Unsellable, a company that facilitates tax-loss harvesting in the world of non-fungible tokens, recently reached $4.20 million in tax deductions for users, according to the company’s ticker on its website. All told, the company has purchased over 20,000 NFTs from users looking to benefit from selling their JPEGs for cheap.
It works like this: Unsellable purchases NFTs for a 0.002 ETH service fee, plus gas, with bulk selling options available and a general service fee cap of 0.08 ETH, so that users will never spend more than that selling their NFTs. If users have purchased their NFTs for more than the 0.002 service fee, then they are almost certainly entitled to a tax deduction, as the NFT sale counts as a loss.
Tax loss harvesting is a popular strategy for investors, who, towards the end of the year, unload assets for losses, which lowers their overall tax burden in the coming year, saving them money. Before companies like Unsellable, however, doing this for NFTs was difficult, as many, if not most collections were simply illiquid or had no trading volume.
In 2022, one X user, Thomas Mancini, shared a screenshot that revealed they had used Unsellable to tax loss harvest to the tune of 19 ETH or $58,000 at the time. A move like that significantly reduces tax burden, enabling degens to degen with more funds at the start of the New Year.
Skyler Hallgren, co-founder of Unsellable, said the goal for the platform is to create the world’s largest collection of NFTs. He added that an acquisition may be in sight, with some crypto tax software companies interested in buying the company.
What Collections Does Unsellable Typically Buy?
In an interview with Decrypt, Unsellable revealed that it doesn’t touch the NFT collections that have held value during the bear market, such as Bored Ape Yacht Club and Pudgy Penguins tokens. Instead, it has become a graveyard for NFTs that simply no longer have value, like derivative collections (spins offs of popular NFT sets) and other illiquid JPEGs.
Although Unsellable has flipped some of these NFTs for profit, the goal ultimately isn’t to do that. Rather, it wants to form the world’s largest (worthless) NFT collection. While its website says it has only purchased 20,000 such JPEGs, its OpenSea account has nearly 31,000, indicating that its plan is coming to fruition.
Unsellable solves a chief problem in the NFT space, which is lack of liquidity. As we covered in a recent post about how to value your NFT, you could technically have a JPEG that is ‘worth’ thousands of dollars based on metrics, but if there’s no one to buy that JPEG, then it is hard to tell what it is ‘worth’ in the end.
The tax loss harvesting is important as well, as many investors tried to ride the 2021-2022 bull run, expecting their NFTs to rise in profit. But many didn’t. Unfortunately due to laws regarding taxes, someone can only realize a loss (or gain) after they sell an NFT. Hence, the helpfulness of Unsellable’s platform.
In case you missed it: