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
Mempool
It is the abbreviation of Memory Pool. Set of unconfirmed transactions in a blockchain
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A term used to describe the situation a single strategy which requires consensus from all members within a group who cannot be trusted or verified
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Dump
A common term used to describe downward market movement, or to describe the action of selling an individuals holdings.
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