The Significance of Deposit Fee and Harvest Fee, or the Significance of Tax

Pollo Basic Income has a Deposit Fee and a Harvest Fee in the Shares pool and a Deposit Fee in the Boardroom.

I can understand why some people are resistant to these projects, interpreting them as a “heavier tax” than other projects.

The Pollo Team has been considering whether it really makes sense to charge a fee for many points, which is not the case for many other projects, and as a result we have decided to charge a fee. There is a clear intention behind the Fee that we receive from everyone, which I will explain in this article.

”Value creation” and “wealth redistribution”

As I mentioned in my previous article, the essence of a project is the creation of new value.

It would be ideal if everything could be paid for by “value creation,” but Pollo is a walker, searching for the equilibrium point between ideal and reality.

Currently, the only countries that can develop their countries with little or no tax revenue from their citizens are countries blessed with natural resources like Dubai or countries that earn a lot of foreign currency as a national policy like Macau.

Just as there is no such thing as a nation with 0% taxes, it would be impossible to cover the outgoing funds without collecting taxes and redistributing them.

If we don’t collect a proportional fee for those who benefit greatly as first movers, and then take measures to utilize the fee for “all”, including those who join late, the project will fall flat on its butt (a kind of redistribution of wealth). This is how we keep the protocol alive for a long time, while we go out into the world and create new value.

There’s no doubt that each project is going through a lot of trial and error in this regard, and I can understand why bDollar is scrambling to find new ways to add value, such as casino games.

The important thing is balance.

However, this does not mean that taxes should be inexhaustible.

If a country deducts as much as 60% of income tax, people will try to leave the country or cheat on their taxes.

Similarly, an expensive and complicated Fee will lead to a loss of interest from investors.

As a side note, in some yield farming, there was a rule that a certain percentage was deducted from the underlying capital for every harvest.

This may be economically viable. But users were confused and the system was never accepted.

Pollo also studied how to make it “as simple as possible” and “have the greatest effect”.

The conclusion was the Deposit Fee and Harvest Fee. This is a tax system in which there is no complicated calculation, just a deduction.

Let’s talk about the tax rates.

For example, compared to income tax and value-added tax around the world, tax rates such as 5%, 10%, and 15% are very gentle.

Even if the Deposit Fee and Harvest Fee are set at 15%, it should pay for itself in a few days or a month or two at the most if you keep harvesting.

However, in the world of DeFi, the soil is not ready to accept a 15% tax rate.

Considering that Goose Finance had a Deposit Fee of 4% (now 1.5%) and that there is no invoice, the Deposit Fee of 3% and Harvest Fee of 5% are quite low or reasonable.

Pollo can survive at a much lower cost than a real state. There is no need to hire civil servants, pave roads, or build a White House.

The big ones are development costs, security costs, marketing costs, and labor costs.

Please understand that most of the Fee you pay will be returned to you in a very direct way.

Pollo aims to be “stable” in an “up-and-down industry

Pollo, by its very nature, is a relatively stability-oriented project.

However, it is also true that as DeFi, we have to take some speculative actions.

If Pollo were truly stability-oriented, it would rely on stock dividends and other sources of profit. As a result, the APR returned to you would have to be 5% or at most 10%.

I’m sure you all understand that it is only in the DeFi bubble that the APR is over 500%. Pollo and DAO need to continue their efforts to create new value so that this high APY does not end up being a dream.

Closing Thoughts

This article may seem like a negative topic, but it’s not. We will move forward together with you, knowing that “Achieving your dreams is not an easy road.

Some of you may be disappointed and say, “Realism after all. We don’t want to deceive you with big words, and we believe that Pollo’s dream is not a fantasy.

Blockchain is a revolutionary technology that can eliminate a lot of costs and man-hours. To put it bluntly, it has the potential to save millions of dollars per year in government office operations if it is rebuilt from scratch using smart contracts.

Finally, I would like to reiterate that the Tax is not meant to hurt you, nor is it meant to line the pockets of the Pollo Team, but is an attempt to ensure that the Pollo family lives happily ever after.

It is an attempt to make the Pollo family live happily ever after. In the future, we would like the DAO to discuss whether the tax should be raised, lowered, or eliminated.