Token Tax Model Overview¶
1. Transaction Tax Summary¶
| Transaction Type | Goal | Tax Rate |
|---|---|---|
| Buy | Encourage players and investors to buy — lower entry tax promotes adoption. | 2% |
| Sell | Discourage large sell-offs and price dumping through a higher tax rate. | 6% |
| Transfer | Maintain stability for peer-to-peer and in-game transactions. | 2% |
2. Purpose of the Tax System¶
The primary purpose of the transaction tax is to support the game's tokenomics by maintaining a sustainable ecosystem.
Each tax contributes to:
- Ensuring ready liquidity for smooth buying and selling on the market.
- Providing continuous funding for game development, marketing, and community events.
- Maintaining price stability and player incentives within the in-game economy.
3. Tax Distribution Model¶
Whenever a token is bought, sold, or transferred, the smart contract automatically deducts and redistributes a percentage of the transaction according to the following allocations:
| Allocation | Description | Rate |
|---|---|---|
| Liquidity | Adds part of the tax back into the liquidity pool to stabilize the token’s price. | 4% |
| Marketing | Provides funding for promotions, community events, partnerships, and exchange listings. | 3% |
| Reflections / Rewards | Used for in-game rewards, player staking incentives, and DAO participation bonuses. | 2% |
4. Economic Rationale¶
- The liquidity pool ensures that the in-game marketplace remains stable and resistant to price manipulation.
- Marketing funds drive visibility and growth, supporting player retention and long-term project sustainability.
- Reward allocations encourage active player participation by rewarding engagement, staking, and governance involvement.
These mechanisms work together to sustain a healthy token economy that benefits both players and investors.
5. Technical Feasibility¶
This tax model is fully feasible on Polygon (PoS) using a modified ERC-20 smart contract.
The contract can be programmed to:
- Automatically apply varying tax rates depending on transaction type (buy, sell, or transfer).
- Distribute tax portions to predefined wallets or liquidity pools.
- Maintain transparency, with all transactions visible on the Polygon blockchain via PolygonScan.
Example Transaction: Player Buys 600 Tokens¶
Let’s illustrate how the tax system works in practice.
Step 1: Purchase Overview¶
- Transaction type: Buy
- Amount purchased: 600 tokens
- Applicable tax: 2% (buy tax)
Step 2: Tax Calculation¶
- Tax deducted: 600 × 0.02 = 12 tokens
- Net tokens received by player: 600 − 12 = 588 tokens
Step 3: Tax Distribution¶
The 12 tokens collected as tax are automatically redistributed according to the allocation model:
| Category | Allocation Rate | Tokens Received | Purpose |
|---|---|---|---|
| Liquidity | 4 / (4+3+2) = 44.4% | 12 × 0.444 = 5.33 tokens | Adds liquidity to the pool for price stability |
| Marketing | 3 / (4+3+2) = 33.3% | 12 × 0.333 = 4.00 tokens | Supports marketing, events, and partnerships |
| Rewards | 2 / (4+3+2) = 22.2% | 12 × 0.222 = 2.67 tokens | Funds in-game rewards and staking incentives |
Total tax distributed: 12 tokens
Step 4: Result Summary¶
| Recipient | Amount (tokens) | Notes |
|---|---|---|
| Player | 588 | Final tokens received after tax |
| Liquidity Pool | 5.33 | Auto-added for market stability |
| Marketing Wallet | 4.00 | Used for project growth |
| Rewards Pool | 2.67 | Reserved for player incentives |
Step 5: On-Chain Transparency¶
All of the above transfers occur automatically within the Polygon smart contract.
Each step is visible on PolygonScan, ensuring transparency and accountability.