Introducing Inactivity Tax — Completion of further Auto Cashout Optimizations

Posted by: MonstaCorp on December 4, 2021

The results of our last community proposal are in and the community overwhelmingly voted in favor of the proposed optimizations and changes to the Auto Cashout process, with more than 1 billion MONSTA used to vote! Thanks to everyone for participating in this important proposal and we are glad so many agree with our idea to make Cake Monster more efficient and rewarding!

To recap, the proposed changes include

  • Sell 30% (10% more) of the MONSTA of an inactive holder for CAKE (which goes to the Gravity Vault)
  • Burn 70% of the MONSTA out of the LP, equivalent to the remaining holdings in the inactive wallet
  • The remaining 70% (effectively 67.5% due to 2.5% reward for iTax caller) of MONSTA holdings will stay untouched in the inactive wallet until it becomes inactive again (becomes active after iTax is processed)
  • Mint MONSTA worth 2.5% of an inactive users holdings and send it to the iTax caller’s wallet (caller reward, unchanged compared to the ACO system, this is the only minting happening and it is in place to limit gas costs and smart contract complexity)
  • The inactive holder will have 50 days to claim a 25% MONSTA inactivity refund from the dashboard to prove activity again. (the refund comes from a refund contract that is funded by the community wallet)
  • Rename Auto Cashout to Inactivity Tax (iTax) (changes on website, docs and others will follow shortly)
  • Implementation of a 5% liquidity impact threshold (LIT) to ensure a sustainable reduction of MONSTA liquidity in the LP

When will the new changes take place?

The new optimizations have now been implemented and are live as of publishing of this article. If you have gone inactive and were subject to the iTax, you’ll find a new section in the Cake Monster App to claim your refund.

Check out the new detailed transaction flow in below graphic.

Inactivity Tax Transaction Flow

What are the benefits to the protocol?

  • The newly implemented iTax system will preserve 60% more BNB liquidity in the liquidity pool compared to the previous Auto Cash Out (ACO) methodology, where 70% of an inactive holders MONSTA was bought back with BNB from the LP, putting negative pressure on the LP and increasing price impacts for buyers and sellers.
  • It will add CAKE to the Gravity Vault at a much better rate, since CAKE is being bought directly without a preceding MONSTA sell, like it was the case in the old system. Instead of 20%, now 30% will be used to buy CAKE for the Gravity Vault.
  • Softer impact on inactive holders’ investment while ensuring continued deflation, and have an overall more streamlined and less complicated smart contract flow.

The implemented refund option will automate the prior manual process of refunding and will ensure a much faster process. Further benefits will see the attraction of new investors, the opening of new avenues for potential collaborations due to a higher liquidity and more stable price movement.

The burn impact on the MONSTA in the LP is subject to the newly implemented Liquidity Impact Threshold (LIT) of 5%. This means that the smart contract can never burn more than 5% of the current MONSTA liquidity in the LP.

Example (LIT)
- A wallet with 10M MONSTA gets iTaxed while 100M MONSTA reside in the LP
- A 70% equivalent amount (7M MONSTA) should be burned out of the LP
- As the burn impact on the LP would be 7%, the smart contract decides to burn a maximum of 5M MONSTA (5%) out of the LP

How will the new refund dashboard work?

If your wallet became inactive and you were subject to the iTax (formerly Auto Cashout), you can visit the refund dashboard in the Cake Monster dAPP here. The process is entirely automated via a smart contract which will confirm your eligibility and transfer you the 25% refund amount.

Can a holder be subject to the iTax more than once?

Yes. Once the iTax has been applied, the inactive holder has a chance to prove activity again and receive a partial refund within 50 days, but if they fail to do this, they will be subject to the iTax a second time. This process repeats to a maximum of 3 times at which point the inactive holders remaining MONSTA funds will be burned out of the wallet.

Example (iTax 3rd Strike System)
- A wallet holding 1M MONSTA becomes inactive and gets taxed
- iTax uses 30% (300k MONSTA) of that MONSTA holdings to buy CAKE for the Gravity Vault
- iTax burns an equivalent of the remaining 70% out of the LP, but will never burn more than 5% of the total overall LP (due to the Liquidity Impact Threshold)
- If a user becomes inactive a second time in a row (after another 50 days), again 30% of the current MONSTA holdings (now 700K MONSTA) will be used to buy CAKE and an equivalent of 70% (490K MONSTA) of the remaining funds will be burned out of the LP. The refund from the first iTax application (strike one) will be forfeited, and a refund of 25% of the new amount can be claimed for the second strike within the next 50 days.
- If a user remains inactive for a third time in a row, all the remaining MONSTA funds will be burned out of their wallet (in this case 490K MONSTA)

iTax Summary

The newly implemented iTax and discontinuation of the previous ACO methodology will add further value to the Gravity Vault, strengthen the Cake Monster protocol overall, and provide increased value for holders, foremost in terms of claimable CAKE rewards (Slice, Crumbs, DC NFT Dividends) and the soon to be released lottery system that aims to add value to all Diamond Claw NFTs.

We continue to monitor the progress of the first cycle and will propose further optimizations to the community as they are identified.

About Cake Monster

Cake Monster ($MONSTA) offers a multitude of great features aimed at building a flexible, multifaceted, and automated dividend yield and reward system for participants without compromising the sustainability or security of the protocol ecosystem, and combines this with smart design, creativity, and organic growth, resulting in a very vibrant and engaged community.

Learn more about Cake Monster by visiting or read the documentation at

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