Just to clarify: token concentration in itself is not necessarily a problem. It depends on the team and the objective behind it.
The issue usually comes from massive concentration without clear explanation.
For example, a team controlling a large part of the circulating supply but with clear transparency, clear communication, and well-defined reasons behind it - can be justified. After all, there is an entity managing the project.
But concentration with no transparency, no justification, no clear reason is a major red flag. That’s often the classic setup for a rug pull: concentrate the tokens, attract buyers, then dump massively on the market.
So it’s important to do your due diligence. When you come across a token with high concentration among top holders, try to check :
> Has the team communicated about it?
> Is there transparency behind it?
If not, consider it a red flag.