[GIP-11] GoodDollar V3 - Protocol Enhancements

[sirpy]

GIP: 11 - GoodDollar V3
Title: GoodDollar V3 - Protocol Enhancements
Author: Sirpy
Status: Stage III
Track: Protocol
Created: 2022-11-16

GIP-11: GoodDollar V3

This vote refers to a range of updates to the GoodDollar protocol, summarized as GoodDollar V3.

All proposed changes are in seek of GoodDollar protocol’s ultimate goal, which is to issue a sustainable crypto universal basic income protocol that enables people to use G$ as a medium of exchange.

All proposed changes are designed to:

• encourage usage and engagement among active G$ holders and community members
• reduce the rate of leverage of the currency, to encourage sustainable growth with minimal price volatility
• Lay the groundwork for the GoodDollar protocol to begin to fund community-led initiatives
• Allocate 20% of the daily G$ UBI mint towards savings rewards and a community fund: savings rewards (10% of daily UBI mint) and a GoodDAO community fund (10%).
• These changes will impact the rate of GoodDollar minting. The number of GoodDollars minted and distributed daily will decrease; the daily G$ claim amount per user will also decrease; however, these modifications are in service of creating a more sustainable economic policy for GoodDollar for its long-term future
• These proposed changes will be developed, activated, and implemented over the period of November 2022 through Q1 2023, as per the larger V3 roadmap.
• The proposed code and protocol upgrades as part of this GIP will be voted on Snapshot and executed by the GoodDollar Guardians, per GIP 2 .

Proposed Protocol Changes

• Eliminate Staking APY Rewards for Mainnet Stakers

  • The current staking rewards rate:
    • Compound: 36.03%
    • Aave: 40.71%
  • The original goal of the Staking Rewards was to encourage every day people to be able to use their crypto to fund for good, and source a sustainable source of staked capital.
    • Since V2, only 17 individual wallets have staked. The primary staker has been eToro, a corporate donor that has already donated their earned interest rates.
  • Amount distributed as G$ rewards vs. value of UBI generated.
    • Current staked:
      • $1,207,488.11 (16 stakers)
    • Rewards paid:
      • G$ 438,388,608.00
      • $76,235.06 ( G$ price = 0.000173)
      • Distributed out to all active stakers. eToro’s $1 million stake is not considered for the rewards calculation.
    • UBI minted from yield:
      • G$ 100,413,879.40
      • $ 17,461.81 ( G$ price = 0.000173)
  • The original goal of the staking rewards have not yielded the intended effect of attracting a large volume of staked capital to fund sustainable UBI.
  • Rather than continue to allocate GoodDollar rewards as a staking APY, we propose to mint and allocate GoodDollar rewards to community members who save in G$, and fortify the ecosystem. See “G$ Savings” below.
  • G$ Stakers will receive entitled rewards upon withdrawal of their funds from the current staking contract.
  • Staking contracts will no longer deliver an APY in G$, but market rate earned interest can still be used to deposit funds into the GoodReserve.
  • Stakers will continue to earn GOOD tokens for their stake. This is part of a longer term plan to attract corporate stakers and partners through providing a way to meaningfully engage and influence with the economy.
  • GOOD allocations to stakers are subject to further changes.

• Reduce Speed of Minting - Reduce Reserves Ratio from 20% → 15%

  • This change is proposed to ensure GoodDollars are being minted at a healthy and sustainable rate, and the currency is not being leveraged too quickly relative to the circulating supply, and value in the GoodReserve.
  • The current reserve ratio is 69%.
  • The Reserve Ratio is currently set to reduce by 20% per year.
  • The proposed change will slow down the rate of minting. The proposed change is to reduce the reserve ratio to 15% reduction per year.
  • This reduces the rate of leverage, of G$ minted relative to cDAI in the GoodReserve.

• G$ Savings

  • This proposed change suggests allocating G$ rewards for community members that stake their G$. This will enable members who stake and save their G$ to earn G$ bonuses alongside GOOD tokens.
  • Currently, staking G$ is rewarded with GOOD tokens, the non-transferable governance token of the GoodDollar ecosystem.
  • A G$ savings rate also creates an additional incentive for community members to hold G$, in order to save. G$ stakers will continue to earn GOOD tokens for their stake, as well.
  • The proposal would be to allocate a modest portion (10%) of the daily GoodDollars G$ minted as UBI, and allocate those G$ to be used towards a reward savings pool to fund G$ stakers.
  • GoodDollar savers will be rewarded a fixed 5% APY from the rewards pool, on annual basis.
  • The savings rewards smart contract will be activated for users and launched by January 2023.

  Update 31/07/2022Code that passed initial audit: https://github.com/GoodDollar/GoodProtocol/pull/259

G$ DAO Community Fund

Currently all G$ minted are distributed as UBI to active members of the ecosystem. This proposal suggests allocating a portion of the G$ minted for daily UBI, to be moved into a community fund that is managed by the GoodDAO.

