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What is a Fee on Transfer token?
What is a Fee on Transfer token?

Everything about fee-on-transfer tokens and how they work.

Matt avatar
Written by Matt
Updated over a week ago

What is a Fee on Transfer token?

A "Fee on Transfer" token is a token that by fundamental design, takes a percentage of internal commission upon transfer or trade. In other words, every time the token is moved or swapped, a pre-determined portion of the transfer amount is either burned or sent to another address.

In many cases, these Fee on Transfer tokens have legitimate logic behind them (for example sending a portion to a burn address to create scarcity for holders); however, some "scam" tokens can also use internal commission to send funds directly to the pockets of the token creators.

How can I swap unique types of tokens on 1inch?

To swap Fee on Transfer and tokens with other unique internal mechanics, it is recommended to increase the custom slippage tolerance in swap settings and also enable "Compatibility Mode". The amount of slippage tolerance needed is different for each token, and can vary from low amounts (like 3-5%) up to 49% or even higher.

By increasing the slippage tolerance, you are decreasing the necessary 'minimum amount returned' to compensate for the % taken out during the transfer.

***Please keep in mind, a higher slippage tolerance increases the risk of your transaction being front-run (sandwich attacked)

***If the total / combined internal commission is higher than 49%, the token cannot be swapped on 1inch.

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