The Great Flare Voting F**k Up

[Seoulite]

So we will now be left with three options:

Option 1 - give 15%, then after that the normal distribution but people have to opt in to the future airdrops by burning a small amount

Option 2 - give 15% and that's it, reduce the whole supply of the token by 85%

Option 3 - pretend this all never happened and carry on as before

First I want to say that I'm not oblivious to the fact that the Flare team is giving us these tokens for free, and that there is always cause to be grateful for that. But that doesn't mean we are not free to criticise. 

This has been a massive self-inflicted wound for Flare. I now expect Option 3 to pass very quickly after the launch, because as Hugo noted one of the things that people liked the least about this whole thing was the 5 month delay. As Brian has pointed out, this is changing the distribution after the launch and there is nothing in the white paper that gives Hugo the power to do that. If he claims that power (which he technically still is) then it gives the lie to the 'community-governance' structure and it gives the lie to decentralisation. Uncertainty is the market killer, and tying up trading for 5 months immediately after the launch was always a terrible, terrible idea. 

What's worse, this whole thing seems to be nothing more than an attempt to help Americans do their taxes. From what I've seen this has pissed off a large number of non-US holders and more than a few US ones. My guess is that Hugo has been receiving pressure from US exchanges / wealthy individuals / investors to relieve the tax burden, either that or they have spent too much time talking to Americans and forgot that the rest of the world existed. Needless to say, this has left a bad taste in people's mouths. Why is this global decentralized crypto smart contract system proposing to change the very supply of the token itself in response to a few people in one country complaining about that country's tax regime? It is very disappointing because I thought we were past this. I thought we were past bowing and scraping and bending our whole lives to accommodate the American Empire. 

This whole affair shows the importance of decentralisation. When you have a single point of human weakness (the Flare team), it can be exploited and warped and ends up deforming the whole system. Decentralization and smart contracts mitigates this to a certain extent. 

Furthermore, the communication about this whole thing has been terrible. We have said from the start that Flare's communication is bad, but this episode has been much worse. They keep hinting at tax advice that apparently can't be published yet. Hugo hinted at the 'burn option' a few weeks ago in an interview and just let that rumour run. They are circumventing and/or changing the governance rules set out in the white paper and pretending they are not.

Flare keep falling back on this 'it's actually very simple' and 'it's not our fault if you can't understand our simple blog posts' stuff when people claim to be confused. The problem is, no matter how many times you explain it, no matter how logically and reasonably and mathematically, this looks like what it is: proposing to make massive changes a matter of weeks before the launch. When you say you are going to do something for 18 months and change your mind at the last minute, people are not going to like it, even if you have a very good reason. (In my eyes, helping Americans with their taxes doesn't qualify as a very good reason.) Moreover, the option 2, no matter how many times you explain it, sounds to people like you are giving them less than you promised them. Even a toddler would instantly have a negative reaction to that. Should people be more grateful and more understanding? Yes possibly. But when you are smart enough to build a crypto network you should also be smart enough to know what people are really like. If you want 'communities' on your side, and 'communities are the greatest asset' then you need to understand communities. People listened very closely to what you said, and made decisions based on that, and now you turn around and say 'let's change the rules at the last minute'.  

I am a believer, and this has greatly shaken my confidence in Flare. For those who were on the fence or actively opposed, this is blood in the water. This has confirmed every negative image of Flare: as a scam, as a rug pull. It has left many in the community thinking that Americans come first and everyone else is an after-thought. It has polarised the community and toxified it and ultimately I think nothing will have been gained from this at all. In fact, things will be worse. This is because if option 3 wins as I am expecting, then people might not have the opportunity to optimise their taxes like option 1. If they had just proposed option 1 yes or no, or just gone through with option 1 (as many people were expecting anyway) then this all would've been avoided.

But now I think we will get option 3. I will wait for the 'expert' analysis and more details, but at the moment I am supporting option 3, simply because that is the plan that everyone was preparing for. If Americans are afraid of their taxes, they can destroy their private key. They can give their private key to the IRS. You can give your private key to me. I promise to take good care of it. 

