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Tobin Tax

Overview of the Tobin Tax and its effect on the Celo reserve.
The tobin tax is currently disabled on Mainnet.

Implementation

If the Celo reserve ratio falls below tobinTaxReserveRatio, a small fee is levied on CELO transfers to discourage further depletion of CELO collateral. This fee is transferred to the Reserve smart contract. There is no gas charged for this transfer. The tobinTaxReserveRatio and the tobinTax parameters are governable.

Reserve Ratio Calculation

The total Celo reserve value, expressed in CELO units, is approximated on-chain by dividing the reserve CELO balance by the CELO target asset allocation weight. The Celo reserve ratio is then computed by dividing the total reserve value by the value of Celo Dollar supply expressed in CELO units.