GCP #7 - Burn $GCR Tokens for Carry Reduction

Summary/Proposal

To improve $GCR tokenomics and more closely align the value of $GCR with the amount and quality of deals that GCR does, we propose a token burn mechanism whereby users can choose to burn $GCR tokens to reduce the carry that they are charged on a deal.

Motivation

As of now, $GCR tokenomics are very one-sided. On the demand side, $GCR tokens represent a one-time purchase that a user makes to become a member. Beyond that the only other utility that $GCR has is for governance voting. On the supply side, however, as with most DAOs, the $GCR token is an important resource to help fund DAO expenses. We need to introduce a token utility to $GCR that will help balance supply and demand - ideally one that is related to the success of the DAO’s activities.

Specification

Users can choose to burn $GCR tokens to reduce that carry that they are charged on a deal that they participate in.

Example:

There is an opportunity to participate in a private deal through GCR. Alice, a GCR member, decides to invest $5,000 into the deal.

In the current paradigm, to participate in the deal, Alice pays:

• $5,000 USDC, her investment amount
• +$250 USDC Ops fee

After the deal is funded, a minimum of 15% carry is charged on Alice’s investment. (Remember that in the case where the deal returns >15x, the carry charge increases to 25%)

Once the proposal is passed, Alice has the option to burn an additional amount of $GCR tokens to reduce the carry that she is charged. The carry reduction is equal to ½ the amount of $GCR tokens burned up to a maximum carry reduction of 4%. To reduce the carry by 1%, 2% of the initial investment needs to be burned. Alice would decide to do this if she believes that the deal that she is participating in will generate at least a 2x multiple.

Under this paradigm, Alice pays:

• $5,000 USDC, her investment amount
• +$250 USDC Ops fee
• $100 worth of $GCR to be burned (2% of her investment amount in order to reduce her carry by 1%)

As a result, the minimum carry she is charged is reduced to 14% (down from 15%). In the case where the deal returns >15x, the carry would increase to 24% (down from 25%).

To recap:

• The decision to burn an additional amount in $GCR to reduce the carry charge is optional, not required.
• The ratio of $GCR burned to carry reduction is 2:1.
• Participants can reduce their carry by 1% to 4% max, in 1% increments.
• To determine the # of $GCR tokens burned, we use the prior month’s 30-day VWAP based on CoinGecko’s historical data.
• Users purchase the correct amount of $GCR tokens and send it to the same Gnosis Safe for deal funding. Once the deal is funded, the $GCR tokens are sent to a burn address.

This is considered V1 of this proposal. V2 may include an auction mechanism where deal participants can blind bid on how much they are willing to burn in order to reduce their carry. This would allow for market forces to determine the ratio of $GCR token burn vs carry reduction instead of a static 2:1 ratio.

Additional Consideration:

There will be a 1-time 90-day window from when the proposal is passed for members to retroactively opt into a $GCR token burn under the same specifications above to reduce carry for previously funded deals.

Vote

The ‘Single choice voting’ Snapshot voting system will be used for this proposal, meaning each voter must hold at least 1 GCR token to be able to vote and may select only one choice:

Yes - Approve the proposal No - Decline the proposal