• This proposal suggests allocating a percentage of G$ minted daily towards a community fund that will be managed and overseen by a set of community guardians, nominated by GoodDAO.
• The proposal is to allocate 10% of the daily GoodDollars G$ minted as UBI and allocate those to a community fund controlled by a yet to be created GoodDollar DAO funds committee.
• These funds will be automatically diverted into a smart contract that will be transferred to a multisig upon selection of the GoodDollar DAO funds committee. Upon ratification of this vote, an additional proposal will be enacted to create a group of 5 community guardians to sit on the multisig.
• The intended purpose of the GoodDollar DAO funds is to encourage community-driven GoodDollar adoption and its usage as a medium of exchange.
  • Examples of intended usage of the G$ funds:
    • GoodDAO Grants DAO: enable a community fund to vote on and fund G$ entrepreneurs and community members.
    • GoodDAO Jobs: enable the GoodDAO to propose key working groups, roles, work to be done, local chapters and initiatives and have a source of funds to fund it.
    • Fund the creation of GoodDAO working groups, such as protocol research, local marketing teams, and more.
    • GoodDAO treasury: over the 5-10 year time period, these funds could be used for the GoodDollar protocol to begin to fund operating costs currently subsidized by the GoodDollar LLC, such as gas fees, hosting, etc.

Motivation for asking changes in such Protocol policy

• Reduce leverage in the GoodDollar ecosystem
• Prepare for incoming funds to the Reserve
• Reward active community members who are transacting in G$
• Empower the GoodDAO with a community fund to promote its own adoption
• All changes are subject to further changes
  • The protocol vision is to build out a multi-asset Reserve, as well as multi-chain Staking protocols
  • As GoodDollar staking is deployed on side chains, APY and staking rewards will be reconsidered
  • A grant for protocol research and how to sustainably and responsible optimize G$ staking APY with other G$ rewards usage (savings, community fund) will be a pre-condition to re-releasing GoodDollar G$ staking rewards

[Fuseprime]

Good proposal, I agree with these changes.

Please link to the vote when it goes live

[Meri_Fernandez]

There’s some cool changes coming up. Really excited for the DAO Community Fund!

I think its useful to share some FAQ that people may have after reading this proposal (al least I had this questions first time reading the proposal!): FAQ [GIP-11] GoodDollar V3 - Protocol Enhancements

[Noak]

Good suggestions. Thanks Hadar and team. I really appreciate finally getting rid of the unhealthy staking rewards and instead put the G$ to use for the community.

Can we add some language around how the new savings should be managed. I’m suggesting the DAO should be tasked to review the G$ Savings Pool parameters on a quarterly (?) basis. If they see that the savings pool is growing too large then they can take one of three decisions: to either reduce the 10% or increase the 5% or move some funds from the savings pool into the Community Fund. (And if the savings pool has gone below sustainable levels then conversely increase the 10%, or decrease the 5%)

Also, when now the DAO will be better funded - let’s be very clear about how people can propose and apply for various grants from the DAO and what the process will be to approve them. This doesn’t have to be detailed in this proposal, but we should give a reference to where people can go to learn more about it, to build confidence that these funds will be managed well.

[MAMQ01]

Nice proposal to try increase the capitalization of the GoodDao

I have one question, When the G$ savings are live the GoodDao staking will be finished the multiplier (Increases 2x after 30 days)?

[Erosmotri]

I have the same concern, that is not clear, in fact it was never clear, could you explain a little more please, thank you.

[pedrosa.eth]

There will be no multipliers in the initial Savings contract. It has a fixed 5% APY.

[pedrosa.eth]

Happy to explain! The UBI staking contracts that we are discussing eliminating rewards (stake stablecoins, get G$+GOOD rewards) have a multiplier that was meant to encourage stakers to keep their stablecoins in the contract without “force locking” it.

Meaning, instead of having something that would lock people’s money for a month or more so that more yield/UBI would be generated through the 3rd party protocols (Aave, Compound), we have a mechanism that encourages people to keep their assets there by rewarding them with a multiplier for time staked. It gives the staker freedom to remove their tokens whenever they want, while also giving them incentives to keep it there.

Edit to add: The governance staking contract never had a multiplier as it has no need for a locking strategy.

[JAG]

@sirpy

This proposal suggests allocating a percentage of G$ minted daily towards a community fund that will be managed and overseen by a set of community guardians, nominated by GoodDAO

Why are you selecting nominates to rule the funds? That’s a centralized solution. You could enable a vault contract activated with GOOD tokens if you really want to try the power of community ruled funds (yes guys, that’s what a DAO means). What about conviction voting, for example?

[sirpy]

Sure, we are all for exploring any practical solutions. The problem is that most solutions need to be built.
So as i’ve wrote in previous posts if you or anyone else from the community want to pick that up and help to build something or find community members that can, that would be awesome. It can probably also be modestly compensated from the future DAO budget .

[JAG]

Can’t you guys just fork 1hive.gardens solution?

