Tax Token V1

Currently, Tax Token is only enabled on BNB Chain, XLayer and Monad. And this doc briefs the Flap Tax Token V1.

Overview

Flap supports Tax tokens. Since V5.4.0 (on BNB Chain & XLayer) , tax is not only applied to migrated tax tokens but also the ones that are still on the bonding curve.

When a tax token has already migrated DEX, it will charges a tax on every trade through the main pool and accumulate the tax in the token first. Once the accumulated token amount reaches a specifiy liquidation threshold, an automatic liquidation happens to sell the token for quote and sent the the beneficiary through the Tax Splitter. (Check below to learn more detaills)

When a tax token is still on the bonding curve, we don’t implement it as a “real tax” like a migrated one. To make it simple and easy to do an off-chain quote, we implement it as an extra fee added upon the current bonding curve fee.

For example:

• For a non-tax token, the current bonding curve fee on BNB chain is 1%.

• For a token with a tax of 3%, the effective trading fee becomes: 1% + 3% = 4%

• For a token with a tax of 1%, the effective trading fee is 2%

Tax Splitter

To avoid DOS, we do not liquidate and distribute the Tax in the tax token directly. For each tax token, a "Tax Splitter" contract will be deployed on creation. Both the liquidated Tax and the Tax on the bonding curve will be directly sent to the "Tax Splitter" first. Then anyone could trigger the tax distribution by calling the "Tax Splitter" contract's split method. However, for most of the time you don't need to manually call "Tax Splitter" yourself , Flap will run a bot to automatically trigger the distribution when needed.

FAQ for Integrators

I am using quoteExactInput to get a quote, do I need any change?

No. You don’t need make any changes. The quoteExactInput method will work as expected. For tax tokens, it will return the new quote result.

I am doing an off-chain quote, how can I change my current implementation?

💡

If you are not able to change your off-chain quote logics, you can also raise your slippage based on the tax rate of a token.

We assume that you have implemented your off-chain quote logic based on https://docs.flap.sh/flap/developers/trade-tokens#how-to-do-an-off-chain-quote. In https://docs.flap.sh/flap/developers/trade-tokens#how-to-do-an-off-chain-quote, we have two examples:

• Swap 1 BNB for token

• Swap 1M token for BNB

Here are the changes:

• Instead of using the previous fixed 1% fee rate, we now use a new fee rate for tax token.

• We can get the token’s tax rate using either getTokenV6 or getTokenV7 , Or we can index Portal’s FlapTokenTaxSet event to get the token’s tax rate. (Note that FlapTokenTaxSet is optional, if not presented, the tax rate is 0 by default).

//// Values From your Indexer or getTokenV6/V7

// current circulating supply 
// This can be obtained from getTokenV6 or the FlapTokenCirculatingSupplyChanged event.
let curr_circulating_supply;  
// The circulating supply threshold for the token to be migrated to DEX
// Typicially, this is 800M 
// This can be obtained from getTokenV6 or the TokenDexSupplyThreshSet event. 
let dex_supply_threshold = 800_000_000;
// The token's Tax rate 
// This can be obtained from getTokenV6 or the FlapTokenTaxSet event from the Poral 
let tax = 0; 

// The input bnb amount 
let input_bnb = 1; 

//// Compute the Quote 

// We cannot buy more than the dex_supply_threshold on the bonding curve 
// The max_reserve is the cap of the reserve 
let max_reserve = curve.estimateReserve(dex_supply_threshold);
// We estimate the current reserve from the circulating supply  
let curr_reserve = curve.estimateReserve(curr_circulating_supply);

// CHANGED!!!! 
// protocol fee on BNB chain is 1% 
let fee = 0.01 + tax; // 1% fee  + tax 

// Charge a 1% fee on the input bnb. 
let input_after_fee = input_bnb * (1 - fee); 

// If the user pays more than required, we will automatically refund the user 
let new_reserve = curr_reserve + min(input_after_fee, max_reserve - curr_reserve);
// estimate new circulating supply from new reserve 
let new_circulating_supply = curve.estimateSupply(new_reserve);

// The diff of circulating supply is the output token amount 
let output_amt = new_circulating_supply - curr_circulating_supply; 

Similarly for the sale:

//// From Indexer Or getTokenV6/V7 

// current circulating supply 
let curr_circulating_supply;  
// The circulating supply threshold for the token to be migrated to DEX
// Typicially, this is 800M 
// This can be obtained from getTokenV6/V7 or the TokenDexSupplyThreshSet event.
let dex_supply_threshold;
// The token's Tax rate 
// This can be obtained from getTokenV6 or the FlapTokenTaxSet event from the Poral 
// eg.  this token has a 3% tax 
let tax = 0.03; 

// BNB fee 
// protocol 1% , tax 3% 
// Effective fee: 4% 
let fee = 0.01 + tax = 0.04;

// The input token amount
let input_token_amt = 1_000_000; 

// estimate the current reserve 
let curr_reserve = curve.estimateReserve(curr_circulating_supply);

// estimate the new resereve 
let new_reserve = curve.estimateReserve(curr_circulating_supply - input_token_amt);

// The diff is the output amount without deducting the fee 
let output_eth_before_fee =  curr_reserve - new_reserve;  

// we take 1% fee from the quote token 
let output_eth = output_eth_before_fee * (1 - fee);