A new Tax proposal

I know generally a tax is frowned upon within the community and I’m not suggesting any taxes within the defrost ecosystem I.e staking/withdrawal/boosting taxes are out the picture here.
The proposal is to involve up to 1% melt sale tax and below I’ll break down the how/why below

  1. On a low volume Sunday melt had $240k worth of volume in 24 hours. Let’s assume here that 50% are buys and 50% are sales. The 50% of 240,000 is around 120,000 dollars. Suppose now we had a sell tax of 1% that would amount to 1200 dollars worth of melt. Keep in mind this is a low volume day.
    Now with that generated income from sales tax we can break it down to streams
  2. 50% of the tax income gets burned and helps combat emissions and make melt more deflationary which will incentivise more interest in platform and current holders to maintain holdings and rewarding them for it.
  3. Add remaining half to protocol owned liquidity for obvious reasons.

I think it doesn’t necessarily have to be as high as 1%, it can be anything from 0.1-0.5%. Anyways the point is at such a low tax rate it will not discourage people from purchasing token nor selling but would create another stream of benefits for the $melt holder.

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Long term, if we would burn a portion of every sale wouldn’t that eventually become very deflationary? AVAX does this but if I understand correctly it is replaced / balanced by generated staking rewards. In MELT it does permanent damage to the fixed supply like if we were to launch gold into space.

While I dont agree with a tax, purely because the cureent perception is that tax is for shitcoins, I also dont agree that burning tokens is inherently bad for the platform. Scarcity = greater value per coin. Metrics like amount required to boost, etc, could be changed if the requirements no longer reflect the supply years down the road.

Avax burn mechanism is different as its due to gas. This is just a tax on sale. And no it’s not like what you described, taxed melt will be taken out of circulating supply and burned. While the other half to protocol liquidity.

Yes I tend to agree that taxes=shit coin. Generally speaking though those taxes tend to be crazy numbers of 10% plus.

However you have to argue in the melt scenario here, tokens like avax, eth, and all major caps have a ‘gas fee’ which gets burned in transactions. Melt does not, therefore it only makes sense if your transacting/selling melt that you should give some back to the community in order to benefit. I think it’s a tough road ahead for the crypto markets as a whole, and added liquidity+more burn pressure+more incentive to hold rather then sell will surely be beneficial. I am not aware how complicated this is in terms of coding the smart contracts etc, but I think a minimal tax is negligible to someone interested in the project.

Additionally, a sale tax for those dumping their reward tokens will benefit the ecosystem as a whole as they are somewhat ‘punished’ lightly for selling compared to staking and earning extra yield. All in all this will benefit the melt holder and I genuinely think with the bear market looming we must act fast.