Basis Cost Block Reward Accounting
Problem
A delegator sells some ADA rewards from years ago and reports their income using the point of sale price.
Solution
A delegator can generate an income statement that factors only the cost to create their rewards to report as income.
Total to date
This is the total amount allocated to Basis Cost Block Reward Accounting.
About this idea
[IMPACT]
CryptoCount is an app and third party API that specializes in reward basis cost income statements. The software is ideal for any ADA reward holder looking to realize a quantity of rewards into fiat currency throughout the existence of Cardano from some time period in the past. What makes CryptoCount unique is its precisely calculated basis cost calculations for each reward realization.
Here is an impact picture: say the year is 2030. You want to sell some block rewards from 2022 because ADA is significantly higher in price and it would be nice to have some fiat currency to spend at the bar. Using CryptoCount, you can select to realize all of your rewards from 2022 and then generate an income statement that displays the cost to create your 2022 rewards (so say about 1.5USD per ADA). The reported income difference between the point of sale value (in 2030) and the basis cost value (from 2022 or prior) is the impact of CryptoCount. This results in tax savings.
In addition to the basis accounting, we also supply to depreciation accounting sets. Our accounting methods are based off academic literature, which you can find a link to in our website here: https://portaltoblockchain.org
CryptoCount supports 40 countries and others can be requested and integrated.
The challenge CryptoCount faces is if reward holders report a point-of-sale fiat value of block rewards as income, especially when, the rewards were generated years before the point-of-sale. By assumption of bullish ADA price to fiat in the 21st century, a large price gap exists between the basis cost and point-of-sale cost. CryptoCount solves this problem by giving users an interface to realize a date domain of block rewards, for example all rewards generated in 2021. The basis cost of the 2021 rewards is aggregated and delivered to the user for income reporting. The basis cost of a reward is calculated as the weighted average of true additions (positive transactions that remain immobile for a significant period of staking) prior to the reward being generated. Hosted third party delegation services are our primary target for API integrations (like coinbase, crypto.com, etc.) so that the exchange can use our data in the "Taxes and Reports" sections.
One challenge will be deriving validator block rewards versus delegator block rewards. We have established the infrastructure required to successfully develop the project. Our experience building the project to this point and our significant Cardano Integration planning has given us confidence to deliver the project successfully.
The basis accounting we use is currently being lobbied in US congress by bi-partisan groups of legislatures. We were actually a small part of the lobbying team that brought a civil suit to the U.S. to affirm that basis cost block reward accounting becomes the de-facto block reward accounting method and income reporting method in the 21st century. Economic literature indicates this methodology will dominate in legislative logic throughout the 21st century around the world.
[FEASIBILITY]
Deliverables
- Implementation of the new History object (core system object, visual representation page 260)
- Implementation of the upgraded history object. Comes with realization by a date domain (this means the user will select a range on a calendar that displays their true additions and basis costs)
- Integration of Cardano Validators and Delegators
-Cardano validators will be able to select themselves in the "Consensus Role" section of the analysis request in CryptoCount.
- All accounting services will be available to Validators and Delegators
- Third party validator services will be able to query for their own validating operation. Supplemental delegator information may also be supplied as an endpoint. This is for exchanges and other hosted address entities.
- Numerous minor feature upgrades
- Several minor features like "Skip Sign In", legal information for block reward income reporting in the user's jurisdiction, detailed explanations of how the programs work in the income statements and on the app.
- Other upgrades include, naming Histories, interacting with the accounting entry graph, reverting a saved realization back to its previous state, and much more.
- Significant project traffic
- We aim to significantly increase the project traffic by targeting user's on Google, Instagram, and Reddit.
- API Integration
- We are aiming to get our first API integration in 2022.
Our budget proposal is based off of labor input to the project with overhead space for deployment assets and community development incentives. Our build schedule is slated for Q2 and Q3 this year. Our budget is planned to work like so:
Q2 Engineering development - 3 full time engineers and 1 manager at approx 40 hours per week. For 3 months.
Q3 Engineering development in system development life cycle (after receiving feedback and testing input) - 3 full time engineers and 1 manager at approx 40 hours per week. For 3 months.
Reserving 200,000 USD of the proposal for the engineering team, the hourly rate for the engineers is 52.1 USD/hr.
According to ZipRecruiter: average California software engineer earns 43$ per hour and the 75th percentile makes 55$. We think this is fair build estimate. The remaining $50,000 goes towards infrastructure, marketing and administrative assistance (for API integration).
Marketing: approx 15,000 - 20,000 USD. This funding is reserved for google ads, instragram ads, other content driving methods, and our marketing consultants (google analytics and SEO specialist and instagram specialist).
10 Year Hardware infrastructure plan: approx $30,000. CryptoCount is a long term solution for block reward realizations. Putting an infrastructure budget out to sustain the project is critical for servers, database management, and other overhead costs.
Henrik Moe - Author, Project Lead. PTBO employment duration: 3.5 years.
https://www.linkedin.com/in/henrikmoe/
Shaheen Alemi - Engineer - Database management, unit testing, route design, Engineer for Ripple.
https://www.linkedin.com/in/shaheen-alemi/
Chase Bellisime - Engineer - React Engineering, Complete WEB2 and WEB3 development, AI/ML Specialist, Google Analytics and google traffic specialist.
https://www.linkedin.com/in/chasebellisime/
Blake Berlinger - Traffic Driving - Instagram content driving specialist, NFT solutions experience.
https://www.linkedin.com/in/blake-berlinger-93a985185/
Ruby Swanson - Technical Support - Integration Service, Customer relations, Marketing support. (Community driven actors): Leo Treasure - Technical Support - Community driven support actor, early adopter, unit testing, other credentials unknown.
[AUDITABILITY]
We take a Behavioral Driven Development approach to the project. We'll track progress by deriving our 5 major deliverables listed above into sets of software units. We will move on to the next deliverable after every unit within the current deliverable category is thoroughly tested and stable.
- Implementation of the new History object (core system object, visual representation page 260)
- Implementation of the upgraded history object. Comes with realization by a date domain (this means the user will select a range on a calendar that displays their true additions and basis costs)
- Integration of Cardano Validators and Delegators
-Cardano validators will be able to select themselves in the "Consensus Role" section of the analysis request in CryptoCount.
- All accounting services will be available to Validators and Delegators
- Third party validator services will be able to query for their own validating operation. Supplemental delegator information may also be supplied as an endpoint. This is for exchanges and other hosted address entities.
- Numerous minor feature upgrades
- Several minor features like "Skip Sign In", legal information for block reward income reporting in the user's jurisdiction, detailed explanations of how the programs work in the income statements and on the app.
- Other upgrades include, naming Histories, interacting with the accounting entry graph, reverting a saved realization back to its previous state, and much more.
- Significant project traffic
- We aim to significantly increase the project traffic by targeting user's on Google, Instagram, and Reddit.
- API Integration
- We are aiming to get our first API integration in 2022.
Our definition of done is to have both Cardano delegators and validators using CryptoCount in mass numbers, saving millions of USD in taxes by reporting rewards from long ago using basis cost instead of point of sale accounting.
This is a new proposal in Catalyst and the Cardano ecosystem.
SDG Rating
Unavilable
Team
CryptoCount is a block reward asset management tool suite that features an app and an API for third party hosted staking services. Our team has developed CryptoCount for the last year and a half with the support of Tezos.
