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
Blockchain
In Bitcoin's case, blockchain describes its decentralized, public ledger which contains transactional information.
Immutable
A property characterized by inability to be change and stays unchanged over time.
Wash Trade
Meaningless back and forth trading between a single party with the aim of inflating trade volume.
Altcoin
Coins althernative to Bitcoin
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