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.
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.”
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxFeatured Image: Shutterstock/AMFPhotography