Since the launch of The Animal Farm, investors have been able to stake their DOGS ($AFD) tokens in the so-called Dog Pound. As a result of staking, tax reduction was earned of the staked tokens, growing every day.
As a DOGS ($AFD) token holder (and staker) myself I’m really curious what will happen once the max tax reduction of 86% is reached, and you might probably be wondering the same.
In one of my previous articles (The Dog Pound Mechanics are Coming into Play!) we discussed the tax mechanics regarding the DOGS token more extensively, as well as the implications of those. Now, in this article, I will go into the potential effects of the “Max Tax Reduction” event which will occur in 4 days already!
Max Tax Reduction
First, let’s briefly explain what we mean with the “Max Tax Reduction” event. From the tokenomics regarding the Animal Farms DOGS token we learned that a DOG token will be charged with 90% tax by default on:
- Sell AFD
- Transfer AFD
Stake Related Tax Reduction
However, the 90% tax can be reduced over time by staking your token in the Dog Pound on the platform. Depending on which pool is used to stake in, the tax will reduced daily by either 1% (Autocompounding pool) or 0.75% (Linear pool).
Important to note is that the earned tax reduction is assigned to the specific staked token. Each new stake will earn its own tax reduction. Which means that the collected tax reduction is only applicable for the tokens in that specific stake. As you can see in the below example.
Wallet Loyalty Tax Reduction
In addition to the stake related tax reduction, there is a so called Wallet Loyalty score which earns an additional tax reduction. 2% tax reduction is earned on wallet level for each 30 days when staking at least 10 DOGS tokens.
On wallet level means that the earned reduction is applied on all DOGS tokens which are sold or transferred from that particular wallet.
Max Tax Reduction
The maximum reduction which can be earned is 84%. In other words the lowest tax rate which can apply for a given DOGS token is 6%.
Considering the launch date of the Animal Farm, in particular the Dog Pound, and the abovementioned ways of collecting tax reduction, it means that the max tax reduction can be reached at the 20st of January 2023. For those who deployed their first stake of DOGS tokens in the Autocompounding Dog Pound right at launch on November 1st:
- 2x 30 full days went by: 4% wallet loyalty tax reduction
- 80 days went by: 80% stake related tax reduction
90% minus, 4% minus, 80% leave to 6% tax left!
Max Tax Reduction event is Incoming!
Now What?! Sell-off or Pump?
Since we are getting closer and closer to that event it will be interesting to see how the investors and community will deal with this situation.
Now that people have the opportunity to sell at the lowest tax possible, I’m curious:
- Will they sell?
- Or will they keep holding and staking?
- And if there won’t be a sell-off, would that encourage the investors who are still on the sidelines to enter and move in fresh capital?
1. Haters Are Already Out!?
Given the history of the Animal Farm dating back all the way to its launch last year January, followed by the pause of the platform and the long wait before the relaunch, we know some people got upset and were planning to leave as soon as it would be possible.
The question is, did they already leave? We did see big sell-off for $AFD back in December while the max tax reduction at that time was around 40% or so.
Fun fact, 50% of the value of the token at that time would have given about the same amount of BUSD you would get when you sell $AFD now at current prices with only 6% tax charged.
Anyway, let’s assume there are some people still waiting for the full tax reduction before selling. It will be interesting to see if that would have a significant impact on the price of DOGS.
2. Price Continues Ranging
Another option could be the those particular frustrated sellers are out while buyers were already doing their thing. Nothing really changes considering price action as a result of the Max Tax Reduction event.
3. Smart Money is Awaiting the Final Sell-off to Fill Their Bags Cheap
For the final scenario I’m assuming that I won’t be the only one who can reason like this given the tokenomics and mechanics at play. To be honest, I’m not considering myself to be part of that Smart Money group (YET!). I guess there could still be smart investors who are patiently waiting for the effect of this event.
If there will be a sell-off as a result of it, they can scoop up some nice cheap tokens. If price will move up again instead, they get the confirmation for the bottom and are still able to step in on relatively low prices. Especially when you compare it to the prices at launch.
Wrapping up
As said at the start of this article, personally I’m interested to see what will happen, you might as well. Good for us, it really is around the corner so we don’t have to wait that long anymore. Another good thing, there is no release needed for the event to happen… you know what I mean ;)!
My Referral
If you decide to invest in The Animal Farm yourself, after having done your own research, please consider using my referral link. It’s very much appreciated, thanks!
References
Website:
Wiki
Telegram channel The Animal Farm:
Telegram channel Forex Shark Calls:
Disclaimer
DYOR/NFA
Nothing in this article is to be considered as investment advice. The author or the publication cannot be held responsible for any investments, profits or losses you may incur as a result of this information. The article may contain affiliate links. Always DYOR.
More From MDSquared?
Become a Medium Member
Tired of hitting the limit on free articles when browsing Medium? Upgrade to a Medium Membership and Access Unlimited Content.
