August 16th, 2021
A First in the World DEX on BSC with customizable transaction taxes and automated fee distribution to benefit listed tokens in ways never before seen in DeFi
What the hell does that all mean you ask!?
Well, before we get into the good stuff, let’s start by talking about transaction taxes (tx tax):
Tx taxes are fantastic. They can add in-built deflation to tokens through automated burning and other hugely appealing features like liquidity acquisition and lockup (automatically increasing the trading liquidity available), and sending some tokens directly to treasury or charity etc. It’s of course hard to do all that without some downside though, and this is where we found one of the major problems that we wanted to solve…
Because of the way the tx taxes are built directly into the token contract, they’re always there, permanently, no matter what transaction we want to make. So not only are we paying the tx tax when we make a trade with a specific token, we also pay it when we send those tokens from one wallet to another, or create and break LP tokens etc.
This can make it dangerous for beginners who don’t know about the pitfalls and frustrating for stakers who have to pay 4 separate tx taxes if they want to buy, create LP, break LP and then sell a token — that’s 20% of the total token value they lose if they do that with a token with a 5% tx tax!
Most of all though this makes it considerably challenging for tokens with transaction taxes to get listed on CEXes (centralized exchanges) because the exchanges have to consider the tx tax every time they process a withdrawal or transfer funds between wallets internally. Many CEXes just outright don’t list tokens with tx taxes — especially most of the big ones
Obviously we’ve solved this problem, otherwise I wouldn’t have written all this, but I’m gonna save “the how” for a little later. Before that I want to quickly talk about the relationship between a project with a token to list, and the DEXes that they can list on…
We’ll use PCS (PancakeSwap) as an example because most people in DeFi know them — and just to be clear, we love you PCS! But we had to have an example and you’re popular so you’re it ;)
On PCS, when someone makes a trade, there’s a 0.25% trading fee, which is broken down as follows:
- 0.17% — Returned to Liquidity Pools in the form of a fee reward for liquidity providers
- 0.03% — Sent to the PancakeSwap Treasury
- 0.05% — Sent towards CAKE buyback and burn
This means that of the total 0.25% fee, the liquidity providers get 68% of it (0.17% out of 0.25%) returned to them as added value to their staked LP token. Now this is a great system of course otherwise PCS wouldn’t have over $4B market cap! But the swap fee itself doesn’t do a lot for the token holders who aren’t keen to risk impermanent loss to stake their tokens, nor does it directly benefit the team behind the listed token other than providing them a DEX for their token to be traded on
So there are two problems that we wanted to solve, and solve them we have!
How, you ask? Good question! Allow me to explain:
BUSTA DEX has built all of the tx tax functionality into the router of our AMM!
Basically, all the stuff that tx taxes can do that I mentioned above like auto-burning, liquidity acquisition etc. can be done at the router level for tokens traded on our DEX. Meaning that a token that currently has no tx tax features built into its contract could list on our DEX and enjoy all the benefits of a customizable and future-adjustable tx tax, without being stuck permenantly with all of the associated downsides!
Also, a token that already has a tx tax in it’s contract could still list with us and enjoy further customization with the swap fee — or simply choose a 0.03% swap fee with no additional benefits if their built-in tx tax and own staking platform already has enough in it to incentivize LP providers
To drill down further, tokens like SKILL, MIST or TLM, could put their liquidity on our DEX and choose exactly what percentage tx tax they want to have on trades of their token, and how that collected tax would be used
Using the above tokens as examples, a few simple options would be:
- 0.3% tx tax on all trades of SKILL, split so that 0.1% goes to burning SKILL, 0.17% is returned to the liquidity providers just like on PCS, and the remaining 0.03% goes to the BUSTA DAO — the DAO’s gotta get something right ;)
- 2% tx tax on all trades of MIST, split so that 1% goes to burning MIST, 0.6% goes to additional liquidity acquisition and lockup, 0.3% gets sent directly to the MIST team’s treasury wallet, and the remaining 0.1% goes to the BUSTA DAO
- 10% tx tax on all trades of TLM, split so that 2% is returned to the liquidity providers, 7.95% goes to additional liquidity acquisition and lockup, and 0.05% goes to the BUSTA DAO
Those are all reasonably standard in regards to what other projects are doing in DeFi these days, and if that last one looks a little crazy, I can assure you that it is! But SafeMoon has a 10% tx tax and they’re at a $1.3B market cap right now so I guess it worked!
