How Does Token Distribution Affect the Decentralization and Fairness of a DeFi Community?

A highly concentrated token distribution, where a few wallets hold most tokens, leads to centralized governance, undermining the 'decentralized' nature of the protocol. Fair distribution methods, such as airdrops or liquidity mining, aim to spread tokens widely among the active user base.

This broader distribution ensures a more diverse and representative voting community, enhancing the protocol's resilience and legitimacy.