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How to add Liquidity Pool transactions as trade? (LEGACY)

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This article refers to the old Import method. We recommend reading our current article Import of Liquidity Pool/Mining transactions.


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TL;DR: Adding liquidity pool (LP) transactions manually is needed when using the legacy import method. You'll need to create trades at the beginning and end of the pool lifecycle. Use "bonus" or "income" entries for rewards, and optionally mark LP entries as taxable or non-taxable based on your local tax rules.


General Instructions

When participating in a liquidity pool:

  • Add two trades when starting the pool (e.g., trading ETH and BTC for LP tokens)

  • Add two trades when ending the pool (e.g., trading LP tokens back to ETH and BTC)

The LP token amount should be split equally across both base assets. For example:

  • 0.1 ETH → 50 LP tokens

  • 0.01 BTC → 50 LP tokens

  • Ending the pool: 100 LP tokens → respective ETH + BTC

Tip: You don't need to log every volatility change that occurs while funds are in the pool.


Bonus Rewards

If you receive extra tokens (e.g., rewards), log them as:

  • Bonus or another income transaction

  • Use a custom price if the asset isn’t listed on CoinTracking’s sources

  • Check the Coin Trend page to see if a token is listed


Alternative: Deposit/Withdrawal Format

Depending on your country’s tax rules, you can log the pool’s start and end as:

  • Deposit and Withdrawal transactions

  • These are currently the default way LP entries are imported


Import Options

CoinTracking now supports automatic LP transaction import from:

  • Ethereum via ETH wallet address (supports DEXes like Uniswap, Kyber, SushiSwap)

  • Binance Smart Chain via BSC wallet address

For other blockchains (e.g., AVAX, LUNA, MATIC, TRX), support is expanding. LP transactions from these chains are imported as either:

(A) Taxable Events:

  • Start: "Other Expense" (taxable) + "Income (non-taxable)" for LP token

  • End: "Income (non-taxable)" for returns + "Other Expense" for LP token given back

(B) Non-Taxable Events:

  • Start: "Expense (non-taxable)" + "Income (non-taxable)"

  • End: "Income (non-taxable)" + "Expense (non-taxable)"

Rewards are logged as "Income" and appear in the Income section of the tax report.


Tracking Impermanent Loss

CoinTracking does not automatically track impermanent loss. You can manually log:

  • Losses: use "Other Fee" or "Spend"

  • Gains: use "Income"

Log these entries in fiat currency to avoid affecting your coin balances.


Important Notes

  • Manually assign asset values if blockchain importers don’t auto-calculate them

  • LP tokens use a format like "LP-XYZ123"

  • Tax implications vary by country — always consult your tax advisor

For further guidance:

  • How to Import DEX Trades

  • How to Enter ICO Coins


Disclaimer: Please note that we are not tax advisors and are therefore not permitted to provide tax advice. The information contained here is for general information and technical support in using the CoinTracking software only. It does not constitute tax or legal advice. Please contact a qualified tax advisor with any tax questions


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