeks.
At the time of writing, around 77,000 active addresses received DOGE, a huge drop from March numbers.
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Here is why Dogecoin is seriously a very centralized
According to Messari data, the Dogecoin network is grappling with a centralization problem. At first glance, over 4 million wallets holding DOGE would suggest otherwise.
However, upon closer look, a troubling picture emerges. Over 95% of these wallets hold less than 1000 DOGE tokens. This means that most of these tokens are concentrated in the hands of a few.
To put the seriousness of the problem into perspective, one can refer to statistics. The top 1% of all wallets hold 95% of the total active supply.
Moreover, the top 100 wallets account for 65% of the total coins. Meanwhile, just one wallet controls 30% of the supply. What if the holder decides to dump his holdings in the market? It would send the price of DOGE crashing down.
These numbers are shocking because DOGE has been around for quite some time. With time, tokens should become more widely distributed, which is not the case with Dogecoin.
While suffering from centralization, DOGE aspires to become a global payment mechanism. However, with no underlying value and no real established trust with the token issuer, it won’t be easy.
Indeed, some merchants have already started accepting DOGE as payment. However, developers (whoever is left of them) should take serious steps to tackle the problem of centralization as soon as possible.
