How CAKE.PAD Taxes Work in Overflow Sales – With Example

1. Taxes are only charged if the CAKE.PAD event is oversubscribed

   1. Oversubscription = Total deposits by all users > Raise goal amount.

   • Tax is only deducted from participants' excess committed funds. No fees are paid by the CAKE.PAD partner project.

   • The CAKE.PAD partner project receives 100% of its targeted raise amount.

   • CAKE.PAD taxes are collected in CAKE, and 100% of it will be burned.

   • Fees are based on the total subscription rate of the pool (% of raise goal):

Oversubscription rate <> Fee Tier

Oversubscription Rate	Fee Tier
≥ 0x	1.00%
≥ 50x	0.80%
≥ 100x	0.60%
≥ 150x	0.50%
≥ 200x	0.40%
≥ 250x	0.30%
≥ 300x	0.25%
≥ 400x	0.20%
≥ 500x	0.15%
≥ 650x	0.12%
≥ 800x	0.10%
≥ 1500x	0.05%

1. Time period – When is tax charged

• Tax is charged at the end of the CAKE.PAD event, when the user redeems their allocation.

• Even if a user subscribes early (e.g., when the subscription is 30% of the raise goal), the final tax is based on the final pool oversubscription level.

  • Example: If the pool ends up at 50x over-subscribed, the applicable tax is the 50x tier (0.8%).

Calculation Steps

1. User allocation = % of total CAKE.PAD partner token pool the user receives

   user_allocation = user_deposit_amount / totalAmountPool

2. User pay amount = Portion of the user’s deposit used to redeem CAKE.PAD partner tokens

   user_pay_amount = raisingAmountPool * user_allocation

3. Refund amount = Excess from the user’s deposit not used for CAKE.PAD partner token purchase

   refund_amount = user_deposit_amount - user_pay_amount

4. Tax amount = Deduction applied on the user’s refunded amount

   • Fee tier is based on the % of raise goal (see table above).

   tax_amount = fee tier * refund_amount

5. Final output for the user

   1. Token allocation = user_allocation * totalTokensOffered
   2. User tax amount = tax_amount
   3. final_refund = refund_amount - tax_amount (if applicable, else = refund_amount)

Numerical Example

• Target raise (raisingAmountPool): 100 CAKE

• Your deposit (user_deposit_amount): 10 CAKE

• Total deposits incl. of Your deposit (totalAmountPool): 5,100 CAKE (51x subscribed = 5,100% of raise goal, implies 50x oversubscription rate)

  • Corresponding fee tier = 0.80% (based on the tax rate table above)

Steps:

1. user_allocation = 10 / 5,100 = 0.00196 (0.196% pool allocation)

2. user_pay_amount = 100 × 0.00196 = 0.196 CAKE

3. refund_amount = 10 − 0.196 = 9.804 CAKE

4. tax_amount = 9.804 × 0.008 = 0.0784 CAKE

5. final_refund = 9.804 − 0.0784 = ~9.72 CAKE

Final User received amounts

1. Token allocation: 0.196 CAKE worth of CAKE.PAD partner tokens

2. Final refund: ~9.72 CAKE (from 10 CAKE deposit − 0.196 CAKE for token allocation − 0.0784 CAKE tax)