Concentration Risk
The risk created when a large share of something, such as supply, deposits, or trading activity, sits with a few holders or venues.
Concentration appears in several distinct forms, and each fails differently. Supply concentration means a few addresses can move a market when they transact; venue concentration means one exchange outage removes most of the market's liquidity; custodial concentration means one custodian's failure affects many products at once; collateral concentration means one issuer's stablecoin underpins lending markets across many protocols. Measures include the share held by the largest holders, distribution across holder cohorts, and Herfindahl-style indices, though on-chain counts must be interpreted carefully. The practical question is not how many participants exist but how few would have to fail simultaneously for the system to stop working.
व्यवहार में
Several digital-asset exchange-traded products in the United States use the same custodian, so an operational failure there would affect multiple issuers at once regardless of their independence in every other respect.
प्रचलित भ्रांति
That a large number of holding addresses proves broad distribution, when one person can control many addresses and one exchange address can hold assets belonging to millions of customers.