Further to the ability to customize the tx tax and split, these tokens wouldn’t have to stay with those amounts permanently like they do if they have these values hard-coded into the token contract — with our solution the variables are fully adjustable by some simple updates to the unique smart contract for each token.
Meaning, if TLM actually decides that a 10% tx tax and the above split and later decide it was a ridiculous idea, they could simply request to have it reduced or adjust the split as they please. Existing tokens with tx taxes built-in can’t do this without re-issuing the token, and trust me, no one wants to go through that if they can avoid it!
Won’t this all be impossible to manage at scale!?
Enter, BUSTA DAO:
Yes of course if we had to manually approve every listing and input custom values etc. it would be a full time job for our whole DEX team, that’s why we’re building our DAO to handle all that
Once the DAO is in place, any new listing requests from projects will be made by them submitting an application form and specifying some variables, including those mentioned above (tx tax amount and split etc.). Then the community will approve or reject the listing depending on what the lister has submitted (including what % of the split the DAO gets) and if their project meets our community’s standards
We’ll be handling the first listings manually until the DAO is ready, and then it takes control and we can focus more on further development. This helps to provide an extra level of safety and morals around new projects listing because an army of BUST community project scrutineers will be performing due diligence on new projects to help reduce the amount of scam and rug projects that get through. By requiring projects to be approved by the community first instead of being able to list freely, we are doing our part to make DeFi a little bit safer
If it’s so groundbreaking, why hasn’t it been done before!?
Honestly we’re surprised it hasn’t. All the technology is right there and the problems have been around for a while now. Are we really that innovative? I guess we’ll find out soon
Of course with any new technology or innovative iteration of existing technology, there are always going to be detractors. So in the interest of clarity and assuaging the more skeptical and/or confused, here’s a quick Q&A to finish things off:
Q: Why would an existing project move their liquidity to BUSTA SWAP?
A: Many existing projects regret not adding a tx tax at the launch of their token, or didn’t want to implement it because of the various downsides it brings when hard-coded into the token. Our solution provides the best of both worlds and once existing projects hear what could be happening if they list with BUSTA DEX, it will be hard for them to look at their trading volume and ignore the fact that that volume could be burning their token etc. We’ve already got a few partners lined up and we’re expecting many more to come once we’re live and the public can see the automated burns working
Q: Is it really that beneficial when compared to just sticking with a traditional DEX?
A: Yes. Taking MIST for example, their 24hr trading volume was about $11M recently on PCS, which meant $27,500 worth of trading fees that went through the PCS fee split. If that volume was with us and the fee was the same, that $27,500 would have gone through whatever split MIST decided. And if they wanted a 1% tx tax instead — which remember is not that crazy considering SafeMoon has a 10% tx tax — then they would have generated $110,000 in fees in a single day. Now imagine they chose to have 0.97% from that fee going to burning MIST… that’s $106,700 worth of MIST burnt… daily…. Tell me that’s not enticing
Q: What about the users who are used to trading on PCS and other popular exchanges?
A: These days, many DeFi traders jump around from DEX to DEX to buy the token they want wherever it’s the most liquid, just like they do with CEXes. Most users don’t have a problem with trading on a new DEX. For bigger projects that like our concept but are concerned about it being difficult for their users, it’s easy, just list on multiple DEXes. For the right project, they could even list their token with a 0.1% tx tax on our DEX and as long as they bring enough liquidity, we could end up with the cheapest swap fees for their users on all of BSC
Q: Will you offer BUST as farming rewards for non-native token pairs?
A: Possibly, but only if it’s in the best interest of BUSTA, and here’s why:
Most DEXes use an inflationary token model with perpetual emissions so they can offer rewards for liquidity providers to attract new projects to list with them. This is great for yield hunters and a few DEXes manage to survive the constant sell pressure but long term it usually leaves the DEX’s native token price on a constant downward trend as they try to fight the inflation. The liquidity providers eventually pull out in favour of better yield elsewhere, leaving the DEX with a ruined token price and very little liquidity to attract traders
Our killer feature is our customisable smart contracts and we’re confident that they will draw a lot of liquidity and trading volume to us. That said, we’re not opposed to offering BUST tokens as rewards for non-native pairs but only if it’s clearly in the best interest of the BUSTA ecosystem as a whole, and not just a way for a short term gain of liquidity until the yield hunters have sold off all the BUST and crashed the price
So, to close this out. If any of these apply to you:
- you made it this far and you’re still not convinced but want to know more
- you’re involved in a project and want to talk about listing
- you think we’re completely crazy and want to come tell us how wrong we are
… then come over to our Telegram and let’s chat ;)