As a user of Algofi, I want to effortlessly use services like Koinly or CoinTracker, so that I don’t have to build complex spreadsheets and/or export transactions to maintain tax compliance in my jurisdiction.
I personally believe that the friction of tax compliance is holding back greater adoption of defi. I believe we are near an infliction point that will require a more seamless, effortless and frictionless method of tax compliance. With a low effort approach, like a real-time API driven system with Koinly or Cointracker, Algofi can increase user KPIs and thereby increase TVL. Which means more people are benefiting from defi - the ultimate goal.
I believe this topic is so important that a consortium of defi platforms may want to work together to deliver this integration.
I would like to begin the proposal process in three phases.
Phase 1 - The first proposal would focus on exploration. The core team would research if other defi platforms (not limited to Algorand) are addressing the use case. Since this would be a low or no code phase, it could run through June.
Phase 2 - The second proposal would use the information from the exploration phase to identify key partners for building a POC and on-boarding a limited number of users. The POC could be a consortium of organizations working on this use case for the common good of defi growth. This phase would run through August and could continue into Phase 3.
Phase 3 - The third and final proposal would be evaluating the feasibility of the POC for scalability and sustainability. In this phase a decision would be made to discontinue, pause or productionalize the capability. The target delivery of this phase would depend on the Algofi roadmap, but conservatively target sometime in 2024.
I keep my Algofi use cases very basic because my spreadsheets skills are simple. I’m sure I’m not the only person that seeks simplicity because of the complexities of tax compliance.
I agree. I think this is extremely important, and evident by the fact I’ve been a user of Algofi for nearly a year, and this topic is the only thing that motivated me to even consider creating an account here on the discussion board to 2nd this.
I used Koinly for my 2021 Tax info but it was a pretty big time commitment on my part trying to figure everything out for the first time. I am dreading my 2022 return already (and I have a masters in accounting haha).
You can already do this with https://stake.tax. This tool will give you a CSV with the list of taxable transactions that you can then import into your tax software (15 formats supported, Koinly among them).
This is a great resource to share. What would be great is if the Devs could audit the implementation for Algofi to verify that everything is being computed correctly. If so, it might make sense to link to this resource in documentation so people know it exists.
Thanks @JumperAvocado for this resource as an example. The heart of this draft Effortless Tax Compliance concept is really about helping Algofi and other platforms like Algofi to consider what it will take to go mainstream. As a result, tax compliance needs to be integrated so that the users are confident and not overly burdened when filing tax documents in their jurisdiction. While many of the current defi users are comfortable with CSV files and github read.me documents, to go mainstream we can’t expect defi participants to jump through hoops. The defi experience must be frictionless.
I would be interested in hearing from others on moving Phase 1 of this concept into Proposal Staging to see what the dev team can uncover.