The Catallax Trust has been designed to support a number of different scenarios. I’m outlining each one of these in a different post over the next few weeks as we move toward the release.
Today we are going to talk about how to use a Catallax Trust to set up a recurring income for yourself. Were you an early investor in ETH? Do you have some valuable ERC20 tokens sitting around that you want to HODL? The Catallax trust will allow you to set a USD based amount to take out each month and this will be enforced by the contract.
For example, Janet was early on the ETH train. She wants to start a new blockchain based project and now she doesn’t have to worry about money as much. Selling all her ETH has big tax implication and she is still bullish on the price. She doesn’t want to sell. Using a Catallax Trust she can put her ETH into a Trust that pays out $20,000 USD worth of ETH each month for three years. If the price of ETH fluctuates wildly one of two things will happen:
If the price of ETH goes up he the trust will pay out less ETH and at the end of the contract Janet will get his remaining ETH back.
If the price of ETH goes down Janet the contract adjusts to pay her what it can so that she has income over the length of the trust.
Putting her ETH into a contract has the following advantages
The Trust owner is committed to HODLing. The ETH cannot be pulled out of the contract any faster than the trust allows.
If ETH goes up the owner will have a big chunk of ETH available at the termination of the trust.
If ETH goes down then the trust will adjust to pay out as much as it can each month so that the trust lasts the entire 3 years.
In future iterations of the trust we hope to be able to allow the owner to elect to take soe risk and potentially make a return on assets locked up in the trust.
Creating the Trust:
Owner calls the Custodian.CreateTrust function to create a new Catallax Trust contract. This function takes a token(ETH or ERC20), a currency(USD, EUR, ect), term(number of months), and fiat payout(amount of currency per term to pay out).
Owner funds the Trust by sending ETH and or ERC20. Fees are paid in ETH, ERC20 can be required if the trust pays out ERC20.
Owner starts the trust on the first day of the contract by calling the Trust.StarTrust function.
During the month the Custodian will be publishing the exchange rates between the token and the currency to the blockchain.
After one month the Owner can call the Trust.Withdraw function to get the exchange rate adjusted the amount of crypto sent to their beneficiary address.
When the Trust Expires the owner can withdraw any remaining ETH or ERC20 tokens out of the trust.
If you are interested in using a Catallax Trust to set up a recurring income, please reach out to us so that we can make sure that we support the Token / Currency combinations that you would like to use.
Donations always accepted at:
ETH and Tokens: 0x148311c647ec8a584d896c04f6492b5d9cb3a9b0
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