TVL concentration (top-10 wallet share)
A economic risk factor in the v1.7.0 rubric. Measured per protocol on a c cadence.
Methodology how we score#
What this measures
This factor calculates the percentage of protocol TVL held in the top ten depositor addresses, sourced from on-chain scanning. A high concentration ratio means a small number of wallets control the majority of the protocol's deposit base, creating correlated withdrawal risk. The metric is updated continuously and displayed as a concentration percentage alongside the top-ten wallet count.
Why it matters
High TVL concentration creates two distinct risks. First, the coordinated exit of even two or three top depositors can cause a TVL collapse that triggers oracle-based liquidation cascades or drops the protocol below the threshold where insurance coverage is economically rational. Second, in a lending protocol, a highly concentrated deposit base allows a single large depositor to also become the dominant borrower, creating circular collateral relationships that amplify liquidation risk. The dataset includes several cases where post-exploit TVL recovery was complicated by the exit of a few large holders who accounted for the majority of the residual deposit base.
Green / Yellow / Red
Green: top-ten wallet share below thirty percent, indicating broad distribution and low correlated-exit risk. Yellow: top-ten wallet share between thirty and sixty percent, indicating meaningful concentration that warrants monitoring of the largest depositor addresses. Red: top-ten wallet share above sixty percent, or a single wallet accounting for more than twenty-five percent of TVL, indicating that the departure of one address would constitute a material liquidity event.
Common gray cases
Protocols where the largest depositor is a verified protocol-owned treasury account (not a user) may present differently; curator must distinguish user TVL concentration from protocol-owned reserves when calculating the ratio.
Notable historical examples
No cross-hacked incidents currently linked in database for this factor.
Measurement what to look for#
Compute the percentage of protocol TVL held in the top-10 depositor addresses.