Reflection tokens, sometimes called reward tokens, are cryptocurrencies that reward holders with new tokens. They do this by employing a tax of a percentage of transactions and distribute them to holders of the token as a reward.
This incentivizes long term holding to earn rewards from transactions of the token. It’s executed through a token smart contract that charges a fee, split among holders, funds liquidity, and buyback then sends to burn wallet.
What is a crypto reflection token?
Let’s say you own a cryptocurrency and decided to hold it. By being active in the community, the project rewards you by helping you make money with the crypto.
The crypto then figures out a way to charge a tax on every transaction in the project. You become part of the community and the project you’ve invested in wants to thank you by helping you earn rewards for holding the token long term.
How Do Reflections Tokens Work?
Reflection tokens are part of a reward system. This system may designate percentages to automatic liquidity, buyback and burn, marketing, etc.
They are designed to reward long term holders by encouraging a “hold and earn” approach which reduces selling pressure.
Reflection mechanisms were adopted by several cryptocurrencies recently. The most popular being Evergrow Coin, Safemoon, and Reflect Finance (RFI).
Why “Hold to Earn”?
The reflections mechanism addresses selling pressure and volatile price movements by monetizing without staking.
Some benefits include being allowed to use your tokens to earn benefits without staking. The tokens are fairly distributed based on the amount of tokens you hold.
Choosing the Right Reflection Token
Finding the right reflection token is the key. There are a lot of cryptocurrencies and choosing the right one can be very difficult. Especially, trying to find what that meets all your criteria.
You must do your research and be educated about;
- Why you want to invest in reflection tokens.
- Understand the projects fundamentals, core team, life expectancy, etc.
- Make sure there is a community involved in the project
- It has a tax fee that is distributed as a reward.
Most Popular Reflection Tokens
- EverGrow Coin (EGC) launched in September of 2021 and broke records on the BNB Chain for amassing investors through a unique reflection system. Evergrow Coin charges a 14% tax on all EGC transactions with 8% instantly distributed to investors. Evergrow paid over $25 million in reflections within 5 months. www.evergrowegc.com
- Safemoon (SAFEMOON) launched in March of 2021 and was one of the first projects to bring reflections to the crypto industry. There are over 2.5 million holders with a market cap of $2 billion. Safemoon charges a 10% tax on all SAFEMOON transactions, with 5% going to investors. www.safemoon.com
- Reflect Finance (RFI) is on the Ethereum blockchain. RFI charges a 1% tax to RFI transactions which are automatically distributed to holders. www.reflect.finance
Newest Reflection Token
The reflections token to look out for in 2023 will be WEFI. WEFI charges 10% tax on only sell trades with 7% instantly distributed to investors. They also offer a hybrid staking model using a Royalty Reward Model that is sure to disrupt crypto industry. www.wefitoken.com.
The basis of reflection tokens are simply holding to earn. You are rewarded just for holding the token in your wallet.