Balance Capital
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Balance Capital

Wrap Staked FHM: Making Taxes Hurt Less

Have you ever wanted to pay fewer taxes on your crypto capital gains? Developers at FantOHM DAO have implemented the perfect solution- wrapped staked FantOHM (wsFHM).

Investor’s Dilemma

When investors allocate funds to protocols like FantOHM for higher returns, they also have nightmares about those gains being heavily taxed. This is due to outdated, draconian tax laws that hinder the growth and advancement of decentralized banking systems.

Investors are, unfortunately, taxed twice on their investments. Once during the point of sale of the token and again, when the investors receive their staking rewards. To get higher returns from our ecosystem, investors stake their FHM and are punished in areas where such tax laws exist.. Daylight robbery if you ask us!

Solution? Wrap Staked FHM (wsFHM)

By wrapping staked FHM tokens, investors defer their staking rewards. Essentially, all the staking yields generated for all investors participating in wsFHM are accrued at a 1:1 ratio while in automated, decentralized holdings. This compacts the interest-bearing power of staked FHM into a pool of collected wealth. Investors still have control over their crypto investments and the gains are just the same but since the tokens are now held by the investor until they unwrap their wsFHM, taxes on them are not applicable anymore. This value of wsFHM is calculated based on the staked FHM market value, i.e., sFHM and current index.

Calculations

Let us show you what the calculations look like -

Say, you have 100 staked FHMs (sFHM) and the current index is 5 and you receive 20 wsFHM tokens [sFHM / Index = wsFHM]. These wsFHM tokens already contain the rebase rewards in the sense that when you decide to unwrap them, you will receive sFHM tokens according to the (then) actual current index value which itself increases over time.

For example, when the index is now 10, your 20 wsFHM tokens will be unwrapped for 200 sFHM [wsFHM x Index = sFHM]. The current index value can be found here.

How To Get Started?

Investors need to stake their FHM tokens and then wrap these staked FHM tokens.

Head over here to stake your FHM tokens.

Once staking is done, the next step is to wrap the staked FHM tokens. Go here and start wrapping your staked FHM tokens. You will need to approve your wsFHM for transactions first.

The whole process is really simple and straightforward.

For safety purposes, please always verify that you’re on app.fantohm.com

While the investors hold wrapped staked FHM tokens (wsFHM), their staked FHM awards accrue in a 1:1 ratio with their holdings. So, when it is time to take profits, investors only need to unwrap the exact amount of sFHM necessary to cash out. By taking part in this system, the investors only pay capital gains taxes once.

Conclusion

The wsFHM token is, in short, wrapped staked FHM, a standard ERC20 token with an accumulation of the rebase value of FHM, without rebasing. Investors get all the rebase benefits when they unwrap wsFHM back to sFHM. wsFHM carries all the FHM values as well as the rebasing value. We believe investors can bet on protocols like Fantohm with utmost pragmatism where the potential upside is maximized and the tax burden is minimized.

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