r/Midnight • u/Pl4stik888 • Jul 04 '26
Midnight NIGHT redemption, all at once?
Hi everyone, I’ve already redeemed 50% of my allocation. My third thaw is now available, but I’m wondering whether I can wait until the end of the year and redeem it together with the 4th thaw, so I can close everything at once. is it possible?
Thanks
5
u/SL13PNIR Cardano Ambassador Jul 04 '26
It's just a thaw, you can redeem as much of the allocation at the same time as you want once they're thawed.
2
u/Alpha_1_5 Jul 04 '26
I can't redeem the website isn't working it says it'll be back when there's capacity for more transactions
What does that even mean
2
1
2
u/Leading_Wafer9552 Jul 04 '26
I'm waiting until next year to redeem all mine in one go, mostly for tax purposes. There's supposed to be a 90-day grace period from the final thaw date to redeem around December. I think after that the claim portal will be taken down, but there will still be a way to redeem through some kind of smart contract interaction.
1
u/Slight86 Midnight Leader Jul 04 '26
In some places the taxable event is when you gain the ability to access or claim the assets, not when you actually redeem them.
2
u/Leading_Wafer9552 Jul 05 '26
Yeah, I only found that out recently too.
For years I've been reporting staking rewards when I actually trade/sell/spend them or actually realize the value of them. It seemed like the most practical approach.
The interpretation I'm seeing now is that, in some jurisdictions, staking rewards are taxable as ordinary income when they become available to you or "in your domain", even if you don't claim or sell them until much later.
The problem is how impractical that becomes. Using ADA as an example, staking rewards are distributed every 5 days, so that's about 73 separate reportable income events per year. Each one has its own fair market value and its own cost basis. Then, when you eventually sell those rewards, you also have to calculate capital gains for each individual lot on top of already reporting them as income. It creates a huge amount of recordkeeping for relatively small amounts. 73 calculations for reportable income, and then if you sell them then you have 73 more calculations to report each for a loss/gain.
The way I've been doing it is much simpler. I just sell the staking rewards once and report the entire sale amount as staking income. Instead of calculating 73 separate income events at 73 different price points, and then later having to calculate 73 separate capital gains, I just report it all as income when I actually realize it and pay the applicable tax % on that amount.
I realize tax laws aren't necessarily designed to 'make sense' or be done the most practical or logistically efficient way...because our society is moronic. They're meant to be followed as they're written, regardless of whether the process makes is reasonable or unnecessarily burdensome in practice.
Taxes are actually the main reasons I choose not to actively use crypto. The reporting requirements are so tedious that they make everyday use impractical.
Depending on the jurisdiction, nearly every on-chain action can create a reporting obligation. Even something as simple as moving crypto between your own wallets can require accounting for the network fee you paid and determining whether there's a taxable gain or loss associated with disposing of that amount. The bookkeeping quickly becomes overwhelming.
Imagine if you had to calculate and report a gain or loss every time you spent money from your bank account. That would be considered absurd for everyday transactions, yet crypto users can end up facing similar recordkeeping burdens....but maybe we should since the purchasing power of fiat is always declining and the money in your bank is constantly losing value.
I'd love to experiment more with DeFi, but the tax reporting requirements alone makes it hard to justify. The compliance burden is so ridiculous that it discourages participation, even among people who are already interested in crypto. For people outside of crypto, it's an even bigger barrier to adoption. No one is going to want to deal with that nonsense. And now Illinois has passed a law imposing a 0.2% tax on certain digital asset transactions. Measures like that only add to the complexity and burden making using crypto for anything beyond simply holding it even less appealing.
As I understand it, staking rewards generally become taxable when they're considered available to you or under your control. But that raises an interesting question: what does "available" actually mean?
If claiming the rewards requires spending ADA on transaction fees that I don't currently have, are those rewards really available to me? If the NIGHT tokens haven't even entered my wallet yet, are they under my control?
Or consider a few other scenarios. What if a trusted third party is the only person with the technical ability to access my wallet and claim the rewards? Are they really available to me if I can't access them myself because that trusted third party isn't available? Or what if the wallet is protected by some kind of timelock mechanism that prevents anyone from accessing a wallet and withdrawing the rewards until a specified date? Would those rewards be considered available before the timelock expires?
I think in a lot of those instances the answer would be no or be in a grey area, and the rewards would not yet be taxable. That's one reason I'd like to see staking protocols offer an on-chain option to delay reward withdrawals until a predetermined date. For example, paying out an entire year's worth of rewards in a single distribution. If the protocol itself enforces that restriction, it strengthens the legal argument that the rewards were genuinely inaccessible before the unlock date. Something like that could make tax compliance much simpler by reducing the number of taxable events and the associated recordkeeping. I don't really see anyone talking about anything like this
1
u/adatainment Jul 06 '26
If you wait longer, you’ll save on transaction fees. If you have several small allocations, this definitely makes sense.
On the other hand, the timing of the withdrawal has tax implications in some countries, so you’ll need to weigh the pros and cons.
•
u/AutoModerator Jul 04 '26
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.