A new working paper from the European Central Bank (ECB) finds that governance in a handful of major decentralized finance protocols is more concentrated than previously suspected, saying the findings could influence how policymakers “build the framework to bring the entities concerned under the regulatory umbrella.”
It’s easier said than done, like As the title of the paper suggests: “Who to Regulate? Identifying Actors Within DeFi Governance.”
The paper’s headline statistics claim that the top 100 governance token holders Aave, MakerDAO (now part of the rebranded Sky Protocol), Ampleforth, and UniSwap account for more than 80% of all token holdings in the ecosystem. This means that a relatively small group has influence over how these protocols work.
In many cases, those holdings are “linked to the protocol or exchange itself,” although it’s not always clear who controls the tokens, especially with large balances held by many users on exchanges.
The paper also notes that “the top voters are mostly delegates,” many of whom “could not be identified or linked to token holders,” making it difficult to determine who has the most influence in protocol governance.
The authors suggest that this makes it difficult to rely on common regulatory anchor points used in other crypto-sectors, such as token holders, developers, or exchanges, which may not hold up in practice.
The researchers also challenge common claims that DeFi protocols become more decentralized over time and that the level of concentration seen with these protocol tokens is not simply a byproduct of the initial distribution, especially when considering that Aave, Uniswap, and MakerDAO are approaching a decade in operation.
Expand the chart.
Many of the issues raised in the ECB paper have also been flagged by some of the biggest DeFi developers, who are already experimenting with ways to balance decentralization and streamline governance.
At Aave, the top DeFi protocol by total value closed according to data from The Block, founder Stani Kulechov recently called DAO governance “extraordinarily difficult” to work with, citing slow decision-making, multiple rounds of voting, and internal politics that hinder progress.
Disclaimer: The Block is an independent media outlet that provides news, research and data. As of November 2023, Foresight Ventures is the majority investor in The Block. Foresight Ventures invests. Other companies In the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. Block continues to work independently to provide objective, effective, and timely information about the crypto industry. Here are our current financial disclosures.
© 2026 The Block. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.