Taxes, Rebates, and Stability Mechanisms

One of the key elements of the Nebula Finance protocol is the introduction of taxes and rebates, which are designed to maintain the stability of the system and provide a pathway to full collateralization.

For each transaction (buy or sell), a 7% tax is applied, as well as a 2% transaction tax. This tax is divided between the Stability Pool and the Conclave, with 2% directed to the Stability Pool and 5% allocated to the Conclave. The distribution within the Conclave is adjusted according to the current action phase of the protocol, which includes Expansion, Above-Peg, Over-Peg Safe, Under-Peg Safe, Below-Peg, and Recovery phases.

Moreover, the protocol is designed to incentivize certain actions with rebates. For example, during specific phases, minting a token may incur a 10% NUSD tax. This tax reduces the amount of NUSD received. However, an immediate rebate of 12% NSH is provided, resulting in a net gain of 2% for the user. This mechanism accelerates the progress towards full collateralization as the taxes contribute to building the necessary collateral.

It's important to note that some actions during different phases may also incur a NSH tax that will be burned. The specifics of these actions are currently in development, and we strongly recommend regularly checking our updates to fully understand the ongoing changes and developments.

The combination of these taxes, rebates, and phase-dependent adjustments creates a dynamic system that encourages active participation while maintaining the stability of the Nebula Finance ecosystem.