How to file your Spark protocol taxes with Koinly
Spark is a decentralized Ethereum protocol that allows investors to lend DAI and earn rewards or borrow DAI using ETH or liquid Ethereum staking tokens as collateral. Whatever your transactions, Koinly can help calculate taxes for hundreds of Ethereum dApps including Spark. Here's how.
Sign up to Koinly and choose your country and currency
Connect Ethereum with Koinly to import all your trades safely and securely
Koinly identifies the cost basis of your tokens and coins, as well as your taxable transactions
Koinly calculates any capital gains, losses, and income from your taxable transactions
Koinly generates your crypto tax report - ready to help you file with your tax office, or hand it over to your accountant.
How are Ethereum lending protocols taxed?
Most tax offices haven't released specific guidance on lending protocols just yet - but that doesn't mean you won't pay tax on your lending rewards or indeed on any loaned crypto. It all depends on the rules where you live and how your protocol works but you may pay Capital Gains Tax or Income Tax depending on your specific transactions. Learn more in our DeFi loans tax guide.
Can the IRS track DeFi investments?
Yes. Ethereum transactions are recorded on a public ledger. The information available includes wallet addresses, all transactions associated with a given wallet, wallet holdings, and more. All the IRS needs to do is link you to a given address in order to track your DeFi investments.
Read next: Can the IRS track crypto?
How to get Spark tax documents
You'll usually report income, gains, and losses from crypto - including from any Spark transactions - as part of your annual tax return.
To do this for your Spark transactions, you'll need to look through your transactions, identify which are taxable and the type of tax that applies, as well as calculate any gain, loss, or income from your investments.
If you think that sounds like a lot of work, you’d be correct - which is why most investors use a crypto tax calculator like Koinly. Koinly can calculate your gains, losses, and income for more than 800 wallets, exchanges, and blockchains.
How to import Spark transactions to Koinly automatically
To import your Spark transactions into Koinly, you’ll need to connect any Ethereum wallet you use with Spark to Koinly. This is simple to do, you just need your public address. We've got instructions on how to connect popular Ethereum wallets on our integration pages - but here's an example of how it generally works.
In your wallet
Open or log in to your wallet
Select the blockchain you'd like to connect to Koinly - in this example, Ethereum
Copy your public address
On Koinly
Sign up or log in to your Koinly account and go to the wallets page
Search for and select the blockchain you'd like to connect to - in this example, Ethereum
Give your wallet a name - for example - Coinbase Wallet Ethereum
Paste your public address
Your frequently asked questions...
What is Spark?
Spark is a DAI lending protocol and part of the MakerDAO foundation. Investors can use Spark.fi to lend DAI and earn rewards and to borrow DAI against ETH, stETH, and rETH.
What are sDAI tokens?
Savings Dai (sDAI) is the token you receive when you deposit DAI into Spark.fi to earn rewards. sDAI increases in value according to the DAI Savings Rate. sDAI can be redeemed for DAI at any point.
Are Ethereum loans taxed?
Yes. You'll pay either Income Tax or Capital Gains Tax on Ethereum lending protocol transactions depending on how your protocol works and the rules where you live.
