Crypto Anti-Dumping Policy
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Hi friends!, how are you today? Welcome to my blog, it's super good to be back in your faces too. I trust you got value from my last post. I bring to you another value packed content one that I believe you would find interesting as usual.
In my last post, we explored the concept "Darknodes" and it importance. Today, we would be looking at Anti-Dumping Policies in the crypto world...just as it has been captured up there. I would take you on the journey of absolute enlightenment, just stay with me and enjoy the ride guys!
Dumping is one dubious exit strategy that have played out over and again in the market, I mean record has a lot of this event which have successfully played out and the most devastating part of it is that small investors are those who find themselves at the receiving end after they must have been emptied of their hard earned money.
What then is the way out, how do we curb this selfish act carried out by some big players in the market because as it stands, it's a major concern among many other concerns in the market. In my quest for answers, I got some answers to this question. So guys let's enjoy together what I've gathered.
When you hear the word anti-, what comes to mind? A counter approach or action right? Yeah! You're right. So relating it with the subject matter dumping, it mean measure and strategies put in place by crypto project developer or exchanges and communities to guard against massive sell-off of crypto asset i.e coins or tokens in order to maintain it value.
We all know that dumping has a very adverse effect on the value of a token, a brutal dump will almost leave the coin completely worthless, making investors loss greatly and regret ever having anything to do with such token, thereby making them lost confidence in what we do in this space.
The need for Anti-Dumping Policies cannot be overemphasized, it will go a long way in curbing dumping activities by malicious folks who falls largely into the categories of investors who invested early into a project and accumulated a very large quantity of the token.
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These folks could also be referred to as Whales because of their holdings. Any attempt from them to sell off all their holdings would reck the price. Hence the need for these measures. For example THUNDERCAKE token restricts selling and buying of their token to 0.1% and 0.5% of their entire supply respectively. By so doing, they would ward off whales which are potential threat to the ecosystem.
It's also important to mention that Anti-Dumping policies are typically used by new project that are looking to gain entry into the market. Many of the dumping scheme that were recorded in the past were carried out on new token by those who had accumulated a lot of it before it became tradable.
This is not to say that already established coin or token cannot use anti-dump policies, of course they can, the goal is to stabilize the prices of these coin and also to boost investor's confidence but the policies are more important for new crypto project that usually would have fund raised via ICO's and really want to last in the market.
• Buying and selling limitations: Projects looking to curb the event of dumping put limitation on buying and selling which pegs the amount that would ever be bought or sold at a particular time by a particular investor within a particular timeframe.
This is just to curb this event. Allowing an investor to buy a very large quantity carelessly would backfire, he would drive price up and sell the same when he hits his desired profit level. With the policy in place, whatever an investors buys or sell will not be a threat to the value of the token and all who have invested in it.
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• Token vesting: This is another working method used by project developers. This method requires locking up token in substantial quantities for a definite period of time before it is unlocked again. A relatable example is that of steem chain, we have the vesting policy in place which have helped stabilize price in no small way.
Come to think of it, what would have happened if we were all selling the steem coin as we were printing them...well maybe a number of us will not be here anymore, the reason is not far fetched, steem would be worth nothing...because we focused on selling off and not accumulating via vesting.
• Incentivizing: This is another way to curb dumping. I will call it an offshoot of the vesting approach. In this approach, project incentivized nodes or participants in a network for embracing the vesting culture or for holding the token without dumping it. We have also seen this play out on the steemchain, where people are reward for vesting especially when they hit new milestones such as the Dolphin and orca status.
• Buyback Strategy:
Buyback Strategy is also another way to maintain the price level or value of token. When developers of a crypto project discover there's too much of their asset in circulation, they would resolve to absorbing them by buying them up so that price levels can be maintained.
The law of demand and supply is applicable in the crypto market too. Don't forget it's called a financial market.
When there is too much of a commodity in circulation, the value of such commodity tends to drop. The same is applicable to these tokens too, hence the reason for buying, since the goal is to ensure that price is maintained fairly.
I believe by now we understand what Anti-Dumping policies are and their positive impact in the crypto space. It primary goal is to ensure that dumping activity are curbed in order to have a far market play and not foul plays that could cost people their hard earned money.
I trust you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.
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@lhorgic♥️
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