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Wonderland-Money / wonderland-frontend

MIT License
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Please rename the Staking Tab and Botton #9

Open edmorbius opened 3 years ago

edmorbius commented 3 years ago

Hi

As you know, rebasing has its own tax implications is the US and probably other countries. Rebasing is not a staking reward and, for reference, please listen to the Token Tax interview hosted by Olympus. The short of it is that a rebasing system is akin to a stock or token split.

So, I have been audited in the past (It turned out to be an IRS mistake). These IRS employees are very simple and move quickly. As soon as they see "Stake" on your website they will claim that rebasing rewards need to be taxed as in in the year that they were gained. It would be helpful if you didn't call it "Stake".

Staking has its own complications in that I need to be in possession of the rewards. One can argue that I am not in possession until I exit the contract (Unstake on your website). Nonetheless, it is not helpful that you call it staking for a rebasing system.

Token Tax Interview https://twitter.com/ishaheen10/status/1442909878561902594?s=21

plebosaur commented 2 years ago

A rebase should not qualify as a taxable event since you are being guaranteed assets and you are not claiming any of them. Claiming your reward seems more like an event that would be taxable. To borrow a paragraph from this article(https://tokentax.co/guides/defi-crypto-tax/):

In traditional markets, a stock split occurs when a company divides its existing shares into more shares in order to increase liquidity. This is not considered a taxable event because although a shareholder now owns more shares, those shares have the same market value as the shares he or she held before the stock split. A taxable event would only occur when and if the investor sold their shares for more than they were worth at the time they were received.

If we applied this treatment to rebasing tokens such as AMPL or OHM, capital gains would be only realized when and if you end up selling your asset for more than it was worth when it was deposited in your wallet.

And by claiming I mean at an exchange for fiat money IE USD not claiming on the DAO

edmorbius commented 2 years ago

Thank you for the response. I understand taxation but implying that the user has entered a staking protocol is simply a mistake. It is a rebasing protocol. It is not a big deal other that when one thinks and decides how to treat a taxable event. Calling it 'staking" is a source of confusion in that situation.

I do understand that "staking" is a term that most users understand when going thru the process. But, again, there are other implications.

plebosaur commented 2 years ago

I want to clarify I dont have any affiliation with Wonderland Im just a participant also. I hear your concern, that seems like something that should probably be addressed.

edmorbius commented 2 years ago

Ah. That is great. I thought I was quite alone on this.