Source 1: The Tolerant Fortress Tax
Traditional transaction taxes in DeFi often create unsustainable systems, punishing users and eroding trust. AetherCycle implements a different model—the Tolerant Fortress Tax—designed to encourage adoption while protecting and strengthening the ecosystem.
Part I: The Tolerant — Designed for Adoption
Most user activity is exempt from taxation to ensure smooth participation and growth:
0% Wallet-to-Wallet Transfers → Sending AEC between users is tax-free.
0% Protocol Interactions → Staking, claiming rewards, or participating in governance does not incur any tax.
Key Principle: Taxes only apply to market-generating activity (trading), not to core utility or adoption.
Part II: The Fortress — Protecting the Ecosystem
The “Fortress” component acts as a dynamic safeguard to:
Concentrate liquidity in official markets
Prevent fragmentation across unofficial pools
Capture value from arbitrage and MEV activity
This ensures that all market activity strengthens the protocol rather than diluting value.
Tax Structure
Taxes are applied only on trading activity.
Collected taxes are routed 100% into the Perpetual Engine.
The Engine redistributes the funds according to the immutable 20/40/40 rule:
20% Burn → permanently removes AEC from circulation
40% Auto-Liquidity → added to official liquidity pools and staked
40% Staking Rewards → distributed to LP, Token, and NFT staking pools
Critical Difference: No portion of taxes is allocated to the team, founders, or insiders. All value is recycled back into the ecosystem.
Summary
The Tolerant Fortress Tax is designed to be:
Tolerant → does not penalize genuine use or participation
Defensive → prevents value leakage and market fragmentation
Regenerative → all collected value is reinvested into the community-owned economy
This approach transforms taxation from a burden into a mechanism of perpetual reinforcement.
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