Anti-whale mechanisms on Arbitrum: Avoiding pump and dump
The concept of "whales" refers to holders who hold large quantities of a particular token.
While the presence of whales can bring certain advantages (many token creators pact with whales to increase their marketcap), they can also pose risks to the stability and fairness of a token's ecosystem.
To address these concerns, several anti-whale mechanisms have been implemented, which can be resolved using the anti-whale tool at Smithii.
In this article I will tell you about anti-whaling mechanisms and then we will look at some potential positive aspects of having whales in your token ecosystem.
Anti-whaling mechanisms on Arbitrum
The main and most widespread anti-whaling mechanisms are based on setting a maximum for token transfers.
Setting a maximum limit on the number of tokens that can be transferred in a single transaction helps prevent drastic price movements, but there are also other types of mechanisms:
- Ownership Limits: Setting a maximum percentage of the total token supply that any one address can hold ensures a more equitable distribution of tokens. This prevents whales from having excessive power over the token ecosystem.
- Smart contracts with Temporary Lock-in: lock tokens for a specific period can prevent whales from selling large quantities of tokens in the market simultaneously. This ensures a more gradual release of tokens, promoting price stability.
Anti-Whale configuration for your token
You can configure the anti-whaling mechanisms with the tool at Smithii using the following steps:
- Connect your wallet: Use the button on the top right to connect your wallet.
- Select the token you created
- Sets the limit per transaction: Indicates the maximum amount per transaction to limit the whales.
- Set the limit per lock: Similar to the previous step.
Advantages of having whales in the trading of your token
Yes, I don't want to leave this post without explaining that there are also positive aspects of having whales trading your token.
So, keep in mind that it is not always a bad thing to have whales within your Liquidity Pool since they may be the ones that are providing the liquidity or a large part of it.
In addition, many people design programs and are very attentive to the movements of wallets detected as whales. This can cause that once a whale enters trade your token, many more people follow in its footsteps.
A whale can pump and dump depending on its size. Many whales working differently together in a token is much more market cap difficult to move among themselves.
Conclusion
While anti-whaling mechanisms are essential to ensure fairness and stability in a token ecosystem, it is important to recognize the positive contributions that whales can make.
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Industrial Engineer. Member of the Smithii's marketing team. Solana trader. Collaborator in the $SHRIMP memecoin launch.
