Decentralized Finance, Centralized Ownership? An Iterative Mapping Process to Measure Protocol Token Distribution

Abstract: In this paper, we analyze various Decentralized Finance (DeFi) protocols in terms of their token distributions. We propose an iterative mapping process that allows us to split aggregate token holdings from custodial and escrow contracts and assign them to their economic beneficiaries. This method accounts for liquidity-, lending-, and staking-pools, as well as token wrappers, and can be used to break down token holdings, even for high nesting levels. We compute individual address balances for several snapshots and analyze intertemporal distribution changes. In addition, we study reallocation and protocol usage data, and propose a proxy for measuring token dependencies and ecosystem integration. The paper offers new insights on DeFi interoperability as well as token ownership distribution and may serve as a foundation for further research.