If you've done stuff on-chain and later attempted to prepare an accurate tax report, you can probably relate to this experience:
You load your wallet into any crypto tax software, and a good percentage of your transactions are incorrectly tagged, or don't have a category at all.
The more long-tail you go, with the chains / protocols that you interact with, the less likely you're to have accurate interpretation of what each transaction is, and what it means for taxes.
The consequences of getting this data wrong can be massive.
Whether through over-paying taxes, or under-representing income and then getting into trouble with authorities, there's a lot to lose by having incorrectly-tagged transaction data.
In DeFi, this lack of "standardized meaning" for transaction data is not getting better as time passes.
This is due to a combination of the following factors:
- More chains means more data fragmentation (you have to resort to a greater number of data providers just to keep up).
- There are almost no standards for how smart contract developers name their functions, variables, event logs, and other technical shenanigans that make data interpretation a lot harder.
- New trends like account abstraction, or gas-optimized smart contract calls (multicalls), are making the data even more obfuscated and harder to process.
Meaningful tagging, enrichment, and delivery of human-friendly descriptions are all core components of our transaction data product.
We come at this problem from the perspective of being DeFi-native, and having experienced first-hand how challenging it is to get good, clean, and meaningful data from on-chain transactions.
If you want the nitty and gritty of how our transaction data is generated, click here.
Here's the summary: we have a system that will tell you what every transaction is, so that you can decide in a very granular way (for example) what to report as a taxable event.
Something that you'd normally spend hours doing manually by cross-checking your transactions against what you see on the block explorer, we do it automatically.
Updated 3 months ago