📌 Project Overview

TaxFi is an AI-powered Crypto Tax Automation Platform that helps cryptocurrency investors automatically:

• Track transactions across multiple blockchains

• Calculate tax liabilities

• Detect tax-loss harvesting opportunities

• Generate IRS-compliant tax reports

• Execute tax-saving transactions automatically

• Maintain complete wallet ownership (Non-Custodial)

Core Vision

"Your Crypto Tax Agent That Pays For Itself"

Instead of charging yearly subscriptions like Koinly, CoinTracker, or TokenTax, TaxFi only takes 5% of actual tax savings generated.

🔥 Problem Statement

Crypto taxes are extremely difficult because users:

❌ Manual Tracking

A user may have:

• 500 swaps on Uniswap

• 200 staking rewards

• 50 NFT trades

• Transactions on Ethereum

• Transactions on Base

• Transactions on Arbitrum

Tracking all manually is nearly impossible.

❌ Wrong Cost Basis Calculation

Suppose:

If user sells 1 ETH:

Which ETH was sold?

• FIFO?

• LIFO?

• HIFO?

Different methods produce different tax liabilities.

❌ Missing Tax-Loss Harvesting

Example:

Bought:

100 SOL @ $200

Current:

100 SOL @ $150

Loss:

$5000

Most users don't realize they can sell, realize the loss, reduce taxes, and rebuy later.

❌ Custodial Risk

Current tax tools require:

• API keys

• Exchange credentials

• Wallet imports

Meaning:

"Trust us with your entire financial history"

TaxFi avoids this.

💡 TaxFi Solution

TaxFi combines:

🏗️ High Level Architecture

User Wallet
      │
      ▼
Frontend (Next.js)
      │
      ▼
FastAPI Backend
      │
      ▼
Multi-Agent AI Pipeline
      │
 ┌────┼────┐
 ▼    ▼    ▼
Venice AI
Blockchain APIs
1Shot Relayer
      │
      ▼
Smart Contracts
      │
      ▼
IRS Forms + Tax Savings

🤖 Multi-Agent System (Core Intelligence)

This is the heart of TaxFi.

The backend runs 6 specialized agents.

Agent 1 — Ingest Agent

Responsibility

Collect blockchain transaction history.

Sources

• Ethereum

• Base

• Arbitrum

APIs

• Covalent

• Alchemy

Example

User Wallet:

Transactions:

Swap ETH→USDC
Stake ETH
Claim Reward
Buy NFT
Bridge Funds

The Ingest Agent fetches all of them.

Output

{
  "hash":"0xabc",
  "chain":"Ethereum",
  "from":"0x123",
  "to":"Uniswap",
  "method":"swap"
}

Agent 2 — Classifier Agent

Responsibility

Understand what each transaction means.

Uses:

🧠 Venice AI

Model:

Example Input:

{
 "method":"swapExactTokensForTokens"
}

Venice AI determines:

{
 "category":"SWAP",
 "taxable":true
}

Supported Categories

More than 20 categories supported.

Agent 3 — Cost Basis Agent

Responsibility

Calculate gains and losses.

HIFO (Default)

Highest In First Out

Example:

Bought:

1 ETH @ $1000
1 ETH @ $3000

Sold:

1 ETH @ $3500

HIFO chooses:

ETH bought at $3000

Taxable Gain:

3500 - 3000 = $500

instead of:

3500 - 1000 = $2500

Huge tax savings.

Supported Methods

Agent 4 — Loss Detector

Responsibility

Find tax-loss harvesting opportunities.

Example

Portfolio:

SOL Loss = -$5000
ARB Loss = -$2000

Potential Reduction:

Taxable Income - $7000

The agent calculates:

• Estimated savings

• Wash sale risk

• Priority score

Wash Sale Analysis

Checks:

Sold Asset
↓
Bought again within 30 days?

If yes:

Agent 5 — Form Generator

Responsibility

Generate tax documents.

Generated Forms

IRS Form 8949

Capital Asset Sales

Schedule D

Capital Gains & Losses

Schedule 1

Additional Income

Additional Feature

Creates:

Then stores hash on blockchain.

This creates:

Immutable Audit Trail

Nobody can modify reports later.

Agent 6 — Executor Agent

Responsibility

Execute tax-saving actions.

Uses

ERC-7710

Delegated Transactions

1Shot Relayer

Gasless transaction execution.

Flow

User Permission
      │
      ▼
Agent Builds Transaction
      │
      ▼
1Shot Relayer
      │
      ▼
Blockchain Execution

User doesn't need ETH.

Gas is sponsored.

🧠 Venice AI Integration

Venice AI acts as the project's intelligence engine.

Why Venice AI?

Privacy

Traditional AI:

May store data.

Venice:

Trusted Execution Environment.

Data remains protected.

Cost Efficiency

Classification of thousands of transactions becomes cheaper.

Structured Output

Returns JSON directly:

{
 "category":"SWAP",
 "confidence":0.95
}

Perfect for automation.

🔐 Permission Architecture

TaxFi uses a two-layer security model.

Layer 1 — ERC-7715

User → TaxFi

User grants permission.

