In the BSC ecosystem, transaction taxes, holding dividends, and automatic burns have become common designs in many Token economic models. However, combining "dividends" and "burns" creates a more unique mechanism—Black Hole Dividend.

Its core logic can be summarized in one sentence: Users actively burn tokens to gain the qualifications for future dividends.

Unlike ordinary holding dividends, Black Hole Dividends do not simply follow the rule of "the more you hold, the more dividends you get." Instead, they allow users to choose between continuing to hold, selling tokens, and actively burning tokens. Through this mechanism, projects can continually reduce the circulating supply while allocating profits.

What is a Black Hole Dividend?

A "black hole" typically refers to an address from which ordinary users cannot retrieve their assets. For example, the black hole address used in the CiaoTool tutorial:0x000000000000000000000000000000000000dEaD

When users send tokens to this address, it generally means these tokens will permanently leave the normal circulation system.

From the perspective of token economics, the significance of burning lies in reducing the circulating supply. Strictly speaking, there are also designs in the industry that directly reduce the total supply through the Token contract burn function, while "sending to a black hole address" is another common method of permanent locking. The Ethereum token standards also define Burn as the process of destroying existing tokens.

The Black Hole Dividend further adds an incentive mechanism:

1. Users hold the project's tokens.

2. Users actively send a certain amount of tokens to the black hole address.

3. When the burned amount reaches a set threshold, the wallet becomes eligible for dividends.

4. The dividend pool distributes rewards to qualifying addresses according to the rules.

5. The tokens burned by users are permanently withdrawn from normal circulation.

Thus, it is often summarized as "burning is mining."

How does "burning is mining" work?

The "mining" here is not PoW mining, nor is it users earning BNB through hashing calculations, but a reward incentive mechanism based on token burning behavior.

For example, a project issues 100 million tokens and sets:

• Minimum burn amount for Black Hole Dividend: 100,000 tokens

• Dividend asset: USDT

• Dividend pool: continuously inject USDT

• User A: burns 100,000 tokens

• User B: burns 500,000 tokens

When both A and B reach the minimum burn threshold, they may qualify for dividends; the specific allocation ratio depends on the actual design of the contract.

Here, it should be noted: Burning tokens does not generate rewards out of thin air.

Dividends must have a real source of reward assets, such as transaction taxes, USDT/BNB injected by the project team, or other BEP-20 tokens. Therefore, "burning is mining" is more accurately described as exchanging the permanent destruction of tokens for reward distribution eligibility, rather than traditional blockchain mining.

What is the difference between Black Hole Dividends and ordinary holding dividends?

The biggest difference between the two mechanisms lies in the conditions for obtaining rewards.

The logic of the ordinary dividend mechanism is "Rewards for holding", while the Black Hole Dividend is "Eligibility through burning".

This is also the core difference between the two models in token economics.

How to design transaction taxes for BSC Black Hole Dividend tokens?

Black Hole Dividends usually do not exist in isolation, but are combined with mechanisms such as buy/sell taxes, liquidity, and marketing funds.

For example, the BSC Black Hole Dividend token from CiaoTool can be configured as follows:

Buy Tax and Sell Tax

The project team can set different tax rates for buying and selling, and allocate the generated taxes for different purposes.

For example, it can be designed as:

1. Dividend Tax: used to reward qualifying holders.

2. Marketing Tax: transferred to a designated marketing wallet.

3. Reflow Tax: used for liquidity-related operations.

It should be noted that a higher tax rate is not necessarily better. Excessive trading taxes may increase user transaction costs, impact liquidity, and reduce actual transaction willingness, so the design needs to consider project positioning and liquidity conditions.

Why is initial liquidity important?

The completion of the creation of a Black Hole Dividend token does not mean it is ready for trading.

On BSC, BEP-20 tokens can exist independently, but if they wish for users to exchange via DEX, a corresponding liquidity pool needs to be created. The official development documentation for the BNB Chain also explains BEP-20 Tokens in the context of typical smart contract applications similar to Uniswap V2 AMM trading scenarios.

