Reflections (base)

Reflections work by charging a tax fee (usually in percentages) to each transaction and distributing the fee to all token holders according to the percentage of assets they are holding. Holders do not need to stake or wait for the fee to be delivered. Fees are awarded by smart contract and are in most cases immediately reflected in the holder’s balance as PTC tokens. There is no action required at your end other than to keep the token in a wallet that you control.

The reflection concept is volume-dependent. It means reflections work automatically in a descending order. Larger amount bag holders get larger amounts and smaller bag holders get little and sometimes none. This mechanism alleviates the negative sell pressure on the token caused by early holders liquidating their holdings. The reflection mechanism also incentivizes holders to retain their tokens in order to earn larger returns that are proportional to the holder’s token holdings. The reflection system actually doubles the profit for holders that keep their tokens the longest.

Reflections serve a dual purpose for holders by mopping up tokens from both buyers and sellers (Burning and Transfering as well), and adding them to the liquidity pool, to establish a stable price floor for the token. Secondly, the penalty function can be used as an arbitrage-resistant mechanism to ensure that the token’s volume remains stable as an incentive for holders. In principle, the additional liquidity pool provides stability by adding the ‘tax’ to the token’s total liquidity, therefore raising the token’s overall liquidity and sustaining its price floor. Lastly, the burn function serves to create scarcity resulting in a decrease in token supply.

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