I have a DeFi problem that I hope some crypto project can solve. I am regularly receiving crypto income from a project on Polygon. But for tax purposes I don’t want income. What I want is token appreciation. Is there a project that can convert regular income into appreciation?
I think the most popular option here is beefy finance. They probably have a vault for the token pair on polygon that you have in mind. You trade your tokens for vault tokens (which is a taxable event), the beefy vault does all the yield farming and reinvestment, and then you sell the vault tokens one day and hopefully turn a profit. But the gain is all cap gain, not income.
You could get RETH from Rocketpool. RETH represents staked ETH in a validator pool and when that pool earns staking rewards RETH appreciates against the value of ETH. You will pay capital gains if you swap it back for eth or sell it on the market, but it won’t be ordinary income.
No. You do t have a defi problem – you have a tax problem. You can’t convert income to appreciation because you don’t like the tax implications. Once you receive your crypto from an event, like staking rewards for example, which would be classified as income, you have earned income and liable for the taxes. If you then take that income, and swap it to another token, or you get rewards in a particular token and just hold it so they appreciate, you are liable for the gains when you sell it – there is no protocol that will help you escape this reality.
Yes. Use Defi. Place your income crypto into a Defi saving account. Borrow stablecoins and buy an income producing asset.
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MNICorp might actually be a good fit imo. They invest in real-world businesses with collateral, and are powered by the token economy. So, each investor is basically a fractional owner of the company, by virtue of non-fungible equities. Idk if this makes sense.