The Landscape: How Common Tax Tokens Are, Which Designs You’ll Meet, and What Real Projects Are there

Tax (fee‑on‑transfer) tokens are no fringe quirk. During 2024, up to ~25% of daily trades on Ethereum involved buy/sell‑tax tokens in certain periods (about 13% of volume in July 2024), with similar levels on other EVM chains. On the BNB Chain, SafeMoon’s 2021 launch helped push the reflection model into the mainstream, and you’ll still find BNB‑native examples across various “tax” styles today. 

Two realities come with that scale:

• Behavior isn’t uniform. Many FoT tokens change the fee by direction (buy vs sell), wallet, size, or time. Some toggle taxes on/off. Trade‑time simulation is how some aggregators keep quotes honest.
• Use cases are diverse. The same “skim and route” mechanic is marketed as reflections (rewards to holders), liquidity/treasury funding, burn/deflation, charity, and more. Your experience depends less on the label and more on how those switches are configured.
  

Design patterns you’ll actually meet (and what they signal)

1) Classic reflections (rewards in the same token)

The pitch is “hold and earn”: every transfer takes a small cut and redistributes it to existing holders. This is the idea that made FoT feel intuitive for newcomers and drove the early wave. Think of it as “staking without staking,” but remember: rewards scale with trading volume, not with time, hence the quieter the market, the thinner the reflections.

2) Stablecoin reflections

Some projects pay out the skim in another asset, often a stablecoin, giving rewards that feel steadier in dollar terms. You’ll see this framed as less volatile “income,” but again, it lives and dies on transaction flow in the token.

3) Liquidity / treasury routing

A portion of each transfer goes to a liquidity pool or a project wallet (“marketing,” “operations”). In best‑case form, it’s a transparent budget with on‑chain addresses and reports. In worst‑case form, it’s a black box. The presence of a treasury isn’t the issue, the disclosure and controls are. 1inch’s primer captures this family succinctly: fees can be burned or sent to another address and it’s up to the project.

4) Directional and changeable fees

Buy‑only tax, sell‑only tax, or both. Flat today, higher tomorrow. Dynamic or owner‑modifiable fees change the calculus for holders and market‑makers. This isn’t inherently malicious, but it does push you to demand a clear change‑log and governance path before you treat the token like a long‑term position.

Case snapshots

Reflect Finance (RFI) — the “frictionless yield” blueprint

An early, minimal reflection design: every transfer incurs a 1% fee that the contract immediately redistributes to all holders. No staking or claiming is required, balances update automatically. RFI’s site framed this as “frictionless yield” and helped define the category’s baseline before higher‑tax variants arrived.

What it teaches: reflections are transaction‑flow driven. They come from a cut of on‑chain activity, not from time‑based interest. When volume slows, rewards ebb. When volume surges, they rise.

Baby Doge Coin — the “10% split” that taught millions what reflections feel like

A widely cited early example in the BNB Chain meme wave: 10% per transaction, with 5% redistributed to holders and 5% directed to liquidity. Whatever you think of the meme, the structure became the mental model for a generation of FoT users: visible, easy to explain, and tightly coupled to hype‑driven volume.

What it teaches: Reflections feel rewarding when trading is buzzing. They fade when trading dries up. If a project markets “income,” ask: income from what activity, and how durable is that activity?

EverGrow (EGC) — stablecoin reflections at scale

A stablecoin‑reflection variant. EverGrow applies a 14% transaction tax, of which 8% is paid out to holders in BUSD (with the rest commonly allocated across liquidity, buybacks, and marketing per the project’s tokenomics). Holders receive BUSD payouts on a frequent basis (for example, hourly), with the rewards entirely dependent on ongoing transaction volume.

What it teaches: paying reflections in a stablecoin can make rewards feel steadier in dollar terms, but they still depend on trade volume and hence they are not guaranteed yield.

FLOKI / TokenFi — the rollback trend as tokens mature

Some teams that launched with taxes later reduced or removed them to broaden adoption. In early 2023, the FLOKI DAO voted to cut FLOKI’s transaction tax to 0.3% and burn bridge tokens, explicitly arguing that a high tax discouraged users and partners. Later, in 2025, the associated TokenFi project removed a 0.3% buy/sell tax entirely after a DAO vote. These moves were framed as lowering friction for growth and accessibility.

