Understanding Wallet Classifications from Crypto Whales to Krills

Cryptocurrency has seen massive growth for the past five years. Crypto whales are also significantly rising in the market. According to a recent report by Statista, the cryptocurrency market is anticipated to reach USD 51.5 billion in 2024 and revenue is expected to project an annual growth rate of 8.6% by 2028. Most importantly, the number of users is expected to rise to 992 million users by 2028.

Token Distribution is a crucial aspect of the cryptocurrency ecosystem. It directly impacts the stability, decentralization, and overall health. Knowing the token distribution is more important than knowing the number of token holders. Understanding how tokens are distributed among different wallet holders provides insights into the concentration of wealth and influence within the network.

This article lets us know the different categories of wallets and use Bitquery Token holder APIs to explore the distribution of token holders.

Why Token Distribution Matters?

In the field of cryptocurrency and blockchain technology, token distribution stands as an important mechanism shaping the success and sustainability of projects. Token distribution models not only fundraising but also cultivate fairness, transparency and community engagement with decentralized ecosystems. In this section, let us see the significance of token distribution and explore its multifaceted importance in Web3 projects and beyond.

• Fairness and Transparency: It ensures equitable participation and transparent allocation of tokens.
• Community Engagement: Involving users in the project encourages active contributions.
• Decentralization: Prevents power concentration, enhancing network security and resilience.
• Credibility and Trust: Builds trust among stakeholders through transparent distribution practices.
• Global Participation: Attracts a diverse global audience, enriching the project's ecosystem.
• Liquidity and Price Stability: Facilitates token liquidity, aiding price stability post-listing.
• Reduced Costs: Offers a cost-effective alternative to traditional fundraising methods, cutting down on expenses.

Categorization of Wallets

Wallets in the cryptocurrency space are often categorized based on the number of tokens. And this number varies based on how “expensive” this token is valued against fiat currencies. For example, Crypto Whales are wallets that are the top holders of the token, for example containing more than 1,000,000 tokens, while Sharks hold over 100,000 tokens. Dolphins denote wallets with more than 10,000 tokens, and Seals contain over 1,000 tokens. Fish refers to wallets with more than 100 tokens, while Krill encompasses wallets with more than 0 tokens.

These categories serve as a hierarchical classification system based on the token holdings within cryptocurrency wallets, illustrating the varying degrees of wealth and investment within the ecosystem.

The Significance of Whales

Crypto Whales, particularly those holding over 100,000 tokens, exert significant influence on token prices and liquidity within cryptocurrency markets. These large holders can impact supply and demand dynamics, consequently affecting market prices and overall liquidity levels.

• Price Volatility: When whales engage in large transactions, either buying or selling substantial quantities of tokens, they can cause significant price movements. For instance, a whale selling a large portion of their holdings can trigger a sharp decline in token prices due to increased selling pressure. Conversely, a whale purchasing large quantities of tokens can drive prices higher by creating a surge in demand.

• Market Liquidity: Whale Cryptos holding substantial token quantities contribute to market liquidity. Crypto whales can provide liquidity by placing large buy or sell orders on exchanges, allowing other traders to execute transactions without drastically impacting prices. However, if Whale cryptos decide to withdraw liquidity by removing their orders from the market, it can lead to decreased liquidity and heightened price volatility.

• Market Manipulation: Crypto Whales with significant token holdings have the potential to manipulate markets for their benefit. Through coordinated buying or selling activities, crypto whales can manipulate prices to achieve their desired outcomes, such as accumulating more tokens at lower prices or generating profits through price manipulation strategies. Such actions may harm smaller investors who are more susceptible to price fluctuations caused by whale activity.

• Investor Sentiment and Confidence: The actions of crypto whales can influence investor sentiment and confidence in a particular token or cryptocurrency project. Large sell-offs by whale cryptos may signal negative sentiment and lead to a loss of confidence among investors, causing prices to decline further. Conversely, strategic investments or endorsements from whales can boost investor confidence and contribute to positive price trends.

Overall, the significance of whale crypto with over 100,000 tokens lies in their ability to shape market dynamics, influence prices, and affect liquidity levels within cryptocurrency markets. As such, understanding the behaviour and activities of whales is crucial for investors and traders seeking to navigate the volatile landscape of digital asset markets.

Utilizing Bitquery Token Holder APIs to Explore the Distribution of Token Holders

Let's delve into examples and understand how the Token Holders API grants access to details about token holders, the number of token holders, and the distribution of token holders across some popular tokens.

The Categorized Count of USDT Token Holders:

Using this Bitquery Token Holders API for the Ethereum network you can retrieve counts of token holders categorized into three tiers based on their token balances for the USDT (Tether) token contract address "0xdAC17F958D2ee523a2206206994597C13D831ec7" as of February 1, 2024: classic holders (whale crypto) with balances over 1,000,000 tokens, pro holders with balances over 100,000 and up to 1,000,000 tokens, and growing holders with balances over 1,000 and up to 100,000 tokens.

