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
Margin Trading
It is a way of investing by borrowing money from a broker (or in crypto, an exchange or platform) to trade
Non-custodial
It is a decentralized type-of-wallet, where the users owns its private keys.
Unspent Transaction Output
(abbv. "UTXO") Coins that are unspent in the wallet. UTXO virtually represents the cryptocurrency one own in the wallet.
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