Deposit and Borrow - DEFI

Koinly Support
1

Hello

I have used several Decentralized Finance applications. I made several loan and borrowing operations on different applications like Venus or AAVE

Example :

  • I deposit $1000 in the Venus or AAVE application
  • Then I borrow $500 from the Venus app or AAVE
  • And finally I deposit the $500 that I had borrowed

In the Koinly application the result is as follows:

  • For the $1000 I placed I have a “Exchange” movement
  • For $500 borrowed I have a “deposit” movement
  • For the $5000 that I then placed I have a “Echangee” movement

It doesn’t look right and will generate a lot of tax. Can you tell me what i should do please

2

Any answer to this for the Venus platform? How do we handle BNB to VBNB, VBNB to BNB? Venus tokens are receipt tokens but it looks like they generate profit and loss as they have a market price (although they can’t be traded as such).

3

Hello!

Alex from Koinly here :slight_smile:

This one is a bit tricky because of these protocols providing tokens back for providing collateral.
When that happens Koinly automatically see it as a trade because it fits the criteria for it.
It’s one token, for example ETH being traded for AWETH, but in reality it’s just you providing collateral and receiving a receipt for that in the form of AWETH tokens.

Some tax agencies will consider this to still be a trade, but if you check with them and they consider this to be the same as any other lending/borrowing then it’s safe to just go ahead and delete the transaction where you deposit collateral and receive (using the same example) AWETH, and then create a transaction for ETH instead that you tag as “Sent to pool”.

When you go to repay the loan you just need to make sure you remove the AWETH → ETH trade and make it ETH being “Received from pool”.

You will still end up having a deposit for the borrowed amount, but if it’s in Fiat it will be seen as any other Fiat deposit and it’s as if you are just using your own money.

I hope this helps! If you need any more specific help I would suggest sending us an email at hello@koinly.io

Best regards,
Alex