Deterring Whales: KURO’s Maximum Transaction Limit Explained

Everything you need to know about KURO’s whale-deterrence mechanism.

Opening Notes:

Before getting into the main topic of this article, we want to thank everyone in the KURO family for such a smooth and successful token launch last night! We are blown away by the amount of support from the community, and super excited to see how KURO grows over the next few months.

Thanks to the community, KURO is currently sitting at first place in the TokenJenny.ONE Tournament held in partnership with VenomDAO on the Harmony network. Amazing job, let’s keep this up! We’ve got our eyes set on the grand prize — an incentivized KURO pool on ViperSwap! ✨🌸🌿

KURO is currently first place in the TokenJenny.ONE Tournament!

We’ll post another article soon on what winning the TokenJenny.ONE Tournament would mean for KURO, along with details on KURO’s first LP contest, i.e., your chance to win exclusive KURO NFT airdrops!

In the mean time, let’s talk about whales… 🐳

Whales: What’s the Big Deal?

The KURO team is well aware of the risks that whales can pose to the rest of the community. Whales are individuals who hold large amounts of any particular token. Because whales own a significant chunk of the total token supply, they can be powerful enough manipulate the price of that token — not only with big buys, but with big sells too. With that in mind, we made sure to launch KURO with a robust and dynamic whale-deterring mechanism.

To deter whales from scooping up KURO when the price is low and then dumping on the rest of the community when the price goes up, the KURO contract includes a maximum transaction limit that scales dynamically with its market cap. Traditional moon coins either do not have a transaction limit at all, or they include a static buy limit, e.g., 0.5% of the total token supply. This traditional moon coin approach has two major shortcomings:

First, limiting buy orders to 0.5% of the total token supply only makes sense shortly after launch when liquidity is low. For example, standard moon coins launching on Binance Smart Chain might start out with only 1 BNB of liquidity paired with quadrillions of moon coins. With moon coins that cheap, it’s essential to limit buy orders to a tiny fraction of the total moon coin supply.

However, as the per-token price gets into the millions, it becomes less necessary to limit each buy to only 0.5%. After all, this is a market economy — if someone wants to gamble $10,000 on a moon coin, they should be free to do so. Once the market cap is in the millions, even a $10,000 buy order won’t make someone a whale. Note that large market cap meme coins like $DOGE and $SHIB do not have buy limits at all.

Second, the traditional buy limit does nothing to prevent whales from dumping their tokens all at once and causing a large negative price impact.

KURO’s Whale-Deterring Mechanism:

Kuro Shiba protocol addresses both of the above-identified issues by implementing a dynamic maximum transaction limit.

First, the dynamicity of the KURO contract allows certain values to be manually adjusted even after deployment. These values include the maximum transaction limit % (currently 5%), the passive holder rewards % (currently 4%), and the automatic burn % (currently 1%). KURO’s maximum transaction limit was set to 1% at launch, but is adjusted whenever the market cap reaches a set of predetermined goals.

Second, the maximum transaction limit applies to buying, selling, and all other transfers of KURO tokens. This deters whales not only from buying a huge amount in a single transaction, but also tanking the price by selling a large amount of tokens in a single transaction.

KURO’s maximum transaction limit scales dynamically along with its market cap.

As shown in the chart above, KURO launched with a 1% per-transaction limit (5,000,000 KURO). Not knowing how quickly its market cap would grow, we were amazed when the KURO price quickly blew past the first couple of goal markers. The maximum limit is already at 5% (25,000,000 KURO) per transaction, due to KURO having hit its market cap goal of $100,000 very shortly after launch.

Next, if and when KURO reaches a market cap of $500,000, then any single KURO transaction will be limited to 10% of the total token supply (50,000,000 KURO) in accordance with the above schedule. If KURO then falls back below $500,000, the maximum transaction limit will NOT be automatically reduced, because the $500,000 goal was already reached. The only way to change the maximum transaction limit at that point is to submit a proposal in Discord, which the community can then vote on.

The easiest way to keep track of the current maximum transaction limit is to check the #current-stats channel on Discord.

As an added layer of security, the UniV2Router (used by ViperSwap to split LP tokens back into the original token pair) is also subject to KURO’s maximum transaction limit. That means that liquidity providers can only withdraw their LP tokens up to the maximum KURO amount per transaction, thus further limiting the negative impact whales can have on the price.

Known Limitations of “Whale-Proofing”:

It is imperative to understand that any individual can still buy and sell as many KURO tokens as they want, but they’ll need to do it in multiple transactions instead of one single transaction. In other words, KURO’s whale-deterring mechanism cannot eliminate whales altogether — it can only make it more difficult to become a whale and do whaley things.

Although whales can still exist, KURO’s robust whale-deterring mechanism prohibits whales from loading up and/or dumping their tokens at all once. Instead, anyone aspiring to be a whale will need to make many micro-transactions, essentially requiring them to DCA into KURO over time. Each whale’s buys will increase the price of their subsequent buys, disallowing any one person to pick up a huge supply of KURO at a single low price. Similarly, whales will need to slowly sell off their tokens, instead of dumping them all at once.

(A very positive side effect from whales buying and selling KURO is that holders will automatically receive rewards in their wallets just for holding. Specifically, the KURO contract includes 4% reflection, wherein 4% of every KURO transaction is automatically distributed to holders, pro rata, based on how much KURO they hold in their wallets. This should be a nice little treat whenever you check your MetaMask! 🎁)

Unfortunately, it is not possible to fully eliminate whales, as there are always workarounds to any whale-proofing methods. For example, KURO could have opted for a stealth launch, but this would have only benefited the devs and their friends, allowing those with insider knowledge to buy the token before everyone else. Or, KURO could have done a presale, but again, this would have been unfair for the vast majority of people without insider knowledge.

Instead, we launched the fairest way we could — by providing all information about KURO upfront, including providing the contract address, publishing our black & tan paper explaining the tokenomics and ins and outs of the protocol weeks ahead of launch. The flip-side of taking such a transparent approach is that people who were highly interested in KURO were able to get their clicking fingers and bots ready for launch, and would be able to load up on KURO in multiple sequential transactions (as explained on our website, FAQ, and in the black & tan paper).

Again, we fully appreciate and understand any concerns the community may have about any potential KURO whales. We will continue to be 100% transparent in our approach, and welcome any questions in our Discord. As always, we encourage everyone to do their own research and ape wisely! 🦍

Thanks for reading, and for your interest in KURO! ✨🍓💫

KURO and friends!

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Kuro Shiba (KURO)

Kuro Shiba (KURO)

Kuro Shiba (KURO) is the cutest project on Harmony, aiming to strengthen the Harmony ecosystem through collaboration, innovation, & yield-generating NFTs! ✨🍙🍡