Sparkles are contributed to the communal pool whenever Sparkle is bought from the smart contract or transferred from one address to a different address.
What happens when Sparkle is bought
Let’s say that Kendrick sends 1 ether from his Metamask wallet to the Sparkle smart contract. The smart contract values SPRK at 1 ether = 10,000 SPRK before it deducts two taxes: a transaction tax of 2% and a creator tax of 1%. Kendrick therefore receives 9,700 SPRK, the communal pool receives 200 and the creator receives 100. The communal pool is then equally divided based on proportions: Kendrick will receive an additional 197.959 SPRK and the creator will receive 2.041 SPRK.
What happens when Sparkle is transferred
Kendrick sends 1,000 SPRK to Carol, an additional 20 SPRK will be deducted from Kendrick’s balance to cover the 2% transfer tax. Everyone who owns Sparkle will then automatically receive their share of the 20 SPRK in proportion to the amount of SPRK that they have. A unique feature of Sparkle is that you will earn a share of this transaction tax even if you join the Sparkle economy after Kendrick sends Carol the 1,000 SPRK. However, as the share you receive is dependent on the total supply of Sparkle in existence when your balance is queried, there is an incentive to be an early adopter of Sparkle while also not depriving late adopters of their share.
What happens when Sparkle is sold
Each and every Sparkle is backed by a verifiable reserve of ether. The smart contract accumulates ether when people buy Sparkle and it distributes ether when people sell it Sparkle. For example, let’s say that Kendrick now wants to convert 5,000 SPRK into ether. The smart contract values SPRK at 10,000 SPRK = 1 ether before it deducts a 3% creator tax. Kendrick therefore receives .485 ether and 5,000 SPRK is burned and removed from the total supply. It is important to note that the only way to withdraw ether from the smart contract is to sell it SPRK—neither the creator, nor anybody else, can access this reserve pool of ether, thus guaranteeing a minimum value to each SPRK.
What happens when Sparkle reaches its max supply
Once 400 million Sparkle are in existence, which means that the smart contract holds 40,000 ether, then the buy function is automatically disabled. This allows the buy price to increase on external exchanges. The sell function remains active indefinitely. Therefore, whales will have a lessened impact on the price downward as there is a guaranteed minimum value.