The Animal Farm applies very interesting tokenomics. All mechanics are focused on incentivising people to not sell the native token but instead accumulate them in order to earn BNB and BUSD dividends. Today we saw an interesting metric showing that one of the anticipated mechanics for the DOGS token is coming into play.
In this article we will briefly go over the most important aspects regarding the DOGS token and we zoom into the taxes and dividents associated with the Dog Pound to highlight this interesting development.
DOGS token mechanics
Let me already refer you to the official Wiki to find the detailed description of all that is related to the DOGS ($AFD) token. In this section we will only cover the most important parts for the sake of this article.
The DOGS token is one of the two native tokens of the Animal Farm, as you might be aware of already. It can be earned as a rewards from the Farms and Pools offered on the platform and it can be staked in the so called Dog Pound.
There are two mechanics regarding this token and the Dog Pound, which play an important role in the way people can deal with the token. First, there is a BNB Vault which pays out 3% of its balance every day. Second, there is the tax of 90% on the token in case someone sends or sells it.
Dog Pound BNB Tax Vault
On the Dog Pound page you can find the BNB in Vault section which shows the total amount of BNB and its corresponding USD value sitting in the vault. 3% of this amount is paid out every day to the Autocompound and Linear pool stakers. The higher the number, higher the daily payout of course.
More about this later.
Tax and tax reduction
The DOGS token start with 90% tax on sells and transfers. When someone stakes the token in the Dog Pound, it can earn tax reduction at a rate of 1% a day. All the way up to a max of 84% after 84 days.
In addition to this single stake tax reduction, one can also build up wallet loyalty which gives 2% tax reduction per month in case 10 DOGS are staked. Taking that into account one can decrease the tax of 90% to the maximum low of 6%.
The DOGS mechanics
The BNB Vault collects BNB from taxes paid on DOGS sells and transfers. Following the Wiki:
The tax that AFD swaps for BUSD and BNB breaks down as follows:
- 3% is burned
the rest, from 3% to 87% according to loyalty scores:
- 1/3 is swapped for BUSD and sent as reward to Pig Pen
- 2/3 is swapped for BNB and sent as reward to DOG POUND contract.
The taxes on DOGS sells and transfers end up in the BNB Vault which pays out 3% of its value to the stakers.
How to grow the balance and in turn the payout?
So as long as the 3% of the total balance which is paid out every day is more than the inflow of taxes, the balance will decline. And obviously, the other way around, if more transactions happen which generate more tax inflow into the BNB vault, this could outpace the payout. Which in turn lead to a higher daily reward per token.
Tax reduction turning point
Now let’s go back to the tax reduction. The longer one stakes his tokens the lower the taxes eventually will be. But what is the moment that someone is willing to sell his tokens and take the taxes in relation to the token price?
This will be different per person. Therefore, now that we are progressing over time the taxes are getting lower for the first day stakers and we may see more sell transactions.
Although it could lead to lower token prices, it also means taxes are flowing into the BNB vault increasing the daily payout.
BNB Vault analytics
Now this is where it gets interesting. Looking at the analytics of the BNB Vault contract we can see two interesting things.
How to get here?
- Go to Tokens and Contracts at the official Wiki site
- Click the address behind Dog Pound Rewards vault BNB which will take you to the contract details on BSC scan
- Select Analytics and BNB Transfers as displayed in below image
First, if you take the entire timespan from day one until now we can identify three big black bars. Those are BNB injections by the team into the BNB Vault. This is the initial capital to start of the Dog Pound.
As you can see at the bottom of the screenshot:
- Blue is transfers out of the contract: daily payouts
- Black are received transfers into the contract: injections or taxes
Now if we zoom in from November 12th until now the graph will look more clear because it doenst include those big unnatural bars.
On the last day of this view we can see that the inflow outpaced the outflow for the first time. Meaning more taxes were collected than dividends were paid out!
Taxes can only be collected as a result of sells and transfers as we learned. Looking at the DOGS chart we can see a price decline at December 12th.
Wrapping up
So it will be interesting to see how this develops the coming weeks. More and more people might get into tax reduction levels which they are okay to take on a sell of their tokens. How will they deal with that? What will be the impact on the token price? What will be the impact on the BNB Vault and the daily divident payout of the Dog Pound stakers?
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References
Website:
Wiki
Telegram channel The Animal Farm:
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