COFFIN Transfer Tax/Burn
This makes COFFIN supply decrease and keep its price.
When CoUSD price is below peg, there is an opportunity to buy CoUSD and redeem CoUSD for arbitrage.
The burning mechanism takes CoUSD out of circulation thus increasing its value.
At the same time, there is a tax involved in the transfer the COFFIN token. The price COFFIN has the potential to increase due to supply that is burned discouraging users from selling COFFIN and critically affecting the price.
To be clear, there is no tax to mint, redeem, LP-ing, or stake COFFIN. There are some exceptions/whitelist. On the other hand, Withdraw tokens from LP might be tax occurs when CoUSD price is below peg.
When CoUSD > 1 USD equivalent, there is no transfer tax.
When CoUSD < 1 USD equivalent, users should pay tax when users transfer/sell. The tax ratio formula is as follow.
is the price of coUSD
is the adjustment value. it's 2000000 by default.
is the adjustment value. it's 4 by default.
is always set to 0.05% 1% by default. ( please read this announcement. https://coffinfinance.medium.com/change-settings-trying-to-prevent-bad-arbitrage-loop-20df453d6da4 ) However, the maximum tax is capped at 20%.
The table below lists the tax ratios previously referenced.