Who to Regulate? Identifying Actors Within DeFi’s Governance

Decentralised Finance (DeFi) emerged in 2021 as a fast-growing crypto segment, attracting policymakers’ attention due to its innovative approach of delivering financial services without relying on centralised intermediaries. This paper assesses DeFi governance arrangements for regulating and supervising DeFi using a comprehensive dataset. We find that governance token holders of four protocols (Aave, MakerDAO, Ampleforth, Uniswap) are highly concentrated with around half or more holdings linked to the protocols themselves or exchanges. Top voters are mostly delegates, who, in many cases, could not be identified nor linked to token holders. The study offers insights for policymakers regarding the implementation of policy measures aimed at bringing relevant entities under the regulatory umbrella. The difficulty in identifying holders and voters using public data may make it hard to rely on some of the regulatory anchor points often put forward in the policy debate such as governance token holders, developers or centralised exchanges.