Community contribution / How it works?

How works Community contribution mechanism

Community Contribution is the core mechanism behind Community Coins. It’s a customizable fee taken from each transaction of the token when traded on CoolDEX and is automatically distributed across three directions:

• Real-time Holders

• Liquidity Providers

• Burning

All generated Community Contribution is split 50/50 in $SOL and $TOKEN.

Developers set the contribution between 0.25% and 5% and must allocate 100% of it. They can split it across all three categories (e.g., 50% to holders, 10% to LPs, 40% to burning) or go all-in on one (100% to holders, for example).

Once liquidity is added to CoolDEX, this mechanism activates, and Community Contribution is automatically generated and distributed based on the setup.

Two Key Rules for Distribution

1. All Community Contribution must be allocated.

2. If any part of the Community Contribution is allocated to Liquidity Providers (LP), the rewards earned by the initial migrated liquidity (from Something.cool to CoolDEX) will be redistributed among all active holders*.

We believe that even the liquidity of Community Coins should belong to the community. If the initial liquidity migrated from Something.cool earns rewards — we ensure those rewards will be redistributed back to token holders.

Example

Let's illustrate how Community Contribution works in a real scenario:

Coin "$AAA" has a 2% Community Contribution, distributed as:

• 50% to holders

• 20% to liquidity providers

• 30% to burning

And then some user swaps 10 $SOL for 1,000,000 $AAA. He receives tokens worth 9.8 $SOL, while 0.2 $SOL goes into Community Contribution.

Then simple Math:

After this swap, the user receives 980,000 $AAA, and a Community Contribution fee of 0.2 $SOL is deducted and distributed as follows:

1. 10% (0.02 $SOL) goes to CoolDEX for processing the reward distribution.

2. 90% (0.18 $SOL) is allocated across the 3 categories based on the set percentages:

   • 50% goes to holders, meaning they receive 0.045 $SOL + 45,000 $AAA (equivalent to 0.09 $SOL).

   • 20% goes to liquidity providers, meaning they receive 0.018 $SOL + 18,000 $AAA (equivalent to 0.036 $SOL).

     • If the initial liquidity is the only liquidity source, these rewards go to it and are then redistributed among all current holders at the time of the swap.

   • 30% is allocated to burning, meaning 54,000 $AAA is burned (equivalent to 0.054 $SOL).

Final Impact

• Holders receive a total reward of 0.063 $SOL + 63,000 $AAA, equivalent to 0.126 $SOL.

• A total of 54,000 $AAA is permanently burned, equivalent to 0.054 $SOL.

Now, imagine the rewards holders could earn when a coin reaches 20M–50M–100M–500M+ in trading volume. This mechanism creates massive long-term opportunities and enables you to build a real cult following around your coin.