Improve manual edits for liquidity pool entry and exit
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Strategy
In the DeFi & Yield Farming Crypto Tax Guide by CoinTracker, it outlines a strategy to indicate entering into a liquidity pool as a deposit, and exiting as a withdrawal. Additional asset volume gained is counted as income resulting from swap fees earned and/or liquidity mining rewards.
Implementation - Deposit/Withdrawal Of Assets
- Add the ability to edit transactions in/out of liquidity pools as Transfers.
- Edit transactions where the asset deposited into a liquidity pool loses value (when the total value withdrawn is less than the value deposited). This is relevant in cases where a single asset is deposited/withdrawn, e.g. 1 WETH is deposited into a liquidity pool with multiple underlying assets. The assets trade at a loss in total value. 0.5 WETH is withdrawn in addition to any separate liquidity mining rewards claimed.
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Sam - CoinTracker
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This is now complete! We now support Liquidity events via our new transaction classifications. See our guide on Liquidity transactions in CoinTracker.
For further assistance, please contact our support team directly.
Thank you for your feedback and cooperation as we work to enhance your CoinTracker experience!
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How To Edit Liquidity Pool Entry/Exit As Deposit/Withdraw?
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What's the best way to manually edit transactions for entering/exiting liquidity pools as deposits/withdraws?
Strategy
In the DeFi & Yield Farming Crypto Tax Guide by CoinTracker, it outlines a strategy to indicate entering into a liquidity pool as a deposit, and exiting as a withdrawal. Additional asset volume gained is counted as income resulting from swap fees earned and/or liquidity mining rewards claimed.
Implementation
1. Deposit/Withdrawal Of Assets
1a.
Is the best method to select to ignore the existing transactions auto labeled as Trades, and manually create new transactions marked as transfers?
When the transactions are selected there is no option to modify them to transfers.
1b.
In cases where the liquidity pool loses value, when the total value withdrawn is less than the value deposited, how should the capital asset loss be recorded?
No asset was provided in return since there is a single asset deposited/withdrawn, e.g. 1 WETH is deposited into a liquidity pool with multiple underlying assets. The assets trade at a loss. 0.5 WETH is withdrawn in addition to any separate liquidity mining rewards.
2. Liquidity Pool Token
How should this token transaction be labeled in CoinTracker as it is received and later returned? Should it be marked as ignored if following this strategy?
As the article above states for some pools, a liquidity pool token may have "no real world market value".