 

[Julian_Williams]

I expect it will be option 3, and then everything will be forgotten about.

[Guest]

I still don’t understand how the rest of the world is suffering or bowing to the US in any way.

The concerns have been communicated to Flare on day 1 of their announcement of the complications from this. Hell, I’ve personally mentioned this a few times in this forum. They said they will try and find a solution. Now they think they have a solution to help out US residents without burdening the rest of the world in anyway. 

Why is this not seen as the vocal few on social media crying “I got mine, screw you because it’s your fault IRS is like that” ? How is this somehow the fault of Flare trying to provide equitable distribution to everyone across the world ? Or the fault of US residents for asking to play fair ?

No other airdrop in crypto history has been this expansive and spread across these many months. It was spread across a long duration because they didn’t want people dumping. You know what ? Option 2 and 3 will both result in dumping. Where are all those who claimed Flare was a genius for spreading out the airdrop ? 

This whole thing turned into “oh those rich US folks complaining about taxes”. NO. This is not about paying fair share of taxes. This is about being liable for taxes that possibly cannot be paid even after selling ALL FLR that’s available for these folks. And if people don’t feel they care about their peers, do they care about the impact this has on the network in terms of participation ?

The whales in these countries are fine. They’ll simply pay out of pocket. No. The people who have to pay a price are the regular retail folks. All because of an inconvenience of not even waiting for the formal governance proposal to come ?

I don’t like the 5 month delay and hope an option is chosen soon. But today the Flare crypto helped me understand that most just want theirs and don’t plan on even being the slight bit considerate on the real impact on the blockchain and a large population of FLR holders. Because they got theirs.

Edit: Sorry for the rant folks. I get that you’re angry at Flare. I’m just frustrated at the inconsiderateness of some in Telegram and Discord that aren’t even willing to look at the governance proposal and straight up jumped to ‘Murica sucks. Some other Americans claimed the rest were suckers for paying taxes or “bowing to the man”

Edited June 19, 2021 by Ripley

[gamblin310]

18 minutes ago, Seoulite said:

So we will now be left with three options:

Option 1 - give 15%, then after that the normal distribution but people have to opt in to the future airdrops by burning a small amount

Option 2 - give 15% and that's it, reduce the whole supply of the token by 85%

Option 3 - pretend this all never happened and carry on as before

First I want to say that I'm not oblivious to the fact that the Flare team is giving us these tokens for free, and that there is always cause to be grateful for that. But that doesn't mean we are not free to criticise. 

This has been a massive self-inflicted wound for Flare. I now expect Option 3 to pass very quickly after the launch, because as Hugo noted one of the things that people liked the least about this whole thing was the 5 month delay. As Brian has pointed out, this is changing the distribution after the launch and there is nothing in the white paper that gives Hugo the power to do that. If he claims that power (which he technically still is) then it gives the lie to the 'community-governance' structure and it gives the lie to decentralisation. Uncertainty is the market killer, and tying up trading for 5 months immediately after the launch was always a terrible, terrible idea. 

What's worse, this whole thing seems to be nothing more than an attempt to help Americans do their taxes. From what I've seen this has pissed off a large number of non-US holders and more than a few US ones. My guess is that Hugo has been receiving pressure from US exchanges / wealthy individuals / investors to relieve the tax burden, either that or they have spent too much time talking to Americans and forgot that the rest of the world existed. Needless to say, this has left a bad taste in people's mouths. Why is this global decentralized crypto smart contract system proposing to change the very supply of the token itself in response to a few people in one country complaining about that country's tax regime? It is very disappointing because I thought we were past this. I thought we were past bowing and scraping and bending our whole lives to accommodate the American Empire. 

This whole affair shows the importance of decentralisation. When you have a single point of human weakness (the Flare team), it can be exploited and warped and ends up deforming the whole system. Decentralization and smart contracts mitigates this to a certain extent. 

