Looper Finance Docs

Tax System

Why does the protocol use a Tax System?

In order to sustain the protocol with ample resources to upkeep liquidity, treasury and hedge against inflation, we've included taxes into our protocol.

What are you taxed on?

You're taxed every time you buy, sell or transfer your LOOP Tokens.
The stock taxes are as follows:
  • 13% buy tax
  • 20% sell tax + dynamic tax (25% is the optional MAX sell tax limit hard coded into the protocol. Meaning, we can't increase the sell tax to 100%, enabling a rug pull and prevent Loopers from selling.)
  • 13% wallet transfer + dynamic tax Contact us through Discord for a one-off wallet transfer without any tax.

Where do the taxed tokens go?

The stock taxes are always fixed to one destination, in fixed amounts.
For buying & selling (each Loop):
  • 5% Buy & Sell Tax to Liquidity Pool: Ensures ample liquidity when buying or selling.
-->Before Phase C:
  • 8% Buy & 15% Sell Tax to Treasury: Hedges against volatility in the market to ensure stability in price of LOOP Tokens. A small portion of the Treasury will also be used for airdrop gas fees only in Phase B.
-->From Phase C:
  • 8% Buy & 15% Sell Tax to Vault: Used for growth, investments and giveaways based on community votes.

The issue with conventional taxing

While taxing the protocol at a fixed amount has an effect on sell pressure, a lot of whales in the protocol can afford to lose some of their tokens when doing price manipulation. This causes the protocol to have massive price volatility which whales use to shake off retail to buy a bigger share in the treasury. This causes the protocol to not only become unsustainable, but also unfriendly to the average investor, who makes the core of every project. To mitigate this problem, we've implemented the Dynamic Tax.

Dynamic taxes

What are Dynamic Taxes?

Dynamic taxes are an innovative concept created by the Looper Finance Team, which aims to minimize price manipulation by taxing sales/wallet transfers additionally based on how big of a share the holder has in correlation to the LP of LOOP Token. This means that somebody with a lot of tokens in the ecosystem cannot dump the market without leaving a share of it in the hands of the community, making future attempts harder and harder. How many LOOP Tokens you hold is taken into account when calculating how big of a share of the LP you hold. For every 1% that you hold, the tax is increased by 5% until there's a total sell tax of 70%.
What is Dynamic Burn?
New Dynamic Tax & Dynamic Burn calculation breakdown: (80% to Treasury + 20% Burnt)
  • 1% of LP - 5% tax (4% to Treasury + 1% Burnt)
  • 2% of LP - 10% tax (8% to Treasury + 2% Burnt)
  • 3% of LP - 15% tax (12% to Treasury + 3% Burnt)
  • 4% of LP - 20% tax (16% to Treasury + 4% Burnt)
  • so on and so forth.
This tax does not affect the ordinary buyer because of the sheer volume of LP one would need to have to make such a share possible.

Why did you implement this tax?

Previous rebase tokens have been repeatedly manipulated, leaving the rest of the community with losses that cannot be recovered through simple staking. We're dealing with the APY issue through taxes. We believe that, whereas the other protocols believed that blacklisting had valid justification, we do not intend to do so. So, thanks to the concept, we're adding on top of taxing entry and exits by innovating the mechanic by creating tax brackets to reduce the frequency of these problems.