CRYPTO61675 - Decentralised Finance: Lending and staking: Chargeable Gains: Examples: Example 5: disposal when a borrower鈥檚 collateral is liquidated
Lucas holds 100 tokens with a total acquisition cost of 拢500. Lucas provides the 100 tokens as collateral to a Decentralised Finance (DeFi) lending platform and then takes out a loan.
During the term of the loan, the market price of the borrowed tokens falls. On 01/07/20XX the price of the borrowed tokens falls to the point where a liquidation of some of Lucas鈥檚 collateral occurs. 10 of the tokens given by Lucas to the DeFi lending platform as collateral get transferred to a liquidator, along with 1 additional token as the penalty. The tokens have a market value of 拢6 each at the time of the liquidation.
Lucas鈥檚 Chargeable Gains (CG) computation of this disposal will be as follows:
| . | . | 拢 |
|---|---|---|
| Consideration | 11 x 拢6 | 66 |
| Allowable costs | Section 104 pool 鈥� 拢500 x 11 / 100 | (55) |
| Gain | . | 11 |
Lucas鈥檚 section 104 pool will be adjusted as follows:
| Date | Quantity of tokens | Allowable costs (拢) |
|---|---|---|
| Opening balance | 100 | 500 |
| 01/07/20XX | (11) | (55) |
| Closing balance | 89 | 445 |