A European Central Bank working paper says governance across major DeFi protocols is controlled by a narrow set of token holders, delegates, and centralized exchanges rather than a broad user base. Across the four protocols studied, the top 100 holders controlled more than 80% of governance token supply, raising direct questions about accountability.
The paper, ECB Working Paper No. 3208, examined Aave, MakerDAO, now rebranded as Sky, Ampleforth, and Uniswap at two points in time: November 2022 and May 2023. According to the study, those protocols were chosen to represent different DeFi activity segments and together accounted for roughly 32% of Ethereum’s total value locked at the time the data was collected.
Token ownership remains concentrated across the sample
The figures were sharp. For Aave and Uniswap, the top five holders controlled nearly half of all governance tokens, while Ampleforth showed even tighter concentration, with the top five holding close to 60%. Researchers also tried to identify the entities behind those addresses and found that, in most protocols, around half or more of all holdings could be traced to the protocol itself through treasuries, founders, or developer allocations, or to centralized and decentralized crypto exchanges.
Among centralized platforms, Binance held the largest share across all four protocols, ranging from 2% to 15% depending on the protocol. The ownership pattern showed little movement between the two snapshots, suggesting that existing governance structures remained largely intact over time.
Delegates dominate voting, but many cannot be identified
The study also looked at actual voting behavior. Top voters were almost entirely delegates, meaning individuals or entities that received voting power from smaller token holders. Researchers used web searches, Github, social media, governance forums, and Crystal Intelligence’s blockchain analytics tool to identify those actors. Even with that process, about one-third of the leading voters in the sample could not be identified at all.
Among the voters that could be identified, individuals made up about 21%, while Web3 companies accounted for roughly 19%. Venture capital firms and university blockchain societies were also present. In Uniswap’s case, the top voter in both periods was Andreessen Horowitz, or A16z. By May 2023, voting power from 125 addresses had been delegated to the firm.
Most proposals target risk settings, not governance design
The paper categorized 248 governance proposals across the four protocols. Proposals focused on risk parameters such as loan-to-value ratios, debt ceilings, stability fees, and emergency shutdowns made up the largest share at 28%. Asset listing proposals represented another 23%. Proposals dealing with governance structure itself accounted for only 1% of the sample.
From a regulatory perspective, the ECB researchers said governance token holders, developers, and centralized exchanges do not currently offer dependable points of regulatory entry. Pseudonymous blockchain addresses and opaque delegation structures leave no clear line of accountability. The EU’s Markets in Crypto-Assets regulation exempts services provided in a fully decentralized manner, but the paper argues that threshold is difficult to apply in practice because none of the protocols studied came close to a genuine decentralization standard. Most still keep meaningful control in insider hands.
The authors suggested several possible responses, including mandatory disclosure of token holder affiliations, tailored legal structures for DAOs, and hybrid models combining blockchain governance with traditional legal accountability. The framework used by the Danish Financial Supervisory Authority was cited as one practical starting point for assessing whether an offering is genuinely decentralized.