What is the true value of an F asset?

[HAL1000]

If an asset is brought over to the flare network then does it have the same value as the original native token?

E.g. Will Fxrp, Fxlm, Fdoge, Fltc etc - actually have the same value as their native versions?

I understand all the new rewards we will get for doing this, more tokens with potential future value etc, but let's go with this analogy XRP shoot's to $10, does this automatically mean Fxrp will follow suit!

This is just me thinking out loud so to speak, and I was wondering what others here have to say about this.

Am I viewing this in the right way, or am I missing something?

[brianwalden]

The fact that you can convert from one to the other will keep them close in price. But they won't be exactly the same because they have different features and people will therefore value them differently.

I've speculated that this price difference will naturally lead to someone developing an automated bridge to send FXRP to the XRPL (as FXRP, not converting it back in into XRP) in order to trade on the XRP/FXRP price difference.

If this happens for the other F-assets, the two ledgers should become more and more connected with assets able to move across them seamlessly. The same should be true of Stellar since it can also represent all these different currencies. This will hopefully increase volume and liquidity across all of these connected ledgers.

[Guest]

18 minutes ago, brianwalden said:

The fact that you can convert from one to the other will keep them close in price. But they won't be exactly the same because they have different features and people will therefore value them differently.

I've speculated that this price difference will naturally lead to someone developing an automated bridge to send FXRP to the XRPL (as FXRP, not converting it back in into XRP) in order to trade on the XRP/FXRP price difference.

If this happens for the other F-assets, the two ledgers should become more and more connected with assets able to move across them seamlessly. The same should be true of Stellar since it can also represent all these different currencies. This will hopefully increase volume and liquidity across all of these connected ledgers.

Well put !! F-Assets are essentially stable coins pegged to their native coins. One other note - @HAL1000 since you've mentioned rewards: please be aware of tax implications, especially in the U.S., with wrapping your tokens. There are broadly two steps when wrapping:

• You are transferring your native tokens to an Agent's wallet on the original blockchain
• You are being issued new tokens from an Agent's wallet on Flare

Both these transactions are taxable in the U.S. and if you are sitting on a significant profit on your original tokens, you may be liable to pay taxes on the gains.

[brianwalden]

14 minutes ago, Ripley said:

Well put !! F-Assets are essentially stable coins pegged to their native coins. One other note - @HAL1000 since you've mentioned rewards: please be aware of tax implications, especially in the U.S., with wrapping your tokens. There are broadly two steps when wrapping:

• You are transferring your native tokens to an Agent's wallet on the original blockchain
• You are being issued new tokens from an Agent's wallet on Flare

Both these transactions are taxable in the U.S. and if you are sitting on a significant profit on your original tokens, you may be liable to pay taxes on the gains.

Oh man, I didn't think about that. That's kind of crappy, because conceptually it's not selling your coins but transferring them to a different ledger.

[Guest]

36 minutes ago, brianwalden said:

Oh man, I didn't think about that. That's kind of crappy, because conceptually it's not selling your coins but transferring them to a different ledger.

Frankly, I didn't either, until literally a couple of days ago as I was preparing documentation for last year's taxes and this struck me. I was hoping to mint FXRP and get that nice FLR bonus. I'm unfortunately at a fairly low cost-basis, so I'll probably skip this. Unless XRP crashes and makes it financially viable  

Edited March 1, 2021 by Ripley

[brianwalden]

25 minutes ago, Ripley said:

Frankly, I didn't either, until literally a couple of days ago as I was preparing documentation for last year's taxes and this struck me. I was hoping to mint FXRP and get that nice FLR bonus. I'm unfortunately at a fairly low cost-basis, so I'll probably skip this. Unless XRP crashes and makes it financially viable  

Is there some way to not count this as a sale? This is like depositing paper dollars in your bank account and then depositing them from your bank account into paypal. You're handling over bills and getting a credit with the bank, then handing over your bank credit for a PayPal credit. It's not your actual bills moving from place to place but an exchange of one thing for another.

Being taxed for converting XRP into FXRP is like being taxed for converting money in your bank account into money in PayPal. They are both representations of the same thing, XRP, in two different accounting systems, the XRP ledger vs the Flare ledger. I get that this happens because cryptocurrencies are taxed as an asset and dollars aren't. But it doesn't feel right.

Back in the day there were Bitcoin bridges and Stellar bridges into Ripple (and maybe other cryptocurrencies). You were essentially changed a small transaction fee to convert your coins into XRPL IOUs and vice versa. Should those have been taxable events too? Is there a difference if the thing you're getting is treated as a redeemable coupon (which is how IOUs tended to be conceived of back then) rather than an asset in and of itself like modern ERC-20 tokens and F-assets?

[Guest]

10 minutes ago, brianwalden said:

Is there some way to not count this as a sale? This is like depositing paper dollars in your bank account and then depositing them from your bank account into paypal. You're handling over bills and getting a credit with the bank, then handing over your bank credit for a PayPal credit. It's not your actual bills moving from place to place but an exchange of one thing for another.

Being taxed for converting XRP into FXRP is like being taxed for converting money in your bank account into money in PayPal. They are both representations of the same thing, XRP, in two different accounting systems, the XRP ledger vs the Flare ledger. I get that this happens because cryptocurrencies are taxed as an asset and dollars aren't. But it doesn't feel right.

Back in the day there were Bitcoin bridges and Stellar bridges into Ripple (and maybe other cryptocurrencies). You were essentially changed a small transaction fee to convert your coins into XRPL IOUs and vice versa. Should those have been taxable events too? Is there a difference if the thing you're getting is treated as a redeemable coupon (which is how IOUs tended to be conceived of back then) rather than an asset in and of itself like modern ERC-20 tokens and F-assets?

So here's the challenge. The IRS is vague about this. It would be up to us individually to understand whether we take a conservative approach or not. A conservative approach is simple - when there is a transfer of assets between two wallets, it's a taxable transaction unless you own both ends. The regulatory framework isn't smart enough to understand outcomes (i.e. it's your own money) vs. technicalities (you are going through an intermediary)

The challenge is with wrapping, where you technically own both ends but there're intermediaries. At that point, especially with high value transfers (i.e. > USD 10,000) anti-money laundering checks kick in and things get tricky. 

[HAL1000]

I'm not in the USA

Anyway - we all need to consider that the tax man is going to have his work cut out, the amount of new things happening in this space is insane.