Anti-Dumping Policy Definition

Dumping occurs when a holder sells a large volume of tokens in a short time to drive the market price sharply lower. Anti-dumping policies establish rules that discourage or restrict such actions to maintain orderly trading and protect participants.

Common protective measures

• Circuit breakers and trading pauses: Exchanges or on-chain mechanisms may halt trading if a token’s price falls beyond a predefined percentage within a brief interval. The pause allows liquidity to recover and reduces panic selling.
• Lock-up periods: Early investors, team members, or advisors receive tokens that vest over months or years. Staggered release schedules prevent immediate liquidation that could overwhelm demand.
• Community-approved limits: In decentralized autonomous organizations (DAOs), token holders vote on transfer caps or gradual release rules, aligning the policy with collective interests.
• Token buybacks: Some projects purchase tokens on the open market to reduce circulating supply, offset selling pressure, and stabilize prices, though this approach can also encourage speculation.

Case reference: SQUID token

The SQUID token employed restrictive selling rules labeled as anti-dumping measures. Holders discovered they could not exit positions as the price surged. When the underlying scam became apparent, the asset collapsed from nearly USD 2,900 to fractions of a cent within minutes, leaving investors with heavy losses while the creators extracted the funds.

Well-designed anti-dumping frameworks balance liquidity, investor confidence, and market integrity without imposing unnecessary barriers to legitimate trading.