Community fund | Revised design proposal

Also, individuals who think the US can be sidelined and is not needed for the development of the project should really consider where the most BTC is being mined and accumulated. Also, where the 8 holders of most of the IC nodes are located. All I am saying is tax optimization is going to be crucial to gaining more traction in the country. If we cannot compromise, and leave the money hunger at the door. I foresee a rough future ahead. These are just my thoughts. Some US users are really remaining quiet on this issue, because of how pissed everyone is at the price action and how they have felt the dfinity team has handled things. I’ll agree, however, I fear the community is becoming absorbed and not even considering the reality normal small individuals in the US have. Which was the purpose of this blockchain. It wasn’t created to become another big tech, big investor project. Yet, it’s slowly dividing and could quickly become that. Which will make me and other like me leave… Not stay…

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Thank you for your post. This is not about FUD. This is about informing the community about the risk taken when not disclosing the maturity to IRS.
I am wondering how this new question will be answered now. The new keyword is ˋFinancial interestˋ
For me and my tax lawyer firm, Maturity is clearly a Financial Interest in crypto asset. Make your own interpretation.

Since Dfinity have taken on themselves to make a proposal to avoid the burden of tax, I still wish Dfinity seek a professionnal tax advice report and disclose it to the community in order to protect this community from potential important tax mistakes.

Such a report would help investors to make proper decision as to invest in CF. It is a big No for me anyway.

As per Forbes recently:

IRS To Add 87,000 New Agents, More Crypto Tax Enforcement

For 2022 tax returns, the IRS has modified the crypto question asked on Form 1040. A draft of IRS Form 1040 for 2022 now reads:

** “At any time during 2022, did you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”*

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Yes, exactly. 2022 IMO will be the last tax year US users can safely get away with misrepresentation only if they misreport because of confusion. However, that does not mean that US users could not be fined or taxed on that later. The IRS is in fact cracking down. So, in 2023 or after the next election or possibly mid-terms IMO we may end up getting very direct statements saying you must report all of your maturity gains to the IRS. This will need addressing by the community, and rather quickly or people might panic when the time comes. I completely understand where everyone else is coming from. I voted for the decentralization first just to show my willingness to compromise with the community at large. However, I suggest the community take it into serious thoughtful consideration moving forward. If you think creating or implementing tax optimization is a poor use of time and funds I would argue that may be true for those who are hyper-focused on their own projects. However, it is not the case for smaller investors and new users/ learners. Im blessed with an ability to cover fees for a CPA/ attorney that will help me file this and then represent me if anything occurs. However, there is a large portion of naive investors thinking if you hold and do not sell you do not have to report it, and that is not the case in NYS at the very least. I’m sure some other states might take different stances. However, not in this terrible dumpster fire state. I apologize if this creates new information that the community was unaware of, but trust me I will be taxed on my 20.2% staking rewards in 2022 and then on. Otherwise, the risk of being audited and then possibly having wage garnished to pay back taxes (if you don’t have liquid icp or funds to pay fines or fees). It is not just a simple one person wants to file easier. This a serious issue that, IMO if the community does not step up to solve or resolve will be a huge hindrance to the overall IC ecosystem. I know people hate having to work with hyper-regulations like in the USA, but I cannot change that (anytime soon) and this is our reality. I appreciate the safe place to vocalize these concerns and want to make it clear I am not intending on creating FUD or more work or confusion. US users NEED to be better informed, and the community goes silent on them.

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I saw in the September R&D session that the community fund has already shipped and is ready to invest in SNS projects. Where can I learn more about this? I wasn’t aware it was “live”.

Hi @jzxchiang, a draft implementation of the community fund is now available, but it still undergoes further review & testing. So it is not yet live.

In terms of getting further information: We have created this wiki page, which summarizes the community fund process. Please let me know if you have any further questions.

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I would be livid if it was scrapped

I have an important question to clarify: is the “maturity” that will be invested automatically from the CF neuron also taken from the “Staked maturity” or is it no longer subject to any investments?
Thanks for your answer :slight_smile:

AFAIK staked maturity does not get touched by the community fund

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This is correct. Staked maturity becomes available again once the underlying neuron is dissolved. Hence it cannot be exposed to the community fund.

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What does the process look like specifically, such as where it is sold and at what price on which exchange?Is this freely chosen by NNS?

For chat coin, where to view SNS neurons received by CF Treasury

Will only the ICP be burned or will the corresponding proportion of ICP maturity be returned to the maturity of CF neurons?

