What is Octoblock’s Token Tax and How Does It Work?

Octoblock DeFi
2 min readMar 19, 2024

Octoblock token, OCTO, charges a tax of 2% on buys and 2% on sales. This token tax is added to the treasury, which is then used to generate revenue to redistribute back to OCTO holders. Here’s how it works:

Transaction Tax:
When someone buys or sells the token, a tax is automatically applied to the transaction. In this case, a 2% tax is applied to buys, and a 2% tax is applied to sells. These taxes are deducted from the transaction amount before the trade is executed.

After the transaction tax is deducted, the collected fees are distributed to the Multisig treasury.

Automatic and Continuous:
The redistribution process is automatic and continuous. Whenever a transaction occurs, the fees are collected and distributed in real-time to the treasury. This creates an additional income stream for the treasury, that will increase the dollar value of distributions to token holders.

Price Impact:
The transaction taxes can impact the price of the token. When buying, investors need to pay an additional 2% on top of the market price, which effectively increases the cost of purchasing the token. Similarly, when selling, investors incur a 2% fee, reducing the profit they receive from the sale.

This mechanism can create a price floor by discouraging short-term trading and encouraging long-term holding, in addition to encouraging holding to reap rewards from the Nautilus Trove distributions. It also makes sandwich bots ineffective, eliminating negative impact manipulation of the token.

Use Case:
This token tax is used to incentivize long-term investment and discourage speculative trading. It is also used to increase the treasury size over time, increasing the profits generated for OCTO holders.

How To Trade A Taxed Token:
When buying or selling, the token contract itself takes care of any taxation. This means that when using a DEX, users will need to increase the permitted slippage percentage to at least the value of the tax, for example, when buying the tax is 2%, so slippage should be set to around 2.3% or more.

The Future Of The Token Tax:
The token tax is designed to boost early treasury funds with the target or increasing treasury values faster during the project infancy. Once the treasury has reached significant value, a token migration will take place 1-to-1 for a non-taxed token, so that listing on major cryptocurrency exchanges may take place, as many do not support taxed tokens.



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