The European Central Bank has delivered a blunt assessment of governance in some of DeFi’s best-known projects, warning that a handful of actors hold outsized control and that many so-called DAOs are more centralized in practice than they appear on paper. In a new working paper — “Who to regulate? Identifying actors within DeFi’s governance” — ECB staff scrutinize governance token ownership and voting power in Aave, MakerDAO (including its Sky ecosystem), Uniswap and Ampleforth, and argue the results could undermine these protocols’ claims to MiCA’s decentralization exemption.
Key findings
- In each of the four protocols, the top 100 holders control more than 80% of governance token supply.
- Around half or more of those holdings are linked to the projects themselves or to centralized exchanges.
- Voting power is even more concentrated than token ownership, driven largely by delegates whose real-world identities are often unknown.
- In Ampleforth, for example, the top 20 voters control roughly 96% of proxy voting rights.
The paper frames this concentration as a practical problem for regulators. Prior academic work calls the dynamic “minority rule”: a small number of large token holders or opaque delegates can effectively dictate protocol decisions. The ECB’s researchers say decentralization in these cases is often “form over substance,” noting that governance power has remained stable over time rather than diffusing as a DAO’s rhetoric might suggest.
Why MiCA matters
Under the EU’s Markets in Crypto-Assets regulation (MiCA), crypto-asset services that are “provided in a fully decentralised manner without any intermediary” can fall outside the regime’s licensing and prudential requirements. The ECB paper directly questions whether projects where major stakes are held by founding teams or exchanges — the report flags links to entities including Binance — can legitimately claim that exemption. Limited on-chain transparency about who controls delegated votes, the authors say, compounds the problem and makes accountability hard to assess.
Regulatory implications
The ECB’s goal is explicit: to identify “regulatory anchor points” in systems that were designed to avoid traditional corporate structures such as issuers, boards or CEOs. The study signals that supervisors are prepared to apply the same forensic scrutiny to DeFi governance that they use on banks’ shareholder registers and control chains. If protocols cannot demonstrate materially dispersed and accountable governance, the paper implies, they could be treated like centralized crypto-asset service providers — subject to licensing, capital and compliance obligations across the EU.
Bottom line
The ECB’s analysis doesn’t ban DAOs or instantly change the legal status of any protocol, but it tightens the spotlight on governance concentration and on-chain opacity. For projects that want to rely on MiCA’s decentralization carve-out, the message is clear: show dispersed, transparent and accountable decision-making — or be prepared for closer regulatory oversight.
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