Anti-whale mechanisms on Avalanche: Avoiding pump and dump
The concept of "whales" in the ecosystem refers to individuals or entities that hold large quantities of a specific token.
While the presence of whales can have certain advantages (some token creators seek to partner with whales to increase their marketcap), they can also pose risks to stability and fairness within a token's ecosystem.
To mitigate these risks, anti-whale mechanisms have been developed and can be configured with Smithii's anti-whale tool.
In this article we will explore the most common anti-whale mechanisms and also review some positive aspects of having whales within your ecosystem.
Anti-whaling mechanisms
The most common anti-whaling mechanisms focus on limiting the number of tokens that can be transferred in a single transaction.
Setting a limit on the number of tokens per transaction helps prevent sharp price changes, but other mechanisms are available:
- Ownership Limits: Defining a maximum percentage of tokens that a management can own ensures a fairer distribution and prevents whales from accumulating too much power within the ecosystem.
- Temporary Blocked Contracts: Using smart contracts to block tokens for a set amount of time can prevent whales from selling large quantities of tokens all at once. This promotes a gradual release of tokens, maintaining price stability.
Anti-Whale configuration for your Avalanche token
You can set up these anti-whaling mechanisms using Smithii' s tool in a few simple steps:
- Connect your wallet: Use the button on the top right to connect your wallet.
- Select your created token
- Set the limit per transaction: Set the maximum number of tokens per transaction to restrict whale activities.
- Set the limit per block: Similar to the previous step, adjust this limit according to your strategy.
Advantages of having whales in the trading of your token
I don't want to leave this article without mentioning that there are also advantages of having whales trading your token. It is important to consider all aspects.
In some cases, having whales in your Liquidity Pool can be positive, as they can provide a significant portion of liquidity.
In addition, many traders closely follow the movements of whale wallets, which can attract more investors when a whale starts trading with your token.
It is important to note that not all whales perform pump and dump. When several whales work differently within a token, their large market cap can be difficult to move in a meaningful way.
Conclusion
While anti-whaling mechanisms are essential to maintain stability and fairness within a token ecosystem, it is crucial to also recognize the positive contributions that whales can offer.
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Industrial Engineer. Member of the Smithii's marketing team. Solana trader. Collaborator in the $SHRIMP memecoin launch.