Is the Crypto Market Becoming Too Centralized Again?

[seonmo73]

Since 2024, we’ve seen a strong trend of institutional entry, ETF approvals, and major exchanges consolidating liquidity.
While this has brought stability and higher trust, some argue that the crypto market’s original decentralization spirit is fading.
Today, even Layer-2 networks rely on a handful of sequencers, and staking power concentrates among a few entities.

Is this evolution — or regression?


1. Institutional Dominance:
Bitcoin and Ethereum ETFs brought more liquidity, but also made markets dependent on large asset managers (BlackRock, Fidelity, etc.).
→ Is this healthy adoption or hidden centralization?

2. Validator Concentration:
In Proof-of-Stake networks, top 5 validators often control over 60% of total stake.
→ Does staking efficiency justify this, or should governance actively limit power concentration?

3. Layer-2 and Rollups:
While rollups enhance scalability, most use centralized sequencers or DA layers.
→ Can we really call these “decentralized networks”?

Centralization is undoubtedly efficient.
However, when it leads to the concentration of trust, authority, and data control,
it ceases to be innovation — it becomes regression disguised as convenience.

The true value of blockchain lies not merely in technology,
but in the “distribution of power and the sharing of responsibility.”
What we must protect is not speed, but freedom, sustainability,
and a value cycle that truly returns benefits to the users.

[Charles-Tim]

Since the creation of altcoins (like ethereum), the centralization has began, but just that one coin can be centralized than another. See USDT and USDC that can be freezed through their developers on any addresses. But what is good is that there are few coins like bitcoin and monero that are not centralized.

[flapduck]

Centralization is creeping in at the edges, unless we stop paying for the exits. ETFs concentrate custody, LSTs concentrate stake, and most rollups ship with an "upgrade key." That's fine as scaffolding only if users can leave without permission: self-custody on L1, forced-inclusion on L2, and redemptions from staking providers that don't hinge on one operator.

[passwordnow]

Since the creation of altcoins (like ethereum), the centralization has began, but just that one coin can be centralized than another.

I agree. It all started with premine even before the ICO and that has made the devs a huge chunk of the supply like what Vitalik has. Same goes with XRP and look that the owners/devs of it are part of the richest and that's because that they've got the huge allocation of the supply of the project and that's easy, they're all richest people in the world and centralization from there have started and it's passed on and have seen by other enthusiasts and so they made their own projects.

[TastyChillySauce00]

In my honest opinion the only crypto that's decentralized is ETH and BTC. At least those are having both high FDV and good distribution of voting power.

The other altcoins are created with centralization in mind, their decentralization is just gimmick, most of the newer L1 limit validator to only the one they approved but they'd keep yapping about decentralization even though it's empty word since they're not doing exactly that.
For alts, it's definitely becoming too centralized again. Back then people would deploy a network then you can join in, nowaday only insiders able to run. The funny thing is most of validators hosted in the same AWS cluster. Few days ago when AWS goes down, many blockchains gets halted .