Furthermore, the communication about this whole thing has been terrible. We have said from the start that Flare's communication is bad, but this episode has been much worse. They keep hinting at tax advice that apparently can't be published yet. Hugo hinted at the 'burn option' a few weeks ago in an interview and just let that rumour run. They are circumventing and/or changing the governance rules set out in the white paper and pretending they are not.

Flare keep falling back on this 'it's actually very simple' and 'it's not our fault if you can't understand our simple blog posts' stuff when people claim to be confused. The problem is, no matter how many times you explain it, no matter how logically and reasonably and mathematically, this looks like what it is: proposing to make massive changes a matter of weeks before the launch. When you say you are going to do something for 18 months and change your mind at the last minute, people are not going to like it, even if you have a very good reason. (In my eyes, helping Americans with their taxes doesn't qualify as a very good reason.) Moreover, the option 2, no matter how many times you explain it, sounds to people like you are giving them less than you promised them. Even a toddler would instantly have a negative reaction to that. Should people be more grateful and more understanding? Yes possibly. But when you are smart enough to build a crypto network you should also be smart enough to know what people are really like. If you want 'communities' on your side, and 'communities are the greatest asset' then you need to understand communities. People listened very closely to what you said, and made decisions based on that, and now you turn around and say 'let's change the rules at the last minute'.  

I am a believer, and this has greatly shaken my confidence in Flare. For those who were on the fence or actively opposed, this is blood in the water. This has confirmed every negative image of Flare: as a scam, as a rug pull. It has left many in the community thinking that Americans come first and everyone else is an after-thought. It has polarised the community and toxified it and ultimately I think nothing will have been gained from this at all. In fact, things will be worse. This is because if option 3 wins as I am expecting, then people might not have the opportunity to optimise their taxes like option 1. If they had just proposed option 1 yes or no, or just gone through with option 1 (as many people were expecting anyway) then this all would've been avoided.

But now I think we will get option 3. I will wait for the 'expert' analysis and more details, but at the moment I am supporting option 3, simply because that is the plan that everyone was preparing for. If Americans are afraid of their taxes, they can destroy their private key. They can give their private key to the IRS. You can give your private key to me. I promise to take good care of it. 

 

😭😭😭 crybaby 😭😭😭

Any of the options are fine with me. I do have a preference, but wont share it here.

[brianwalden]

We haven't even gotten to the elephant in the room. The tax status of F-assets.

[Guest]

11 minutes ago, Julian_Williams said:

I expect it will be option 3, and then everything will be forgotten about.

Odds are in favour of option 3.

I will be choosing either option 1, my preference and practically the same as option 3, assuming this passes the smell test for both my tax person and David. If not, I will be choosing option 2. Let’s see how the silent majority votes. 

[Guest]

Just now, brianwalden said:

We haven't even gotten to the elephant in the room. The tax status of F-assets.

I’m personally willing to take the risk on that - either be my own agent or take the full plunge. I’m not convinced that this is different from usual wrapping but everyone’s thoughts are different on this and that won’t change until IRS provides guidance.

[Seoulite]

4 minutes ago, Ripley said:

Now they think they have a solution to help out US residents without burdening the rest of the world in anyway.

Thanks for your response mate.

First the delay and uncertainty is a burden any way you slice it. Uncertainty is poison for markets, especially a brand new system. First impressions matter. I am upset because I want Flare to succeed and I see it not succeeding right now.

6 minutes ago, Ripley said:

Why is this not seen as the vocal few on social media crying “I got mine, screw you because it’s your fault IRS is like that” ?

Oh there absolutely is an element of that. But that's what some people are like. The vocal few were also on the other side complaining that they would get screwed by the IRS and to change everything to suit them. Social media is poisonous for sure.

7 minutes ago, Ripley said:

How is this somehow the fault of Flare trying to provide equitable distribution to everyone across the world ? Or the fault of US residents for asking to play fair ?

If they had proposed this six months ago, or even maybe 3 months ago, without a delay after the launch, I wouldn't have cared. This late in the game, and with the delay and uncertainty - this is the problem for me. 