According to the creation process of CiaoTool:

1. Create the Black Hole Dividend token.

2. Set the dividend token, buy/sell tax, and other parameters.

3. Complete the initial liquidity settings.

4. Create the BSC liquidity pool.

5. Pair the new token with value assets such as BNB.

6. After trading is enabled, users can then conduct normal exchanges.

Among these, CiaoTool's current tutorial requires initial liquidity pools to use V2 because the tax mechanism needs to be compatible with the corresponding trading logic; V3 liquidity pools cannot participate in such tax mechanisms.

How to create BSC Black Hole Dividend tokens with CiaoTool?

For project teams that do not want to write complex Solidity contracts themselves, they can complete the creation through CiaoTool's visual interface.

The basic process is as follows:

Bind wallet → Fill in token information → Set dividend token → Configure buy/sell tax → Set black hole burning threshold → Set marketing wallet → Configure initial liquidity → Create contract

The main parameters to be filled in include:

• Token name, abbreviation, decimal precision, and total supply

• Wallet to receive the initial tokens

• Dividend token contract address

• Buy tax rate, sell tax rate

• Marketing tax, dividend tax, reflow tax

• Marketing wallet address

• Minimum burn amount for Black Hole Dividend

• Initial trading pair and liquidity parameters

Among these, the minimum burn amount for Black Hole Dividend is a very crucial parameter in the entire mechanism.

If no threshold is set, according to the default logic in the tutorial, users can obtain dividend eligibility as soon as they send tokens to the black hole; if a threshold is set, only wallets that meet the specified burning standard can enter the dividend system.

What scenarios are suitable for Black Hole Dividends?

This mechanism is particularly suitable for Token projects looking to combine deflationary models with reward incentives.

For example:

• Projects that want to continuously reduce market circulating tokens

• Projects that wish to establish external asset reward mechanisms such as USDT and BNB

• Community-type Tokens that want to enhance user engagement through burning activities

• Web3 projects that need to design special Tokenomics

However, it should be noted that deflation does not equal price increase. A reduction in token supply merely changes the supply-side variables; the final value of the token continues to be influenced by demand, liquidity, trading depth, project fundamentals, and market sentiment.

What should be noted when creating Black Hole Dividend tokens?

Black Hole Dividends belong to a type of Token that involves complex trading taxes and special extended logic, thus requiring greater attention to contract compatibility and security compared to ordinary BEP-20 Tokens.

CiaoTool's tutorial also specifically warns: Due to the use of special mechanisms or extended features, some security detection platforms may display potential risk warnings or lower ratings for such tokens. If project teams are more concerned about compatibility with wallets, DEXs, or security detection platforms, they may consider creating simpler standard tokens.

In addition, before creation, it is important to confirm:

• Whether the dividend assets truly exist and have a sustainable source;

• Whether the buy/sell tax rates are reasonable;

• Whether the black hole burning threshold aligns with the project’s economic model;

• Whether the initial liquidity is sufficient;

• Whether contract permissions need adjusting later;

• Whether features like blacklist and maximum holding amount truly need to be enabled.

The essence of Black Hole Dividends is not complex: User burns Token → Meets conditions → Obtains dividend eligibility → Receives rewards according to rules.

The biggest difference with ordinary holding dividends is that it transforms "holding" into "active burning". Project teams establish a reward pool through transaction taxes or other means, then utilize dividends to incentivize users to actively reduce circulating tokens, forming a combination of "reward incentives + token burning + deflationary model".

However, "burning is mining" is not a risk-free revenue model. Dividend sources, transaction taxes, liquidity, contract permissions, and actual market demand will all directly affect whether the mechanism can operate sustainably in the long term.

For project teams wishing to quickly test this Tokenomics model on BSC, CiaoTool provides a code-free creation process for Black Hole Dividend tokens, allowing for direct contract deployment through visual parameters, and then operating with liquidity and subsequent market value management tools.

Compliance reminder:Different countries and regions have varying regulatory requirements concerning the issuance and trading of digital assets. Please familiarize yourself with local laws and regulations and platform rules before using relevant tools, and take responsibility for your on-chain operations.

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