$PAWSE Launch Mired By Controversial Trading Tax

One of the hottest-anticipated memecoin launches in recent memory, $PAWSE has endured a somewhat forgettable first 24 hours of trading.

Despite a meteoric initial surge to a $100M FDV, euphoria turned to rage as uninformed traders learned they were subject to a 100% trading tax.

Do snipers deserve to suffer heavy penalties for front-running ‘regular’ traders, and are trading platforms responsible for users who don’t read the docs?

Anti-Sniper Launch Mechanic Backfires

On June 17, the fabled $WIF deployer returned to launch a new coin, $PAWSE. In a bid to protect the launch of snipers, $PAWSE was deployed on the Vertigo DEX, with the condition that traders buy through the Bullpen trading platform.

Vertigo, an emerging DEX on Solana, gives token deployers the option to implement variable trading taxes on a slot-by-slot basis. According to Vertigo’s documentation, this levels the playing field between snipers and human traders.

At launch, thousands of traders using all kinds of different trading tools piled into $PAWSE, pushing the memecoin to an FDV of $100M within minutes. However, anyone who bought $PAWSE via any tool outside Bullpen quickly found that they had lost everything, calling the launch a heinous scam.

Solana’s memecoin trenches are divided on whether the $PAWSE launch is an extractive scam, or a paradigm shift in how to operate sniper-proof launches.

Naturally, a measure of objectivity seems to be lacking from the discourse. Traders who lost money are quick to call the debacle an elaborate scam, while those who profited consider the launch a great success.

While the Vertigo model claims to provide a sniper-proof environment, there’s an argument that it merely changes a sniper’s approach to a launch. 

Decreasing trade tax rates over time doesn’t necessarily mean “human traders” can get in at the same time as sniper bots. Instead, it merely postpones the slot at which snipers will execute their trade. Additionally, the model forces snipers to decide on how much tax they are willing to pay, while still outpacing regular users.

According to Fluxbeam DEX and Rugcheck founder Scott Hague, the model still leaves snipers with a significant advantage:

“Snipers in general still have a huge benefit as can accurately snipe when the fee is sufficiently low, [the Vertigo model] seems to just mainly impact uninformed users trying to get in early - given it’s a new DEX it’s even more impactful as users have 0 knowledge of how it operates whereas snipers have fail safes to ensure they don’t get smacked by fees” - Scott Hague, Fluxbeam, Rugcheck Founder 

Blatant Scam or Paradigm Meta Shift?

While the traders who unknowingly lost funds are rightfully frustrated, it’s worth mentioning that Bullpen, Vertigo, and the PAWSE 𝕏 account all stipulated that PAWSE was only available via the Bullpen platform.

The PAWSE team has since indicated that all traders who lost money during the launch will be refunded via a tax rebate. However, prospective recipients are still in the dark with regard to how much they expect to receive back.

Ansem, Solana KOL and Bullpen representative, has come out in staunch defense of the model, indicating that Bullpen will continue working towards building a more egalitarian launch platform. Meanwhile, rival trading platforms have struck out at other terminals that failed simulate trades and protect users from the tax.

This position was further reinforced by Hague, who argues that trading platforms should be responsible for preventing unexpected swap results.

“Trading platforms have a responsibility to ensure their users don’t get blasted with 100% tax. Fluxbeam didn’t integrate the new DEX yet due to this.” - Scott Hague, Fluxbeam, Rugcheck Founder

Burwick Law, a prominent crypto law firm, indicated that they had already received several complaints from $PAWSE purchasers and were investigating the launch on their behalf. However, the firm has stipulated that outlining terms in obscure documents "where users may never see them" is often not enough to protect operators from liability.

“First, we’ve already been contacted by PAWSE purchasers and are investigating potential claims on their behalf. Speaking more broadly, website terms and conditions bind users only when there is clear assent, typically through a clickwrap or similar prompt. Simply posting terms where users may never see or affirm them is often not enough. Digital-asset consumers’ rights should be protected, and claims can arise under breach of contract, consumer-protection statutes, or other regulatory theories.” - Max Burwick, Burwick Law Manager Partner

$PAWSE has since struggled to find its feet following the controversial launch, now trading hands at an FDV of $44M.

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