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
Ethereum Virtual Machine (EVM)
Ethereum Virtual Machine (EVM) is the environment in which all smart contracts are executed.
State Channel
Secondary payment channel occuring off-chain
Portfolio
A portfolio consists all of your current crypto holdings in one place.
Decentralized Applications (dApps)
Applications that run on decentralized peer-to-peer networks such as Ethereum.
Hungry for more knowledge?
Back to Glossary or Subscribe to our newsletter.