What it teaches: FoT can be an early‑phase funding/marketing crutch, but sustained adoption often pushes teams toward leaner or zero taxes. If you see a mature project still leaning on heavy taxes, ask why.

What actually happens to tax tokens over time? 

Looking across cycles, many FoT launches burn bright and fade, others pivot: they reduce or remove the tax to lower friction, or they migrate/rebrand (e.g., EverGrow guiding holders into Cedar on Solana). The headline reflection blueprint (RFI‑style 1%) remains a useful reference, yet few prominent teams keep heavy taxes in place long‑term. Meanwhile, one of the most famous reflection tokens, SafeMoon, ended with SEC charges and bankruptcy. Put together, the weight of evidence is that FoT is often a launch‑phase gimmick or transitional mechanic. Projects that mature typically de‑emphasize it rather than double down.

Ecosystem notes

Tax tokens don’t appear evenly across the crypto landscape. They cluster in certain ecosystems and often follow recognizable design patterns.

• Where you’ll see FoT a lot. You’ll bump into buy/sell‑tax designs across EVM chains and especially in meme/narrative‑driven pockets (BNB Chain has historically hosted many reflection‑style projects). Aggregators like Matcha adapted by simulating trades in real time to catch taxes that only trigger under certain conditions. This approach matters because many FoT settings are conditional, not static.

• Why the “same name” can behave differently. Two tokens can both call themselves “reflection tokens,” yet one pays in the native token while another pays in stablecoin. One funds liquidity, another funds a treasury. One fixes fees, another changes them. Titles don’t tell you enough but parameters and governance do.

What good projects tend to disclose (so you can spot them fast)

There’s also a fairness dimension. Directional taxes (e.g., heavy sells) can shape holder behavior in the short run. However long‑run trust depends on how transparently the project discloses destinations and control. A team that publishes addresses for tax wallets, periodic reports, and a governed process for changing rates is signaling something different from one that treats tax revenue as a slush fund.

Here’s a disclosure‑first lens you can apply in a minute:

• Rate sheet you can bookmark. One place that lists current buy/sell rates, when they last changed, and who can change them. (Dynamic taxes are common; what matters is governance.)
• Destination map. Public addresses for any marketing/treasury wallets and a note explaining the split between reflections, liquidity, burn, and treasury. 1inch’s definition underscores that the fee can be burned or sent elsewhere, so the project should say where.
• Volume realism. If reflections are the headline benefit, show the last 30–90 days of actual trading volume that feeds them. In that case users don’t confuse quiet periods with “broken rewards.”
• Lifecycle intent. If there’s a plan to phase down or remove taxes as the project matures, say it and point to governance precedent (e.g., FLOKI/TokenFi votes)

Five questions that surface signal

1. What exactly funds the promise? If the benefit is “reflections,” is it native‑token or stablecoin? How did those rewards look in weeks with low volume?
2. Who controls the dials? Are buy/sell rates fixed, time‑boxed, or changeable? If changeable, what’s the process (DAO, timelock, multi‑sig)?
3. Where does the skim go? Are treasury/marketing addresses public and explained? Fees can be burned or sent to some address and the project should show you this address.
4. Is there a path to lower friction? Has the team reduced or removed taxes as adoption grew, or do they plan to? (Recent history shows multiple projects trending down.)
5. What’s the realistic venue footprint? Not which router supports what, but where everyday users actually trade it and whether the project acknowledges any practical constraints in its docs. (Aggregation that simulates taxes at trade time is a plus.) 

Sources for further reading

• Matcha blog — A detailed view on how FoT (buy/sell tax) tokens are detected, quoted, and routed in practice.
• BlockSec — Security-oriented exploration of reflection token mechanics, vulnerabilities, and real-world exploit patterns.
• BlockSec — A general guide for DeFi users on assessing contract, token, and protocol risks (useful lens for FoT tokens).
• Cointelegraph — Overview of how reflection tokens redistribute fees, why they gained popularity, and the risks they carry.