We’ve seen this in Tokenomics of other tokens; However, after experimenting with it for some time, we have discovered that it has more cons than pros, it might slightly inflate the token since we will be adding liquidity to one side only as opposed to the whole pair, this is not effective especially when two people send transactions to each other, then Liquidity fees will go to the token only and make it weaker against the paired one.
Not to mention that with this trick, the pool will generate LP tokens to the owners that will give them power to rug pull in anytime in the future, we are totally trying to avoid such tricks.
An example:
Someone sells 100 FALAFELs
10 deducted for this liquidity tax
5 converted to BNB, and the other 5 remains as FALAFEL
(This is done because you need a pair to put back this into liquidity pool)
But wait..how are we converting FALAFEL to BNB? We are using the BNB from the same BNB pool! We are not getting it from outside..it is taken from our pool..so what’s the point? Not just that, we are also paying extra transaction fees for this conversion to happen, and we are increasing FALAFEL technically, just the one side of the pair.
The tax is back as more FALAFEL against the BNB, that’s the end result for such “Automatic LP” or “Liquidity Tax”.
In summary:
We are taking BNB from the pool and putting it back..and we are paying extra fees to achieve nothing! But actually increasing FALAFEL against BNB.
That’s why I said, it looks good..but when you understand it deeply..it’s pointless and it’s actually more harmful than being just pointless. Any other type of tax will do the work more efficiently.
Alternative:
We will use a percentage from our marketing wallet pair it with the external Ad revenue from our games, and add it into our pool.
Other options will be utilised, such as upcoming games in-app purchases revenue, staking pools and any potential grants or crowdfunding the project could have.