> For the complete documentation index, see [llms.txt](https://mmlm.gitbook.io/mmlm/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://mmlm.gitbook.io/mmlm/mmlm-token/tax-on-transfer-model.md).

# Tax-on-transfer Model

$MMLM operates on a tax-on-transfer model, where **10% of tax** is applied to each transaction. This tax is then distributed for various purposes to nurture and support the growth of the MMLM ecosystem.\
\
The breakdown of this tax distribution is as follows:

* <mark style="color:red;">1%</mark> (in $MMLM) is shared among all preceding wallets. [*What are the preceding wallets?*](/mmlm/mmlm-reward-model/preceding-wallets.md)
* <mark style="color:red;">8%</mark> paid in ETH is directed towards the referral network.
* <mark style="color:red;">1%</mark> paid in ETH is sent to the development fund.

In the MMLM ecosystem, 90% of the collected taxes are allocated to community resources. This allocation aims to create a community-centric approach for rapid growth while maintaining stability during Phase 1, laying the foundation for the project's ongoing development in Phase 2.