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Tx taxes are fantastic. They can add in-built deflation to tokens through automated burning and other hugely appealing features like liquidity acquisition and lockup (automatically increasing the trading liquidity available), and sending some tokens directly to treasury or charity etc. It’s of course hard to do all that without some downside though, and this is where we found one of the major problems that we wanted to solve…
Because of the way the tx taxes are built directly into the token contract, they’re always there, permanently, no matter what transaction we want to make. So not only are we paying the tx tax when we make a trade with a specific token, we also pay it when we send those tokens from one wallet to another, or create and break LP tokens etc.
This can make it dangerous for beginners who don’t know about the pitfalls and frustrating for stakers who have to pay 4 separate tx taxes if they want to buy, create LP, break LP and then sell a token — that’s 20% of the total token value they lose if they do that with a token with a 5% tx tax!
Most of all though this makes it considerably challenging for tokens with transaction taxes to get listed on CEXes (centralized exchanges) because the exchanges have to consider the tx tax every time they process a withdrawal or transfer funds between wallets internally. Many CEXes just outright don’t list tokens with tx taxes — especially most of the big ones.
We’ll use PCS (PancakeSwap) as an example because most people in DeFi know them — and just to be clear, we love you PCS! But we had to have an example and you’re popular so you’re it ;)
This means that of the total 0.25% fee, the liquidity providers get 68% of it (0.17% out of 0.25%) returned to them as added value to their staked LP token. Now this is a great system of course otherwise PCS wouldn’t have over $4B market cap! But the swap fee itself doesn’t do a lot for the token holders who aren’t keen to risk impermanent loss to stake their tokens, nor does it directly benefit the team behind the listed token other than providing them a DEX for their token to be traded on.
BUSTA DEX has built all of the tx tax functionality into the router of our AMM!
Basically, all the stuff that tx taxes can do that I mentioned above like auto-burning, liquidity acquisition etc. can be done at the router level for tokens traded on our DEX. Meaning that a token that currently has no tx tax features built into its contract could list on our DEX and enjoy all the benefits of a customizable and future-adjustable tx tax, without being stuck permenantly with all of the associated downsides!
Also, a token that already has a tx tax in it’s contract could still list with us and enjoy further customization with the swap fee — or simply choose a 0.03% swap fee with no additional benefits if their built-in tx tax and own staking platform already has enough in it to incentivize LP providersTo drill down further, tokens like SKILL, MIST or TLM, could put their liquidity on our DEX and choose exactly what percentage tx tax they want to have on trades of their token, and how that collected tax would be used.
Those are all reasonably standard in regards to what other projects are doing in DeFi these days, and if that last one looks a little crazy, I can assure you that it is! But SafeMoon has a 10% tx tax and they’re at a $1.3B market cap right now so I guess it worked!
Further to the ability to customize the tx tax and split, these tokens wouldn’t have to stay with those amounts permanently like they do if they have these values hard-coded into the token contract — with our solution the variables are fully adjustable by some simple updates to the unique smart contract for each token.
Meaning, if TLM actually decides that a 10% tx tax and the above split and later decide it was a ridiculous idea, they could simply request to have it reduced or adjust the split as they please. Existing tokens with tx taxes built-in can’t do this without re-issuing the token, and trust me, no one wants to go through that if they can avoid it!