Here are the inferences from the result of the query:

• Growing Token Holders: The majority of token holders fall into the 'growing' category, with 223,459 individuals or entities each holding between 1,000 and 100,000 tokens. This suggests that the majority of token holders have a moderate amount of tokens.
• Classic Token Holders: The classic holders are found less in number. Only 3753 token holders are each holding more than 1,000,000 tokens.
• Pro Token Holders: 20288 Pro token holders or entities each hold about 100,000 to 1,000,000 tokens.

Top Token Holders for the Mutant Ape Yacht Club (MAYC) NFT collection.

The results returned from this Bitquery Token Holder API query provide insights into the top 10 token holders of the specified token as of February 1, 2024. The analysis includes evaluating the distribution of token balances among the top holders and examining potential implications such as wealth concentration or strategic accumulation.

Here are some inferences from running the results of this query:

• The distribution of token balances among the top 10 holders varies significantly, with the top holder possessing 785 tokens, while the 10th holder possesses 55 tokens.
• There seems to be a gradual decrease in token holdings as we move down the list, indicating a typical pattern of wealth concentration in token ownership.
• The presence of a diverse set of holders suggests that ownership is not heavily concentrated in a few addresses, which can be a positive sign for decentralization and distribution of the token.
• Further analysis could involve tracking the movement of tokens among these addresses over time to identify trends or potential patterns of accumulation or distribution.

Top 10 trending tokens based on their holders on the Ethereum network.

This Bitquery Token Holder API query retrieves data from the Ethereum Virtual Machine (EVM) dataset, focusing on the combined Ethereum network. It seeks balance updates since February 1, 2024, where token balances are greater than 0. The results are ordered based on the number of distinct holders for each token smart contract, limited to the top 10 trending tokens. Each result includes the token's name, smart contract address, and the count of distinct token holders.

Here are some inferences from running this query:

• Ethereum (ETH) maintains its dominance with the highest number of distinct holders, indicating widespread adoption and distribution among users.
• Stablecoins like Tether USD (USDT) and USD Coin (USDC) follow closely, reflecting their utility in the ecosystem for trading and value preservation.
• Tokens related to specific applications or projects, such as Heroes of Mavia, also demonstrate a significant number of holders, suggesting active engagement within their respective communities.
• The presence of staking tokens like Liquid staked Ether 2.0 indicates a growing interest in staking and earning rewards in the Ethereum ecosystem.

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Understanding Token Holder APIs

The Token Holders API offers a wide array of functionalities to explore token holder data, providing valuable insights into token distribution, holder behavior, and network dynamics. Here's an analysis of the results and how users can leverage the Token Holders API:

• Total Token Holder Count: By retrieving the total number of token holders, users gain a comprehensive view of the token's adoption and distribution among the Ethereum network participants. This metric serves as a key indicator of network engagement and user base expansion over time.

• Token Balance of an Address on a Specific Date: Users can track the token balance of specific addresses over time, enabling them to monitor holder activity, token accumulation, or distribution patterns. This information is valuable for portfolio management, auditing, and monitoring of large token transactions.

• Token Holders Over Time: While users can access token holder data for specific dates, obtaining information over a range of dates requires multiple API calls. This functionality allows users to analyze historical trends, identify patterns, and track changes in token holder demographics or behaviors over time.

• Token Holder Activity: Users can explore various aspects of token holder activity, including transaction counts, transaction dates, and token movements. This facilitates the analysis of holder engagement, trading behaviors, liquidity dynamics, and market sentiment surrounding specific tokens.

• Token Holder Statistics: The API provides statistical measures such as average balance, median balance, Gini coefficient, Nakamoto coefficient, and Thiel index. These metrics offer insights into token distribution fairness, concentration of wealth, decentralization levels, and network stability.

• Token Liquidation and Transfer Analysis: Users can identify holders who have liquidated their token holdings or transferred tokens completely. This functionality helps users monitor large-scale token movements, identify potential market trends, and assess holder sentiment or intentions.

• Top Token Holders Analysis: By retrieving information on the top token holders based on token balances, users can identify influential stakeholders, whales, or major investors within a token ecosystem. This analysis informs strategic decisions, risk management strategies, and investor relations efforts.

• Token Holder Filtering and Categorization: Users can filter token holders based on specific criteria such as token balance thresholds, enabling targeted analysis of different holder categories (e.g., small holders, crypto whales, and active traders). This segmentation provides nuanced insights into holder behaviors and preferences.

Overall, the Token Holders API empowers users to gain deeper insights into token holder dynamics, network activity, and market trends, enabling informed decision-making, risk assessment, and strategic planning within the cryptocurrency ecosystem.

Conclusion

In conclusion, this blog provides a comprehensive overview of the significance of token distribution and the influence of various categories of wallet holders, from whales to krills, in the cryptocurrency ecosystem.

Through the utilization of Bitquery Token Holder APIs, the blog demonstrates how to explore the distribution of token holders across different categories for popular tokens such as USDT (Tether) and ETH (Ethereum). The significance of whales, particularly those holding over 100,000 tokens, is highlighted, emphasizing their impact on price volatility, market liquidity, and investor sentiment.

Understanding token distribution is crucial for assessing the stability, decentralization, and overall health of blockchain projects. The categorization of wallets based on token holdings offers insights into wealth concentration and investment patterns within the network.

About Bitquery

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Written by Aarthy