What is a token fee?
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A token fee is a charge encoded in a token's smart contract that is automatically deducted whenever the token is bought, sold, or transferred. Tokens that implement this mechanism are commonly called fee-on-transfer (FoT) tokens.
How it works
The fee is enforced at the contract level: every call to the token's transfer or transferFrom function withholds a percentage before delivering the remainder to the recipient. The fee rate — and how the collected tokens are used — is defined by the token's creator, not by any exchange or protocol.
Common uses for collected fees include redistribution to holders, funding a treasury, or burning tokens to reduce supply.
How it differs from other fees
| Fee type | Charged by | Purpose |
|---|---|---|
| Token fee | Token's smart contract | Issuer-defined (redistribution, burn, treasury) |
| Network cost | Blockchain validators | Compensating transaction processing |
| Swap fee | Liquidity pool | Rewarding liquidity providers |
All three can apply to a single swap. CenturionDEX does not receive any portion of token fees — they are collected entirely by the token's contract logic.
Why it matters
When a token charges a buy or sell fee, the amount you receive will be less than the quoted output. The CenturionDEX interface displays a warning when it detects a non-zero fee, but not all fee structures are detectable on-chain. If a swap consistently fails or returns less than expected, a hidden token fee is a likely cause.