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Jack wishes to provide liquidity to a Decentralised Finance (DeFi) lending platform. He holds:

• 100 token A. »Ê¹ÚÌåÓýappse are in a section 104 pool with a total acquisition cost of £100.
• 100 token B. »Ê¹ÚÌåÓýappse are in a section 104 pool with a total acquisition cost of £50.

For more information about section 104 pools see CRYPTO22200.

On 01/06/20XX, Jack transfers 10 token A and 5 token B to the DeFi lending platform. »Ê¹ÚÌåÓýapp DeFi lending platform transfers a liquidity token to Jack. At the time of this exchange the token A are valued at £1.00 each, the token B are valued at £0.60 each. »Ê¹ÚÌåÓýapp liquidity token is valued at £15.00 each.

Jack decides that a just and reasonable basis for apportioning the value of the liquidity token is in proportion to the market value of the tokens he disposes of. »Ê¹ÚÌåÓýapp total market value of the tokens he disposes of is £10 (10 token A x £1 each) plus £3 (5 token B x £0.60 each) equals £13.

Jack’s Chargeable Gains (CG) computation of his disposal of his token A is as follows:

.	.	£
Consideration	Liquidity token - £15 x 10 / 13	12
Allowable costs	Section 104 pool � £100 x 10 / 100	(10)
Gain	.	2

Jack’s section 104 pool for token A will be adjusted as follows:

Date	Quantity of tokens	Allowable costs (£)
Opening balance	100	100
01/06/20XX	(10)	(10)
Closing balance	90	90

Jack’s CG computation of his disposal of his token B is as follows:

.	.	£
Consideration	Liquidity token - £15 x 3 / 13	3
Allowable costs	Section 104 pool � £50 x 5 / 100	(3)
Gain	.	0

Jack’s section 104 pool for token B will be adjusted as follows:

Date	Quantity of tokens	Allowable costs (£)
Opening balance	100	50
01/06/20XX	(5)	(3)
Closing balance	95	47

Jack will be treated as having acquired the liquidity token for the total market value of the token A and token B that Jack transfers to the DeFi lending platform. This is £10 (10 token A x £1 each) plus £3 (5 token B x £0.60 each) equals £13.