Buy and Sell Taxes
No one likes paying taxes, and everyone likes “free” money. If only it were so simple. First and foremost, it is important to understand that initial APY offerings in the millions and trillions are a marketing tool. They are simply not sustainable over the long term. It is a visual marketing tool used to entice new users into the ecosystem to build a brand and increase treasury reserves.
If sustained, too many tokens are minted creating excessive selling pressure and reducing the treasury runway. If cut, short-term thinkers will get frustrated and move on to chasing the next big thing. It’s a “Catch-22” situation that puts protocols at risk of entering a death spiral. Whilst simply forking OHM provides competition within the marketplace, it does lead to a lack of innovation.
In spite of a (-3, -3) outcome being bad for everyone involved, markets have shown us time and again that many participants will act irrationally to their own detriment and exit at a net loss. Due to the volatile nature of crypto markets and with many inexperienced actors, this risk to the ecosystem should not be understated.
But what if we told you that we’ve found a potential solution to this? A way to further disincentivize sellers whilst at the same time rewarding holders. Yes, it is through taxes. Taxes that are redistributed to those that provide the most value to the system, further encouraging a positive sum outcome for holders and strengthening the liquidity of the protocol.
We have added our innovative [220.127.116.11] tokenomics to the equation in order to make long-term, high yield staking, and cross-chain Farming-as-a-Service (FaaS) truly sustainable. As with CCF, there will be a 12% tax on all buys and sells of the D3 token based on our [18.104.22.168] model. These tokenomics also offer additional benefits to both CCF and D3 holders.
- 3% is automatically routed to burn DEFI to continuously manage inflation
- 3% is automatically routed to the discretionary buyback wallet to control excessive inflation
- 3% goes towards rewarding DEFI stakers by way of BNB reflections
- 3% auto buys CCF, benefiting the treasury, and benefitting CCF holders with reflections
This adds an additional layer to the OHM game theory that makes it even more sustainable. Users must pay a 12% tax when buying into the ecosystem (incentivizing a buy and hold approach), whilst sellers are punished for leaving the system, paying another 12% tax on exit. Whether you buy or sell, your actions are benefitting the ecosystem, creating a far more sustainable model.
The first layer of D3 Protocol's new and improved game theory
Taxes are a necessary addition to the OHM model in order to achieve long-term sustainability. Beyond sustainability, the taxes enable the protocol to offer consistently high APYs, keep inflation under control, and run an auto-investing, auto-compounding treasury.