# What is the significance of the tax mechanism?

This mechanism serves multiple purposes:

* It slows the release pace, stabilizing currency price fluctuations;
* It curbs short-term arbitrage behavior through high tax rates;
* It provides a stable cash flow for the system's sustainable operation;
* It funds the Reciprocal Reward Pool and structural dividends.

Taxes are automatically deducted on-chain and allocated to the Reciprocal Reward Pool in fixed proportions, redistributed to grassroots builders.

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