Tax-Friendliness

A common trend for tokens in 2021 was to introduce a tax on transfer.

The tax is removed during the swap process, and repurposed under various accounting schemes (sometimes increasingly bizarre and complex, as seen in low-fee "blockchains" like BSC).

While UniSwap v3 was unable to even support taxed tokens, we also observed frequent breakage of the UniSwap frontend. As it was updated and given smarter swap routing, the taxed tokens were frequently forgotten. Token projects gave instructions to change slippage settings to a specific percent, usually slightly larger than the tax size.

This habit of conflating price impact with tax amount caused numerous value drain events, particularly of large order sizes where sandwich attacks of a fixed % are more profitable.

By treating token tax as a separate term in the slippage calculations, we are able to build more accurate transactions. This improves user outcome and reliability of the frontend.