# harberger economics

> Harberger tax is a property regime where the owner publicly declares the asset's price and anyone can buy it at that price. The owner pays a continuous tax proportional to the declared price. It eliminates speculative hoarding while preserving private property.

GitVerse adopts this model for tile ownership. Below is what it means in practice.

***

## The declared price

When you claim a tile, you set a **declared price** (minimum 0.01 ETH). This price has two functions:

1. **It's the buyout price.** Anyone can take your tile by paying you this price + a 10% fee.
2. **It's the tax base.** You pay 5% of this price per week, drawn from your deposit.

Higher price → harder to buy you out, but more tax. Lower price → cheaper to defend, but cheaper for others to take.

***

## The deposit

Your tile has a **deposit balance**, denominated in ETH. The contract draws weekly tax from this balance. As long as `deposit ≥ tax owed`, your tile is safe.

* Initial deposit on claim: **0.003 ETH** (lasts about 6 weeks at 0.01 ETH declared price)
* Add more anytime with `addDeposit(tileId)`
* Withdraw extras anytime with `withdrawDeposit(tileId, amount)` (after tax is settled)

If the deposit runs out, the next time someone (anyone) calls `pokeTax(tileId)`, the contract takes whatever is left as partial tax and **foreclosures** the tile. The tile is back on the market.

***

## Price decay

Long-held tiles become cheaper to buy out automatically, even if the owner doesn't change anything.

* Every **2 weeks**, the effective price drops by **20%**
* Floor: **10% of the original declared price** (or 0.01 ETH minimum, whichever is higher)
* Reset by calling `setPrice` (even to the same value — but a *higher* `setPrice` triggers appreciation tax)

This forces holders to actively re-price their tiles. A "set and forget" strategy slowly erodes your defensive premium.

***

## Appreciation tax

Raising your price isn't free. The contract charges **30% on the price increase**:

```
tax = (newPrice - effectivePrice) × 30%
split: 60% Treasury, 40% holder pool
```

Example: your tile is currently effective at 0.01 ETH. You set price to 0.02 ETH. The increase is 0.01 ETH. Tax = 0.003 ETH, drawn from your deposit (or you can send extra ETH in the same tx). 60% (0.0018 ETH) goes to Treasury, 40% (0.0012 ETH) flows to all tile holders (including you).

You can raise your price at most **3× the current effective price** in a single setPrice. Beyond that, you'd need to do it in multiple steps.

***

## Buyouts

To buy a tile from another holder:

```
cost = effectivePrice + (effectivePrice × 10%)
     = effectivePrice × 1.1
```

When the buyout executes:

* Previous owner receives `effectivePrice + their remaining deposit`
* The 10% fee is split: 90% to Treasury, 10% to holders pool
* You become the new owner with a fresh price = `effectivePrice`
* Any excess ETH you sent becomes your new deposit

There is **no minimum holding period**. If you buy someone's tile, someone else can immediately buy it from you at the new price + 10% fee.

***

## Foreclosure

If your deposit runs out and someone calls `pokeTax(tileId)`:

* The contract takes whatever is left of your deposit as partial tax.
* Your tile is marked as empty.
* The `TileForeclosed(tileId, prevOwner)` event is emitted.
* Anyone can now claim the tile fresh.

Your **accumulated fees** are NOT lost. Whatever you haven't claimed yet remains in your `pendingFees` balance and you can call `claimFees()` to withdraw it — even after foreclosure, even after you no longer own any tile.

***

## A worked example

| Action                                           | Result                                                                                                                         |
| ------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------ |
| You claim tile #42 with declaredPrice = 0.01 ETH | Deposit = 0.003 ETH, you're the owner                                                                                          |
| 1 week passes                                    | Tax owed ≈ 0.0005 ETH, deposit = 0.0025 ETH                                                                                    |
| You `addDeposit(42)` with 0.01 ETH               | Deposit = 0.0125 ETH                                                                                                           |
| Someone calls `buyoutTile(42)` paying 0.011 ETH  | They become owner; you receive 0.01 ETH + 0.0125 ETH = 0.0225 ETH. 0.001 ETH fee splits 0.0009 to Treasury + 0.0001 to holders |
| You `claimFees()` later                          | You collect your holder-share accrued while you owned the tile                                                                 |

Net for you: you spent 0.02 ETH (0.01 admission + 0.01 added deposit), you got back 0.0225 ETH + your holder share. Profit comes from the buyout premium plus your accumulated fees.


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