Hey all, in this article I would like to discuss the “whale tax”. Now, when each of us hear the term “whale tax”, we immediately think of those wallets who have deposits in the “tens-of-thousands”, earning hundred of DRIP tokens each day, via that trusty 1%. I’m sure if you’ve DYOR, you’ve read the DRIP white-paper and read the “whale tax” section and the tiers of tax percentages.
Well, I’m here to share with you a little bit of insight that many of you are perhaps unaware of, and that is: you may be a whale, paying a whale tax — and not even know it! Now you may stop me right now, saying “Whoa whoa whoa, how can that be? My deposit is a few hundred DRIP tokens, I am nowhere near in the thousands, let alone the tens-of-thousands…how am I a whale? Why would the whale tax apply to me?”
The beauty of crypto, blockchain and smart contracts, is that they are trustworthy and the source of truth. So, I thought I’d venture into the DRIP smart contract to further understand the mechanics of the “whale tax”.
Let me begin by saying that the “whale tax” in the smart contract is actually called a “sustainability fee” and is triggered when you perform a “deposit”, “hydrate” or “claim” action.
Next, I will outline the calculation of the sustainability fee and how it impacts your 1% available earnings. Below is the code algorithm:
line 1: bracket = user.deposit / 10000;
line 2: bracket = minimum(bracket, 10);
line 3: fee = bracket * 5;
line 1: your DRIP deposit divided by 10000 DRIP tokens (10% of total supply)
line 2: your bracket will be the minimum between yours and 10 (ceiling)
line 3: your bracket multiplied by 5 (5% increase per 10000 DRIP tokens)
The result is the fee (%). This fee is then calculated against your 1% available earnings, resulting in a “net available”. Below is the code algorithm:
line 1: tax = payout * fee / 100;
line 2: net = payout — tax;
line 1: payout (1% available) multiplied by the fee, divided by 100.
line 2: payout subtracted from the tax, resulting in a net available.
That fee (%) is your whale tax and the tax is your whale amount that is deducted from your 1% available. Let’s look at a working example:
Not a big wallet, right? Certainly would not be classified as a whale, right? Let’s enter the numbers into algorithms and see the results:
line 1: 0.029 = 291.207 / 10000;
line 2: 0.029 = minimum(0.029, 10);
line 3: 0.145 = 0.029 * 5;
line 4: 0.029 = 20.350 * 0.145 / 100;
line 5: 20.321 = 20.350–0.029;
As you can see, the deposit (291.207) in this wallet is not large (in the grand scheme of things). Yet, according to the code, it incurs a whale tax of 0.145%! It’s not much, actually tiny, but it’s something.
Now don’t get me wrong, I’m not knocking this or calling it a bad thing. You can take a “glass half full” or “glass half empty” perspective. All I’m saying is that it’s good to know the finer details of the contract.
I’m happy for others to peer review this, in case I have overlooked something or my interpretation of the smart contract is incorrect or I’ve overlooked something in my math.
If you want to chat further on “all-things” DRIP, consider visiting my Telegram channel.
DRIP Reservoir — https://t.me/dripreservoir
If you want a DRIP buddy, consider using my address.
DRIP buddy — 0x91098AE2A2Edb12803c8Ec81805d86e32BfB39a7
Talk soon!