8 minutes ago, Ripley said:

Option 2 and 3 will both result in dumping. Where are all those who claimed Flare was a genius for spreading out the airdrop ? 

Option 2 will result in dumping yes. Option 3 will follow the original plan and will attempt to avoid the dumping. As was the original plan.

9 minutes ago, Ripley said:

This whole thing turned into “oh those rich US folks complaining about taxes”. NO. This is not about paying fair share of taxes. This is about being liable for taxes that possibly cannot be paid even after selling ALL FLR that’s available for these folks. And if people don’t feel they care about their peers, do they care about the impact this has on the network in terms of participation ?

The whales in these countries are fine. They’ll simply pay out of pocket. No. The people who have to pay a price are the regular retail folks. All because of an inconvenience of not even waiting for the formal governance proposal to come ?

I get that, but the problem is that there is a simple solution: don't participate. Crypto is banned in North Korea, so should we not let anyone else have crypto because it's not fair to North Koreans? I am sorry the tax regime in the US sucks, but we can't stop the rest of the world just because of that.

The inconvenience is not small. We are talking about uncertainty about the total supply of a token for the first 5 months of trading. I don't need to explain how damaging that would be.

11 minutes ago, Ripley said:

But today the Flare crypto helped me understand that most just want theirs and don’t plan on even being the slight bit considerate on the real impact on the blockchain and a large population of FLR holders. Because they got theirs.

Yes that is what 'communities' are like. This is why some of us don't get all frisky about the prospect of 'liquid democracy' and 'community votes'. 

[gamblin310]

3 minutes ago, Seoulite said:

Thanks for your response mate.

First the delay and uncertainty is a burden any way you slice it. Uncertainty is poison for markets, especially a brand new system. First impressions matter. I am upset because I want Flare to succeed and I see it not succeeding right now.

Oh there absolutely is an element of that. But that's what some people are like. The vocal few were also on the other side complaining that they would get screwed by the IRS and to change everything to suit them. Social media is poisonous for sure.

If they had proposed this six months ago, or even maybe 3 months ago, without a delay after the launch, I wouldn't have cared. This late in the game, and with the delay and uncertainty - this is the problem for me. 

Option 2 will result in dumping yes. Option 3 will follow the original plan and will attempt to avoid the dumping. As was the original plan.

I get that, but the problem is that there is a simple solution: don't participate. Crypto is banned in North Korea, so should we not let anyone else have crypto because it's not fair to North Koreans? I am sorry the tax regime in the US sucks, but we can't stop the rest of the world just because of that.

The inconvenience is not small. We are talking about uncertainty about the total supply of a token for the first 5 months of trading. I don't need to explain how damaging that would be.

Yes that is what 'communities' are like. This is why some of us don't get all frisky about the prospect of 'liquid democracy' and 'community votes'. 

Crap on Americans as much as you want. If US taxpayers face large tax burdens from the distributions they will sell and sell hard; they will be forced to sell just to afford their obligation to the IRS. 

[Guest]

2 minutes ago, Seoulite said:

Option 2 will result in dumping yes. Option 3 will follow the original plan and will attempt to avoid the dumping. As was the original plan.I

You don’t get it. Option 3 dump issues are why there is a tax liability. Think about this - assuming Option 3/default passes, everyone (as in whales) KNOW people in the US and Japan will be forced to dump. 

Whales always run up the price before an airdrop, get the high value registered for retailers, dump the next couple of days and pick them up on the cheap. Retailers are left holding the bag but can’t help it. 
 

I’m mad at Flare too, don’t get me wrong. I would have liked the default to be option 1 and no vote. They already communicated this plan unofficially. But I’d imagine they didn’t have a choice but to put it as a vote - for legal reasons. And if that’s the case, I don’t want that vote to somehow result in a bad solution for everyone - not just the US.

[Seoulite]

1 minute ago, Ripley said:

You don’t get it. Option 3 dump issues are why there is a tax liability. Think about this - assuming Option 3/default passes, everyone (as in whales) KNOW people in the US and Japan will be forced to dump. 

