I took a look through some of the distribution charts for the top ERC-20 tokens on Santiment this weekend, and I noticed something quite peculiar in the Ampleforth distribution chart.
Typically, when I look at these charts, I notice that whales are either increasing their holdings or redistributing them to the smaller bagholders.
In the first scenario, where the tokens are in the hands of a few whales and they keep stacking, this usually means that the project is centralized - with smaller bagholders not having access to much of the supply.
The first scenario is not the best situation for a ‘decentralized’ cryptocurrency to be in. If a small group of people dominates the holding, the coin is pretty much at the whim of these whales.
In the second scenario, where whales are constantly selling their tokens to smaller bag holders; it might signal that the whales have started to lose confidence in the project. As a result, they are slowly selling off their holdings to not cause a considerable spike lower in price.
A great example of the first scenario can be seen in the YFI Distribution chart;
The chart above shows the distribution of YFI holders across five separate cohorts. Instantly, we can see that whales that own 1000-10,000 YFI dominate the distribution. Whales are holding onto this token and have been increasing their holdings in recent months. Lower down in the distribution lies holders that have just 1-10 YFI in their wallets. This shows that whales are totally dominating YFI and the majority of the coins are in the hands of a select few whales.
On the other hand, the AAVE distribution chart tells a different story;
The chart shows that the largest whales with more than 1 million AAVE in wallets are still relatively high. However, the majority of these holders are likely to be smart contracts or exchange holdings. The second-largest whale cohort with 100K to 1M AAVE has recently started to sell off their holdings as they redistribute it across the smaller holders. This does not mean that whales are losing faith in the project, but it does signal that the larger holders have started to take their profit off of the table.
Both of these distribution charts are not ideal.
When we compare these two charts to the following AMPL distribution chart, we see a totally different scenario;
The Ampleforth chart seems to be one of the finest distributed cryptocurrencies in the industry. It seems that the whales and the smaller bag holders are quite aligned from the distribution chart above. Whales do not dominate the market, nor are selling off their holdings to smaller fish. At the same time, the smaller bag holders are not lagging. Everybody seems to be increasing their holdings.
After thinking further on why this might be occurring solely on Ampleforth, it became apparent that their tokenomics model with the AMPL rebases seems to help the coin be fairly distributed.
When a rebase occurs, you need to remember that it affects the wallet balances equally across the entire board. If the rebase is 2% that day, everybody will see an increase of 2% in their AMPL balance - regardless if you are a big or small fish.
This is not to say that there aren’t any AMPL whales - there are plenty. But the distribution of AMPL token amongst holders seems much more distributed than from all of the other ERC-20 tokens.
For reference, I’ve included the Ethereum distribution chart below;
The situation is relatively similar to the AAVE distribution here. It shows that the smaller sized whales that own between 10K and 1M ETH have been selling off their tokens in recent weeks. Simultaneously, the smaller holders have consistently been increasing their holdings over the past few months.
AMPL & Fair Distribution
The initial distribution of AMPL was not praised like YFI was. When YFI launched, there was no pre-mine nor founders tax. The founder of the project, Andre Cronje, did not keep any YFI for himself and had to acquire his YFI in the same way everybody else had to - through liquidity mining or purchasing.
In comparison, AMPL was backed by a handful of investors, including Brian Armstrong, CEO of Coinbase. Regardless of this venture capital they achieved, the economics behind Ampleforth helps the AMPL token become increasingly fairly distributed as the months pass because everybody is treated equally during the rebase - regardless of whether you are a small fish or a big one.
What are your thoughts? I would love to hear any input you have on why we see such a fair distribution amongst AMPL holders.
