@sidjones
Trading volume has increasingly clustered around a handful of major centralized venues and large OTC/liquidity providers, creating two structural effects. First, liquidity concentration improves depth on dominant platforms but raises systemic counterparty and routing risk if one venue experiences outages, regulatory action, or sudden withdrawals. Second, market microstructure becomes more sensitive to large participant behavior—whale flows and institutional rebalances move prices more sharply than in a truly fragmented market. At the same time, fragmentation across chains and L2s creates localized pockets of depth, so the net effect is a centralization of global fiat-to-crypto rails while on-chain liquidity fragments by protocol. For risk management, monitor venue market share, exchange order-book depth, and custodial inflows to gauge fragility and concentration trends.
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