Example:

Spend up to $100 USDC/day

TaxFi cannot exceed this.

Benefits

✅ Revocable

✅ Limited

✅ Time Expiry

✅ Chain Specific

Layer 2 — ERC-7710

TaxFi → Relayer

TaxFi creates a delegated transaction.

Relayer executes it.

Benefits

✅ Gasless

✅ Secure

✅ Replay Protected

📜 Smart Contracts

TaxFi has four major contracts.

1. AgentPermissionRegistry

Purpose

Stores permissions.

Example

User
 └─ Grants
      └─ Permission

Tracks:

• Who granted

• Who received

• Expiration

• Amount limits

Security Features

✅ Revocation

✅ Spending Limits

✅ Chain Restrictions

✅ Target Restrictions

2. TaxFiAgentSmartAccount

Purpose

Executes harvesting operations.

Features

• Rate Limiting

• Authorized Executors

• Emergency Pause

• Replay Protection

Example

Max Daily Harvest
=
$10,000

Cannot exceed limit.

3. LossHarvestVault

Purpose

Processes harvested assets.

Workflow

Token
 ↓
Swap
 ↓
USDC
 ↓
Fee Deduction
 ↓
User

Revenue Model

Harvest Savings:

$1000

TaxFi Fee:

5%

TaxFi earns:

$50

User keeps:

$950

4. TaxFormAttestor

Purpose

Store proof of tax reports.

Process

IRS Form
      │
Hash PDF
      │
Store Hash Onchain

Later:

🎨 Frontend Architecture

Built using:

• Next.js 15

• React 18

• TypeScript

• TailwindCSS

Main Pages

Landing Page

Marketing page.

Contains:

• Hero Section

• Features

• Pricing

• Security

• FAQ

Dashboard

Displays:

• Opportunities

• Tax Savings

• Portfolio Stats

• Live Updates

Portfolio

Shows:

• Holdings

• Gains

• Losses

• Open Lots

Harvest Page

Shows:

• Tax-loss opportunities

• Potential savings

• Execute Harvest button

Reports Page

Shows:

• Generated IRS Forms

• Tax Summary

• On-chain verification

Permissions Page

Shows:

• Wallet permissions

• Daily spending caps

• Smart Account approvals

⚙️ Backend Architecture

Built using:

• FastAPI

• Python 3.11

• SQLite/PostgreSQL

Major Modules

Authentication

Database

Stores:

• Users

• Opportunities

• Ledgers

• Forms

• Harvest History

Monitoring

Uses:

Tracks:

• Errors

• Latency

• Requests

• Agent Performance

🔄 End-to-End User Journey

Step 1

Connect MetaMask Wallet

↓

Step 2

Grant ERC-7715 Permission

↓

Step 3

Run Tax Scan

↓

Step 4

Ingest Agent Collects Transactions

↓

Step 5

Venice AI Classifies Transactions

↓

Step 6

Cost Basis Agent Calculates Gains

↓

Step 7

Loss Detector Finds Opportunities

↓

Step 8

Dashboard Displays Savings

↓

Step 9

User Approves Harvest

↓

Step 10

Executor Agent Uses 1Shot

↓

Step 11

Gasless Transaction Executes

↓

Step 12

IRS Reports Generated

↓

Step 13

Report Hash Stored Onchain

💰 Business Model

Traditional Platforms:

$100-$500/year

Even if they save nothing.

TaxFi Model

Savings Generated
      │
      ▼
Take 5%

Example:

User Saves $2000
TaxFi Earns $100

If savings = $0

TaxFi earns $0

This aligns incentives with users.

⭐ Why TaxFi Is Innovative

1. AI-Powered Tax Agent

Not just a calculator.

Actually reasons about transactions.

2. Non-Custodial

Users never hand over wallet control.

3. Gasless Harvesting

Powered by ERC-7710 + 1Shot.

4. Privacy-First AI

Uses Venice AI TEEs.

5. On-Chain Tax Report Verification

Very few tax platforms provide immutable proof of filings.

6. Pay-for-Performance Revenue Model

Users only pay when they save money.

🎯 One-Line Pitch

TaxFi is an AI-powered, non-custodial crypto tax co-pilot that automatically analyzes multi-chain transactions, discovers tax-saving opportunities, executes gasless tax-loss harvesting through smart-account permissions, and generates IRS-ready reports with on-chain auditability.

During the hackathon, we successfully designed and developed the core architecture of TaxFi, an AI-powered crypto tax automation platform. We implemented a multi-agent pipeline capable of ingesting blockchain transactions, classifying them using Venice AI, calculating cost basis, identifying tax-loss harvesting opportunities, and generating tax reports. We integrated MetaMask Smart Accounts, ERC-7715 permissions, and 1Shot gasless transactions to enable secure and non-custodial execution. Additionally, we built smart contracts for permission management, harvesting, and tax report attestation, while developing a modern Next.js frontend and FastAPI backend. By the end of the hackathon, we had a working end-to-end prototype demonstrating automated crypto tax analysis, harvesting recommendations, and blockchain-verified tax reporting.

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