Buy/Sell Tax
By CoinGecko | Updated on Feb 21, 2022
It is possible to code a smart contract token to have an innate on-chain "tax" whenever someone wants to buy or sell the tokens. The way it works is that a percentage of the tokens being bought or sold is transferred to a preset address - essentially "taxing" the buyer and seller and thus discourage wash trading. However, this code function is can be abused where the tax rate is unreasonable, making it a Honeypot.
Related Terms
Seed
A value used to initiate generation of pseudorandom number, ususally a string of 12 commen English words.
Public Blockchain
An open sourced blockchain where participation is public and permissionless
Wei
The smallest fraction of an Ether, with each Ether to 1000000000000000000 Wei.
Market Taker
Participant of the market who buys and sells from currently existing orders
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