Sorry if this is the wrong topic to ask this but I have an 8 year neuron with unstaked maturity which is participating in the community fund. My maturity has not been affected by the Openchat launch so I don’t know whether I have contributed to the Community Fund share of the sale or not, or whether I should have done something to do so. I would appreciate any advice on how to manage this neuron going forward to ensure that I am included in the CF investments.

Just make sure the check box is selected for “participate in community fund” in the NNS dApp if you want to participate in the next SNS sale with your unstaked maturity. You can join and leave the CF any time, but you have to be joined when the SNS sale starts.

Hi and thank you for the quick reply. The check box to participate in the community fund is checked and has been checked since I spawned the neuron in November, that is what has confused me. My neuron id is### 10454428591714118847 with 6.55 unstaked maturity. There is no record of any contribution but I don’t know whether it would be too small to participate, or any contribution would be so small as to not to notice.

Sorry to bother you with this but I am keen to be part of the fund.

Regards

Dave

From what can be seen on the dashboard, it looks like your neuron is configured to be eligible to participate in a SNS sale as a community fund participant. However, I suspect you didn’t meet the minimum threshold contribution to participate due to some of the other factors that are used to determine all contributions. Specifically, I suspect your maturity was not enough to make your contribution reach the minimum purchase threshold of 1 ICP.

There is a lot of maturity available in the community fund and the contribution from each neuron is proportional to the total available maturity in the community fund. I don’t know the exact numbers that were relevant at the time the OpenChat sale started, but here is how I think they apply based on numbers that are publicly available today. Today there is 3,245,234 maturity available in the community fund. The OpenChat SNS decentralization sale proposed that 333,333 ICP should be raised from community fund participants. Hence, in order for a participant to contribute 1 ICP from their maturity, they need to have 9.735 maturity in their neuron today (= 1 * 333333 / 3245234). I’m sure it was higher when the OpenChat SNS decentralization sale occurred since about 10% of the community fund was consumed with the sale, but hopefully the logic is clear.

It would be best to get someone like @bjoernek to verify these details.

I had not studied these numbers previously, but now that I see how smaller participants can be excluded form the SNS decentralization sale, and a highly desirable outcome is decentralization and inclusion of investors of all sizes, I wonder if the participation terms should be modified. People can join and leave the community fund any time they want it it’s their personal responsibility to participate in whichever SNS decentralization sale they want. Hence, it seems logical to allow every neuron that meets the minimum participation threshold to purchase at that amount. Then the remainder can be distributed proportional to maturity. It seems like this algorithm could be a little more inclusive to the smaller neuron owners.

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@DaveH501: The analysis by @wpb is spot on. Your neuron is was too small in order to participate via the CF, as per the current logic.

Hence, it seems logical to allow every neuron that meets the minimum participation threshold to purchase at that amount. Then the remainder can be distributed proportional to maturity.

Yes this is an extension, which we could consider. One further edge case to think about: If an SNS defines a relatively high min investment amount (e.g. 100 ICP). Then for many CF neurons, all of their CF maturity would flow in this particular SNS CF participation. And it is unclear whether this is a desired outcome for these CF neurons.

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Hi and thank you both for your responses.

I do understand the current situation, and by my calculation I should be up to around 10 unstaked maturity within the next 45 days, which should enable my participation in any forthcoming launches.

Thanks again for your help, it is really nice to know that a small investor like myself, with very little knowledge, can get such support and help from ICP developers. Onwards and upwards for ICP and its community, I may even top up my CF neuron to get there more quickly.

Kind Regards,

Dave

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Personally, I think this edge case can be addressed by clear communication of the terms of the sale as well as communication that people can unenroll any time if they believe the price is too high. It seems worth fleshing out these kinds of details further because maximizing the opportunity for investment by smaller neurons can be a way to help enhance decentralization of the sale.

It seems to me that the CF option is designed to automate the investment process, not to constantly watch if a given SNS will not eat 90% of my maturity in an SNS that has been accepted by whales with a substantial rate and leave every now and then.
I think it’s a fund designed for long-term participants who have more money and don’t have time to personally check the project and invest (they prefer to trust the community).

However, a nice option would be the ability to add a configurable indicator, e.g. “How much max. percentage of maturity can your neuron invest in a single SNS?” individually for each CF neuron holder.
If a given percentage of the set maturity would meet the minimum participation criteria, then even a neuron with maturity e.g. 1, and setting “permission to include 100% (this percentage would be personally modifiable by the holder) of my maturity in a single CF investment” would participate in such a sale as latest “OpenChat” .

By the way: I suggest that the option “Automatically stake new maturity.” DID NOT put maturity from CF investment earnings as “staked maturity”. In the future, it should be more configurable for the neuron holder which maturity source adds what kind of maturity.

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