Summary
Tax policies differ from country to country and have huge implications on user behavior when it comes to buying/selling/staking of cryptocurrencies.
There is a way this can be used to draw more users to UST!
Motivation
Many countries in Europe charge income tax on coins held shorter then 1y and charge nothing on coins held for longer than 1y.
For coins that are staked the holding period is extended to 10y if you do not want to pay income tax on it.
This prevents a lot of users from using the Anchor protocol or UST altogether.
If there was a way to invest in a yield bearing form of UST without having to stake it (e.g. zero coupon bond) this would increase the usage of UST tremendously.
Proposal
Create a yield bearing version of UST…let’s call it yUST for this example.
Terraswap and Astroport would need to have a trading pair UST-yUST.
yUST would need to have a automatism behind it that automatically stakes the exchanged UST in Anchor.
Once a user wants to sell their yUST the staked UST would be taken out of the pool and redeemed for UST.
Example 1 - Buy and stake 1000 UST and hold 2 years:
Y0 – 1000 UST
Y1 – 1200 UST
Y2 – 1440 UST
Staking Yield: 20%
Tax: 45%
Profit = 440-440*45%= 242 UST
Example 2 - Buy 1000 yUST and hold for 2 years:
Y0 – 1000 yUST
Y1 – 1200 yUST
Y2 – 1440 yUST
Staking Yield: 20%
Tax: 0%
Profit = 440 UST
I disregarded the continuous compounding, but obviously yUST would move up in price depending on the daily staking yield of Anchor.
I strongly believe this would draw a lot more people to the Anchor protocol that currently have issues using it due to tax implications.
Happy to hear your thoughts on this!