Warren Paul Anderson: Token Buy-And-Burn Mechanisms Could Damp Volatility Spillovers Into Bitcoin, Ethereum

Token buy-and-burn models could play a significant role in shaping how volatility in smaller cryptocurrencies spills over into major assets such as Bitcoin BTC/USD and Ethereum ETH/USD, according to Warren Paul Anderson, co-founder and CEO of Imua.

When asked whether such mechanisms might amplify or reduce correlations with leading tokens, Anderson explained that outcomes depend heavily on how unlock terms are structured.

"Depending on the unlock terms, you could see either an amplification or a dampening of spillovers into majors. Favorable unlocks may amplify spillovers whereas aggressive locks may dampen spillovers. The token buy and burn mechanism helps to alleviate selling pressure, which would likely dampen volatility spillovers," he told Benzinga.

Anderson also noted that auction-based fundraising mechanisms, such as Imua's newly launched Initial Distribution Auction (IDA), are most impactful for smaller and newer tokens where price discovery is typically less efficient.

The IDA system differs from traditional token launches by allowing market-driven bidding from zero and distributing rewards to outbid participants, encouraging broader engagement while reducing lock-up risks.

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The model channels 75% of winning bids into a buy-and-burn wallet, directly linking liquidity to token fundamentals rather than speculation.

The remaining 25% goes to the project team, a structure that Anderson says is designed to create more sustainable markets.

The approach comes amid growing criticism of high fully diluted valuation (FDV) launches with low float, which often skew supply-demand dynamics to the disadvantage of retail investors.

Imua and its partner GBM argue that auction-based methods not only improve transparency but also set a foundation for stronger long-term token economies.

Hugo McDonaugh, co-founder of GBM said, "Every bid matters, everyone is rewarded, and the market itself sets a fair price."

By combining auction mechanics with buy-and-burn incentives, Anderson suggested that projects could reduce volatility pressures and build token models more resilient to market cycles, potentially lessening systemic risks for larger cryptocurrencies.

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