I mean, that’s already built…

Also, I’m very curious about why it will be modestly compesated… Are your contributions to the protocol Also being modestly compensated, Hadar??

I’m starting to believe GoodDollar’s claim for inclusivity is kind of fake… Isn’t It?

[Gus]

Hey! Some comments from my side!

@sirpy

Eliminate Staking APY Rewards for Mainnet Stakers

this is great! current configuration generates more inflation than the amount of interest generated.

@sirpy

G$ Stakers will receive entitled rewards upon withdrawal of their funds from the current staking contract.

what do you mean by “entitle rewards”? Are those G$s? A new token to withdraw liquidity from Reserve?

As a general observation, I think all these changes might be good! Still, I’m worried about all the incentives are funded out of inflation and see no proposal to accrue real value (including yields in DAI or any other currencies with sustained market value) and/or utility in the protocol.

I see that the sustaining an economy out of inflation might be sustainable if and only if the project has the trust and confidence from the industry and market, which I don´t think it’s the case of GoodDollar, at least not yet.

Why are you guys not including the multi-asset bonding curve in this? is that not ready? From my own economic perspective, that change should be a priority 1, specially in a time where the crypto-market is down and there is some much potential to grow (e.g. if we include ETH in the reserve, G$ price might increase proportionally to the ETH price).

What kind of indicators you guys have in mind for tracing the success (or not) of theses changes??

Last but not least, I agree with JAG comments, you guys should address the proper resources towards the real decentralization (and therefore market trust) on the GoodDAO. Placing a multi-sig there is placing more intermediaries (and therefore reducing trust) in the whole process.

[sirpy]

entitled rewards - the rewards the stakers earned so far and haven’t claimed yet

the incentives as UBI are from inflation so it doesnt make any difference. and we dont have any other way to provide UBI.

We are open to ideas on how to fund UBI.
And we are always working towards getting G$ more utility. Hopefully things will bare fruit next year.

The multi asset reserve is in research and development, we just recently received a grant for it. It is planned for end of Q1

Regardless of the multi asset reserve, the DAO can decide to buy assets with the funds in the reserve.

I don’t think there are any viable indicators, we are mostly guesstimating, as always we are open for suggestion of anything the community think we should track.

Yes saying “decentralization” is nice, but it requires tools and processes, as i’ve replied we welcome the community to help.

[Gus]

@sirpy

We are open to ideas on how to fund UBI.

I just can’t repeat anymore myself here… GoodDollar needs to teach the market on how the can play with speculation (as any other crypto) while helping others (with the G$ UBI scheme). I understand the legal limitations you guys have on selling explicitly G$s, what I can’t understand is How setting up a proper legal structure to do this was never prioritized.

I believed @goodanna was giving the proper priority to this after her replies on the transparency GIP, but I have seen nothing but ghosting from her after that. She committed to deliver transparency 1 month ago, and not a single reason have been communicated back since then.

[GIP-08] Call for Transparency on GoodDollar LLC Treasury Management

Hey @goodanna any update on this!? A month has passed and there’s still no news about the transparency report you will provide.

@sirpy

Yes saying “decentralization” is nice, but it requires tools and processes,

I know, specially if you guys dismiss the only person in the people caring for that… For me it’s clear that the “decentralization” word is nice for you as well, it’s a shame that all that I’ve witnessed so far goes in the oposite direction… but this is just my humble opinion, ofc…

I would really hope GoodDollar Limited (or the Foundation if/when coming for real) would take care accountability of the proper needed decentralization and the project transition from just using the “decentralization” buzzword towards real commitment and accountability towards that cause.

[Meri_Fernandez]

Hi everybody! Good seeing the community engaging here

Regarding the community fund, as the proposal mention, there will be a following proposal to assign guardians to a multisig. That’s the idea but it’s something that will have to decide as a community. Personally would love to debate and explore other options

If there’s no more relevant feedback in 24h we will move this proposal to voting.

[Gus]

Hey Meri!

could you launch a signalling vote before that just to have a sense if the community is ok or not with such a Multi-Sig approach??

I mean, as @sirpy mentioned, it is a matter of effort (as everything else)… So I’m wondering why GoodDollar LLC is not willing to make such an effort and I’m really curious to see if you guys are actually able to tackle it in case the community is explicitly requesting such a feature for starting the GoodDollar path towards a real decentralized org.

[Gus]

[Meri_Fernandez]

Hi Gus!

Discourse gives you the ability to create a poll if you want to create one.

As I said in my previous comment, how the community is going to run the community fund is something that we can discuss in a following proposal once the reserve ability to send G$ to a fund is approved.

[JAG]

Why do you need to choose guardians to a multi-sig?

Isn’t there a Community DAO multi-sig already? Why not to use that??

[Meri_Fernandez]

I agree we can use the DAO multi-sig. There’s currently 3 members on that multi-sig that can initiate and sign transactions, maybe we can add 2 more from the community.