Try Quests to earn cryptoWealth distribution of LUNA 💰
People who do not like crypto often cite wealth inequality because they claim that tokens are concentrated in the hands of a few whales. We'll be assessing this statement by using LUNA's circulating supply as the case study.
Cryptocurrency was developed to make the financial system more efficient and accessible. Rather than having a centralized figure having complete control of the money supply, cryptocurrency enables the open market to dictate the money supply and create new products (or protocols) to solve the inefficiencies of the traditional financial system.
Still, some people would argue that, even with cryptocurrency, wealth inequality still exists, and most of the money supply still resides in the hands of a few individuals (also known as whales 🐳). Today, we'll be assessing this statement, using LUNA as an example.
To begin with, we need to determine the total circulating supply of LUNA. Using the data from terra.daily_balances, we can sum up LUNA's circulating supply and determine that the total supply is 14,541,465,040,143.60 USD.
Next, to assess whether most of the LUNA resides in a few whales, we have to extract the top 100 addresses to calculate their percentage distribution of LUNA:
Based on the data table above, we can ascertain that the cumulative circulating supply of LUNA of the top 100 addresses is 13,258,072,913,711.80 USD—which is 91.17% of the total circulating supply! Taking a deeper look into the top 100 addresses, we can also observe that the distribution of LUNA among them is uneven:
From the bar graph above, we can see that two addresses dominate the market—with terra...74e6 and terra...n0mh accounting for 31.70% and 24.26% of LUNA's circulating supply respectively. Hence, based on the uneven distribution of LUNA's circulating supply, we can conclude that there is a noticeable degree of wealth inequality within the LUNA ecosystem.
Going one step further, we would like to compare LUNA's distribution with the global wealth distribution in the traditional financial market.
According to the bar graph from Inequality.org, we can see that the richest 1% of the global population owns 43% of the world's wealth. In comparison, the top 1% within the LUNA ecosystem owns 96.87% of LUNA's circulating supply. As such, we can further confirm that there is a considerable amount of wealth inequality within the LUNA ecosystem.
It is important for us to remember that cryptocurrency is still in the early stage, and it remains to be seen how wealth inequality will persist in the future.
We can assume that the whales who have gained a sizeable foothold in the LUNA ecosystem already have a large sum of capital and they are some of the early movers in the cryptocurrency market. Further analysis also needs to be done on other blockchains to assess whether similar uneven wealth distribution is observed in other ecosystems.
At the end of the day, the ultimate goal of cryptocurrency is to make the financial system more accessible to everyone. How the wealth is distributed will be determined by the open market.