As part of Coinsquare's app redesign, we implemented the ability to see your performance on your aggregated holdings or each specific asset that you hold in your account. We consider all the data available to us to create a cost basis for the holdings in your account, which is then compared against the current market price to determine your current performance.
Any assets acquired through Coinsquare prior to November 2022 were assigned a cost basis based on the market rate on November 12, 2022. In the coming months Coinsquare will incorporate the market price on the original purchase date of those assets to adjust cost basis for any affected assets.
How cost basis is calculated
The cost basis is essentially a weighted average price paid for any asset in your account. Coinsquare utilizes the data available to us to determine your cost basis on a best-effort basis. This means that Coinsquare employs the following rules to calculate cost basis:
- Any purchase of an asset uses the executed price (or market rate in CAD for trades that do not include CAD) at the time of the purchase to calculate your cost basis,
- Any deposit of an asset is marked with the market rate in CAD at the time that the deposit is confirmed on-chain,
- Sales and withdrawals do not affect the cost basis calculation until the entirety of your holdings of an asset is exited.
This might seem confusing, so below are some examples to more clearly explain how the cost basis is calculated and may change throughout various transactions:
Example 1: Purchasing ETH with CAD
A client opens an account and deposits $1000 CAD. They then take that CAD balance and trade it all for 0.3 ETH. This means that the client now owns 0.3 ETH with a cost basis of $1000 (or extrapolated to an adjusted cost basis of $3333.33 per 1 ETH).
Example 2: Purchasing more ETH with CAD:
The same client from example 1 deposits an additional $1000 CAD. The price of ETH has declined since their first purchase, and the client trades their entire $1000 CAD balance to purchase an additional 0.4 ETH. This means that the client has a cost basis of $2000 for their total holdings of 0.7 ETH (or extrapolated to an adjusted cost basis of $2857.14 per 1 ETH).
Example 3: Depositing ETH
The same client from examples 1 and 2 decides that they want to aggregate their ETH holdings in their Coinsquare account. The client deposits 0.3 ETH from their private wallet into their Coinsquare account. When the deposit is confirmed on-chain, the market price of 1 ETH is $3000 CAD. This means that the deposit amount is assigned a cost basis of $900 for the 0.3 ETH, which is proportional to the market price of 1 ETH. When combined with the previous holdings, the client has a total cost basis of $3757.14 for 1 ETH.
Example 4: Selling ETH for SOL
A few weeks after their ETH deposit, the client sells half of their ETH holdings for a gain. The client receives 10 SOL (with a market price of $2000 CAD or $200 CAD per 1 SOL) for 0.4 ETH. The client previously had 1 ETH with a cost basis of 3757.14, but now has 0.6 ETH with a cost basis of $2254.28. The cost basis of the ETH holding is reduced proportionally to the amount sold, without consideration for proceeds of the trade. Instead, the proceeds are considered for determining the cost basis of the SOL holding, which is $2000 CAD for 10 SOL.