Flare Network’s highly anticipated airdrop for XRP holders is facing a crucial fork in the road just ahead of launch.
Flare, which plans on distributing billions of Spark tokens to XRP holders, is announcing they are rethinking the airdrop due to complications with tax issues.
Flare’s original plan was to send eligible XRP holders 15% of their claimable Spark at once, and the remaining tokens on a monthly basis, completing the distribution in a minimum of 25 months and a maximum of 34 months.
In a statement via a blog post, Flare says that the longer-term distributions may end up being a big tax concern.
“Specifically, there is a concern that due to the Spark token becoming priced subsequent to the launch of mainnet that the long-term distribution of 3% per month, but not the initial distribution of 15%, could be considered as income for tax purposes.”
Reacting to the tax implications, Flare Networks have decided to give XRP holders two options. The first option, dubbed “Buy Through Burn,” is to go ahead with the original plan of giving every eligible user 15% of their claimable Spark tokens, and then distributing the remaining 85% in monthly 3% increments.
With the “Buy Through Burn” route, users also have the option to burn a portion of their tokens in order to buy the remaining distribution.
The second option, called “Distribution Halt,” is to give XRP holders their first 15% airdrop, and then burn all remaining tokens, essentially giving users 100% of the supply after the first airdrop.
So option 1 is just distribute $FLR like it was planned. (15% first month and every month 3% with total supply of 100B)
Option 2 is burning 85% (85B?) and distribute that 15% and that's it. (15B total supply)
— ? ??? ???? ????? ?? ? $1500+ (@KingDoggoXRP) June 17, 2021
Flare plans on putting the two options to a governance vote and include a draft with the startup’s own views and research.
“Full governance proposals for these options will be drafted, including our view of the pros and cons, and released together with the legal memo upon which Option 1 will be based. Options 1 & 2 will be based on a super majority requiring >66% positive votes to pass. Option 3 (retain the original plan), because it is the default setting, will be based on a simple majority >50% to pass.”Check Price Action
Don't Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/AMFPhotography