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DeFi Sector is Becoming Centralized: Report

ByLouis Adams

Nov 20, 2023 #DeFi
Reading time: < 1 minute

According to a report by Gauntlet, DeFi sectors are primarily dominated by a few major projects.

As reported by Bloomberg, the report identified 12 sectors, including decentralized exchanges (DEX), lending protocols, yield farming, profitability aggregators, derivatives, cross-chain solutions, bridges, algorithmic stablecoins, support services, liquid staking, synthetic assets, and other services.

The analysis was based on data from the DeFi aggregator Llama and the Herfindahl-Hirschman index, which measures market concentration and competition (a higher score indicates a less decentralized market).

Among the 12 sectors, DEXs face the most competition, with the top four platforms controlling only 54% of the market.

Other areas, such as liquid staking, show even less decentralization, with the top four projects holding about 90% of the total assets in that category.