Crypto Transaction Classification System (Trade, Income, Airdrop, Staking Reward)

Development of Crypto Transaction Classification System

Correct transaction classification is the foundation of proper tax accounting. Trade, income, airdrop, staking reward — each type has different tax treatment in each jurisdiction. Automatic classification reduces manual work 80-90% for most users.

Classification Hierarchy

enum TaxCategory {
  // Capital events
  BUY = "buy",
  SELL = "sell",
  SWAP = "swap",
  NFT_MINT = "nft_mint",
  NFT_SALE = "nft_sale",
  NFT_ROYALTY = "nft_royalty",
  
  // Income events
  STAKING_REWARD = "staking_reward",
  MINING_REWARD = "mining_reward",
  LENDING_INTEREST = "lending_interest",
  LIQUIDITY_FEES = "liquidity_fees",
  AIRDROP = "airdrop",
  HARD_FORK = "hard_fork",
  REFERRAL = "referral",
  PLAY_TO_EARN = "play_to_earn",
  
  // Non-taxable
  TRANSFER = "transfer",
  COLLATERAL_DEPOSIT = "collateral",
  COLLATERAL_RETURN = "collateral_return",
  WRAPPED_TOKEN_MINT = "wrap",
  WRAPPED_TOKEN_BURN = "unwrap",
  LP_DEPOSIT = "lp_deposit",
  LP_WITHDRAWAL = "lp_withdrawal",
  
  // Gas
  GAS_FEE = "gas_fee",
  
  UNCLASSIFIED = "unclassified",
}

Classification Engine

class TransactionClassifier {
  async classify(tx: UnifiedTransaction, userContext: UserContext): Promise<ClassificationResult> {
    const rules = this.getRulesForContext(userContext);
    
    for (const rule of rules) {
      const result = await rule.apply(tx, userContext);
      if (result.matched) {
        return {
          category: result.category,
          confidence: result.confidence,
          ruleId: rule.id,
        };
      }
    }
    
    return {
      category: TaxCategory.UNCLASSIFIED,
      confidence: 0,
      requiresManualReview: true,
    };
  }
}

ML Fallback

class TransactionMLClassifier:
    def predict(self, tx_features):
        features = self.extract_features(tx_features)
        prediction = self.model.predict([features])[0]
        confidence = max(self.model.predict_proba([features])[0])
        return { "category": prediction, "confidence": confidence }

Classification system with rules engine, ML fallback and manual review queue — 2-4 weeks development.