Whales always run up the price before an airdrop, get the high value registered for retailers, dump the next couple of days and pick them up on the cheap. Retailers are left holding the bag but can’t help it.

I am open to option 1 but it will be harder to pass and so I think option 3 is just more likely. As you said it would've been better if option 1 was just the way it was and there was no vote. 

As for a dump: I was expecting a dump anyway. I was planning on the 'pick them up on the cheap' part. I think no matter how it is launched, there will be a dump after the launch. 

[BillyOckham]

I think they should stick to the original plan since that is what they said they would do.

Having said that,  if they came up with a way of keeping the IRS happy without screwing everyone else (I don’t think a small burn would be screwing anyone) then I’m not against it.

But I think it’s a giant fail to have this last minute cockup like they’ve had.  Even so,  I would be happy if they said they were gonna do option one without any voting since they are starting it up and controlling it till it’s on its feet.

We've recently seen a billion dollar cockup on Iron token which shows the nascent nature of all this…. so Flare making a command level decision at the startup would be fine with me.

As for dumping….  that’s gonna happen irrespective of anything.  Probably at every release month if they go ahead.  But presumably at lower volumes than if it all was released at once.

Uncertainty is the worst thing for this…. make it certain and make it soon.

[brianwalden]

4 minutes ago, Ripley said:

You don’t get it. Option 3 dump issues are why there is a tax liability. Think about this - assuming Option 3/default passes, everyone (as in whales) KNOW people in the US and Japan will be forced to dump. 

Whales always run up the price before an airdrop, get the high value registered for retailers, dump the next couple of days and pick them up on the cheap. Retailers are left holding the bag but can’t help it. 
 

I’m mad at Flare too, don’t get me wrong. I would have liked the default to be option 1 and no vote. They already communicated this plan unofficially. But I’d imagine they didn’t have a choice but to put it as a vote - for legal reasons. And if that’s the case, I don’t want that vote to somehow result in a bad solution for everyone - not just the US.

So sell a third right when you get it. You'll know when the airdrop is each month, it's not like it's a surprise. Or better yet, use your original 15% to sell a third of the upcoming drop on the pump just before it's released. That way you'll get the best price for it.

Anyone with half a brain should be able to mitigate the tax risk and make sure they have enough liquidity to pay what they owe. I really think Flare has turned a molehill into a mountain.

[CountZerpula]

39 minutes ago, Ripley said:

I’m personally willing to take the risk on that - either be my own agent or take the full plunge. I’m not convinced that this is different from usual wrapping but everyone’s thoughts are different on this and that won’t change until IRS provides guidance.

We talked about that in another thread. I've already finalized my tax strategy for F-assets with my accountant. Just remember that Hugo implicitly mentioned that you are trading one asset for another asset, facilitated by Flare as a cross-chain DEX in that regard. So you may be able to form a strategy whereby you're considering the underlying asset as being 'wrapped' but it's really not. My argument puts forward that the basis should transfer from the underlying to the f-asset by virtue of both the design and intent of the F-asset protocol. This seems the most fair to everybody involved.

10 minutes ago, brianwalden said:

Or better yet, use your original 15% to sell a third of the upcoming drop on the pump just before it's released. That way you'll get the best price for it.

Or this

 

[brianwalden]

1 minute ago, CountZerpula said:

We talked about that in another thread. I've already finalized my tax strategy for F-assets with my accountant. Just remember that Hugo implicitly mentioned that you are trading one asset for another asset, facilitated by Flare as a cross-chain DEX in that regard. So you may be able to form a strategy whereby you're considering the underlying asset as being 'wrapped' but it's really not. My argument puts forward that the basis should transfer from the underlying to the f-asset by virtue of both the design and intent of the F-asset protocol. This seems the most fair to everybody involved.

Or this

 

Yes but the reason we're in this mess is because a lot of people would rather listen to so-called experts who think FLR is a stablecoin and there's no way the burn-to-buy strategy would ever work for the IRS. So my strategy was based on the worst case scenario.