Topic: What if an external person holds 25% of the total supply of a cryptocurrency? (Read 180 times)

Woah, I've never heard about this before. I'd have thought something like this happening would make a project fall flat in its face immediately, but I guess not everyone who races to monopolize aim to pump then dump.

I'd still be quite wary though, as we know whales can cause a splash (pun intended) on the prices whenever they want.

If i recall correctly this is what happend with the BAT token. >100 shareholders bought all the ICO tokens.

The top 20 adresses held 2/3 of all the BAT, and they're doing just fine. So no, i wouldn't say that it is always worrying.

https://www.coindesk.com/35-million-30-seconds-token-sale-internet-browser-brave-sells/

It's still not really distributed that well, but they've grown alot ( in marketcap), although you could argue that every coin has..
https://etherscan.io/token/tokenholderchart/0x0d8775f648430679a709e98d2b0cb6250d2887ef

It's not a good thing if someone has 25% of the total supply.
Let me give you an example.

There are 100,000 users here and everyone has at least one lemon. The total supply is 1,000,000 and I have 250,000 lemons.
The price for a lemon is $1. This price is made by the total supply and the total demand that are currently on the market. When new investors are joining and other investors want to quit, demand and supply change and so the price.
Let's say that there is a total offer to buy 50 lemons at $1.01 and a total offer to sell 25 lemons at $1.01, what happens? The offer to sell at $1.01 will be satisfied and the new market price will change from $1 to $1.01.
Let's suppose that this positive trend continues and the price reaches $1.10 and I decide to get rid of my investment, offering my 250,000 lemons on the market at the price of $1.10.
What happens? My whole offer of 250,000 lemons at $1.10 needs to be satisfied otherwise the price will not increase anymore. In this scenario, it will be hard for the price to go up, but we can't say the same about the opposite direction. If other people decide to get rid of their investments, the supply will increase on the market, pushing the price down. You can understand that my offer to sell 250,000 lemons at $1.10 works as a cap.

If you have a hint that someone is going to buy a huge amount of an altcoin, you may want to join the investment before this happens. Why? What happens if you are in the market before I buy my 250,000 lemons? To buy 250,000 lemons, I need people who are willing to sell them to me. Let's say that the current structure of the market is this:

Price         Total Offer
$1.00              20,000
$1.01              25,000
$1.02              30,000
$1.03              25,000
$1.04              20,000
$1.05              15,000
$1.06              45,000
$1.07              35,000
$1.08              35,000
$1.09              50,000

To buy 250,000 lemons, I need to buy 20,000 at the price of $1,00; 25,000 lemons at the price of $1.01 and so on, till my offer is completely fulfilled at $1.08. The new selling price on the market will be $1.09.
The price goes from $1.00 to $1.09 in a few seconds, +9% in a few seconds... that's the power of a whale coming to play.

I would do some digging to try find out who the person is and how they have such a large holding. It's very unusual for such a thing to happen. I wouldn't be immediately alarmed, it's not entirely different to the team holding a large chunk of the tokens, there's always the danger they'll dump them and crash the price but you just have to hope that this doesn't happen and that they're in it for the long term.

If a whale has more tokens/coins than the whole team, is it worrying? If there is someone who holds 25% of total supply of a cryptocurrency should I better avoid this project or is it still okay to invest in it?