Tax Implications - maybe off topic

Is part of the strength fo DAI that it give various crypto holders a path to access liquidity without triggering various tax implications ??

Perhaps I will hear crickets with this question, but I am new to DAI and this was one of my first thoughts…

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It’s difficult to answer your question because tax laws for each country are different. In the US though the answer is no. Any exchange from one cryptocurrency into another is treated as if it went through usd in the interim and is a taxable event.

Completely agree, in the case of an exchange it would be taxable,
Perhaps I misunderstand DAI - I thought that I locked up my ETH / BTC in a vault to get DAI.
Is it really converting ETH / BTC / … into DAI and locking the DAI up to get a loan in USD ?

Ah, I see. Yes the loan itself avoids taxation from liquidating eth/btc that is true. You are able to extract value from your cryptocurrency holdings without it being a taxable event. This does not sell any of your collateral unless your collateralization ratio drops below the threshhold.

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I think this is probably one of the biggest advantages for MakerDAO long term. Once ETH 2 staking launches, the real cost of opening a vault for leveraging ETH long will be the annualized SF plus the staking rewards rate forgone to lock the ETH in a vault. In all likelihood this could add 5%+ to the cost of holding a vault for ETH speculators. But for people who own ETH with a very low cost basis using a vault for liquidity will probably continue to be more cost effective than selling.

Well we could always onboard some staked eth collateral. Or cETH, depends on the interest rate of ETH on compound.

How could this possibly work? If the ETH is staked then it could be slashed. Maybe it could work with a higher stability fee?

I think the only way this could work is if vault owners delegated to Maker, and then we could ensure that we don’t try to double sign and maintain maximum availability. But begs the question how does Maker run real world infrastructure for staking?

That just avoids slashing due to malicious behavior. We’d still be vulnerable to client bugs.

I just listened to an interview with Joe Lubin where he was talking about “staking as a service.” That just seems crazy to me. You’d have to buy insurance against software bugs and hardware failures.