# Developer entity correlation

Another important consideration in portfolio construction is the true independence of protocols.

At first glance, two protocols may appear unrelated. They may have different names, different token symbols, and separate user interfaces. However, in practice they may still share the same development team, treasury, or governance group.

When this happens, what looks like diversification can actually be hidden concentration risk.

For example, if multiple protocols rely on the same core [development entity](https://medium.com/@SHIFT_DeFi/why-diversification-in-defi-isnt-what-you-think-and-how-to-do-it-right-77074f4cada3), a failure in that organization — whether technical, financial, or operational — could affect all of those protocols simultaneously.

To account for this, Shift maps relationships between development teams, governance structures, and treasury control. Protocols that share a common developer lineage or operational dependency are treated as correlated exposures rather than fully independent positions.

This approach helps ensure that diversification within the portfolio is not only cosmetic, but structurally meaningful.

True diversification protects capital only when exposures are genuinely independent across teams, protocols, and operational infrastructures.

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