How to trade your EthTrader DONUTs

Posted September 30, 2020 by Brent Oshiro

Buy, sell, and trade DONUTs on Matcha today!

We are thrilled to support the r/ethtrader community with the listing of DONUTs on Matcha! It’s exciting to watch Internet communities grow around tokens like DONUT, and we look forward to listing more tokens in this vertical. This simple guide covers the function of DONUT tokens and how to easily trade them on Matcha. Let’s dive in!

What are DONUT tokens

These tokens were originally released in October 2018 as “Community Points“ to the ETHtrader subreddit, which has 260,000+ members. Shortly after, though, the community voted to rename them to “DONUTs”. These tokens are used to vote on community polls, grant special membership, and purchase the subreddit’s ad space.

How to buy and sell the r/EthTrader ad banner with DONUTs

The mechanism for buying and selling the ad banner is unique in that a Harberger tax is applied to each purchase. A Harberger tax is a concept popularized by the book called Radical Markets written by Glen Weyl and Eric Posner. Here is how it works:

1. The person who buys the banner sets the daily ad price. They can purchase multiple days of banner ad time.

2. Anyone can purchase it from them with their DONUTs for the set price, and the owner cannot refuse to sell at the current set price.

3. The person who owns the banner pays a tax on it (100% of the one-day banner price, daily) to keep the banner. Set the price too high, the more the owner pays in tax. But if it’s set too low, someone may buy it immediately.

4. If no one else buys the banner from the current owner, their banner image continues to be shown until the amount they deposited for the banner purchase is depleted.

5. When the banner is purchased, the DONUTs are sent to the original owner.

6. The tax is then burned.

You can learn more about the philosophy and rationale behind this form of taxation here.

How to trade DONUTs on Matcha

The price of DONUTs is determined by the market, like any other token listed on decentralized exchanges. Matcha provides a simple interface to buy, sell, and trade DONUTs easily.

1. Head over to Reddit’s r/ethtrader subreddit

2. Register your Reddit account with MetaMask

3. Earn DONUTs by participating in the sub’s discussions (paid out weekly)

4. When you’re ready to trade, go to matcha.xyz/markets/DONUT and connect your MetaMask account

5. Choose a token to swap with your DONUTs and make the trade

Check out the video below for a walkthrough on how to trade DONUTs on Matcha.

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