Modifying ERC20 Smart Contracts Part 2

Special Memecoin Functions

Introduction

This article follows a previous article I wrote about Modifying Openzeppelin’s ERC20 Smart Contract

The realm of cryptocurrency has witnessed a fascinating phenomenon in recent times with the rise of memecoins. These tokens, inspired by internet trends and memes, are not only capturing the attention of investors but are also pushing the boundaries of smart contract innovation. Central to the mechanics of many memecoins are the specialized functions that govern taxation, swapping, and marketing. In this article, we’ll delve deep into the taxation aspect, as well as the intricate workings of the “swapAndLiquify” and “swapAndMarketing” functions found in these memecoin contracts.

Why Memecoins Tax

At the heart of the memecoin experience is a unique tax structure applied to token transfers. Unlike traditional cryptocurrencies, memecoins implement a tax percentage on each transaction. This tax serves multiple purposes, shaping the ecosystem in distinct ways:

1. Liquidity Pooling: A portion of the tax collected on each transaction is channeled into a liquidity pool. This pool plays a vital role in maintaining price stability and facilitating trading on decentralized exchanges (DEXs) like Uniswap. Liquidity pools ensure that there are enough tokens available for trading, thereby reducing the impact of sudden price fluctuations.
2. Marketing Initiatives: Another portion of the tax is allocated to marketing efforts. This fund is dedicated to promoting the memecoin, creating partnerships, and building community engagement. It acts as a self-sustaining mechanism for increasing the visibility and adoption of the token.
3. Incentivizing Holders: The taxation system also acts as a mechanism to encourage long-term holding. By imposing a tax on selling transactions, memecoin projects aim to discourage excessive trading and promote a culture of HODLing among holders.

Common Special Functions in Memecoins

While there are many types of modifications implemented, we are going to talk about 2 major ones people ought to know.

1. swapAndLiquify

One of the innovative features found in memecoin smart contracts is the “swapAndLiquify” function. This function is triggered when the smart contract’s token balance crosses a predefined threshold, often referred to as “swapTokensAtAmount.” The purpose of this function is to enhance liquidity on DEX platforms like Uniswap. Here’s how it works:

1. Token Swapping: When the contract holds a substantial number of tokens, a portion of those tokens is swapped for a reserve currency, typically ETH. This swapping process is essential for creating the funds required for liquidity provision.
2. Liquidity Provision: The ETH obtained from the token swapping is then used to provide liquidity on a DEX. This liquidity is added to the trading pair involving the memecoin and the reserve currency. Enhanced liquidity leads to reduced price slippage during transactions and a more stable trading experience.

/*Half the tokens meant for liquidity are swapped for ETH, then put into 
  the Liquidity pool with the other half.
*/
function swapAndLiquify(uint256 tokens) private {
        uint256 half = tokens / 2;
        uint256 otherHalf = tokens - half;

        uint256 initialBalance = address(this).balance;

        address[] memory path = new address[](2);
        path[0] = address(this);
        path[1] = uniswapV2Router.WETH();

        uniswapV2Router.swapExactTokensForETHSupportingFeeOnTransferTokens(
            half,
            0, // accept any amount of ETH
            path,
            address(this),
            block.timestamp);

        uint256 newBalance = address(this).balance - initialBalance;

        uniswapV2Router.addLiquidityETH{value: newBalance}(
            address(this),
            otherHalf,
            0, // slippage is unavoidable
            0, // slippage is unavoidable
            DEAD,
            block.timestamp
      );

        emit SwapAndLiquify(half, newBalance, otherHalf);
    }

  

2. swapAndSendMarketing

Marketing plays a critical role in the success of any cryptocurrency project, and memecoins are no exception. The “swapAndSendMarketing” function is responsible for allocating a portion of the tax to the marketing wallet. The process involves:

1. Token Conversion: Similar to the “swapAndLiquify” function, a portion of the tax is converted into ETH through a token swapping process. This ETH is then sent to a dedicated marketing wallet.
2. Marketing Efforts: The ETH collected in the marketing wallet is utilized to fund marketing initiatives. These initiatives could include social media promotions, influencer collaborations, partnerships, and community engagement activities. The marketing fund acts as a self-sustaining resource for continuous promotional activities.

/*
  Amount collected for marketing is swapped for Eth and sent to marketing wallet
*/
function swapAndSendMarketing(uint256 tokenAmount) private {
        uint256 initialBalance = address(this).balance;

        address[] memory path = new address[](2);
        path[0] = address(this);
        path[1] = uniswapV2Router.WETH();

        uniswapV2Router.swapExactTokensForETHSupportingFeeOnTransferTokens(
            tokenAmount,
            0, // accept any amount of ETH
            path,
            address(this),
            block.timestamp);

        uint256 newBalance = address(this).balance - initialBalance;

        payable(marketingWallet).sendValue(newBalance);

        emit SwapAndSendMarketing(tokenAmount, newBalance);
    }

Conclusion

The emergence of memecoins has brought forth a new wave of innovation within the cryptocurrency space. The implementation of specialized functions for taxation, swapping, and marketing highlights the unique nature of these tokens. By utilizing taxation to fuel liquidity, incentivize holders, and fund marketing, memecoins are reshaping the way cryptocurrency projects operate. Additionally, the “swapAndLiquify” and “swapAndMarketing” functions showcase a dynamic approach to enhancing liquidity and driving outreach. As the crypto landscape continues to evolve, memecoins are poised to leave a lasting impact on both smart contract design and community engagement.