[GIP-24] GoodDollar V4 - Celo Reserve and Protocol Enhancements

GIP: [GIP-24] GoodDollar V4 - Celo Reserve and Protocol Enhancements Title: GoodDollar V4 - Celo Reserve and Protocol Enhancements Author : Good Labs Foundation Status:: Stage V Track: Protocol Created: 10/03/2025 Edit: 13/03/2025

TLDR: GoodDollar V4 reactivates G$ minting by deploying a new Reserve on Celo, improving security, sustainability, and accessibility in partnership with Mento Labs.

Key:

New Celo Reserve – Replaces the paused Ethereum Reserve. Reserve Model – Uses cUSD with 40K cUSD weekly and 80K cUSD monthly outflow limits. Bridging Upgrades – Makes Celo the primary source of G$ and reverses bridge direction for seamless transfers across Ethereum, Celo, and Fuse. Economic Adjustments – 10% exit fee (gradually reducing*), 1 G$ = $0.0001. Snapshot vote required; on-chain execution by GoodDollar Guardians. *If the reserve experiences a net outflow of less than 20% over a two-month period, the guardians will reduce the fee by 1% incrementally until it reaches a minimum of 5%.

Description of desired Protocol policy change

Background

GoodDollar protocol mission is to provide a sustainable, decentralized model to distribute Universal Basic Income in an open model. As mentioned in the white paper, “the GoodDollar protocol presents a community-driven, distributed framework designed to generate, fund and distribute global basic income via the GoodDollar token (G$).

Since its launch, the G$ token has been designed to function in a multi-chain paradigm. The core smart contracts that govern the monetary policy of the GoodDollar protocol operate on Ethereum mainnet, including the minting of G$ tokens to be distributed as UBI. G$ UBI distribution has occurred on Layer 2 solutions and side-chains, which are better suited for high volume, low-value transactions.

Why GoodDollar V4

Following the GoodDollar Reserve exploit suffered in the past December (details on this post) the GoodDollar Reserve was drained and a new opportunity to upgrade the protocol was presented.

The GoodDollar Reserve contract has been paused No more new G$ have been minted. Minting of new G$ has been disabled due to the Reserve’s lack of funds. G$ liquidity on side-chains has remained low. Feedback from the community 2 that they valued the Reserve model Community feedback has consistently highlighted the value of the Reserve model, as it provides stability and security for the GoodDollar ecosystem. The Reserve ensures the sustainability of the Universal Basic Income (UBI) distribution, offering users confidence in the consistent value of GoodDollar (G$) despite market fluctuations. This backing strengthens trust in the project, supports economic inclusion, and empowers the community to engage with the system confidently.

Feedback from the community 2 that they wanted the Reserve to be easier to interact with. Interacting with the Reserve was challenging due to issues with the mainnet, including high transaction fees, slow transaction times, and a complex user interface. These factors created barriers for users, making it difficult to engage with the Reserve efficiently and accessibly. Additionally, the technical setup was not user-friendly, especially for those without advanced knowledge.

GoodDollar V4 in partnership with Mento Protocol

The new reserve contracts were developed in collaboration with Mento Labs 2. These contracts have undergone the necessary audit to ensure security and reliability.

Mento Labs is a leading team specializing in decentralized financial infrastructure, providing innovative solutions to enhance blockchain protocols. They focus on developing secure, scalable systems for DeFi, with a strong emphasis on creating sustainable financial ecosystems. Their expertise has been instrumental in the development of the new reserve contracts, helping ensure both security and reliability for the protocol. You can learn more about their work at mentolabs.xyz 2.

Further collaborations with the Mento Labs team are being explored and may be announced in the near future, depending on progress and developments.

Key Features of GoodDollar V4

The aim of this proposal is to approve the upgrades for GoodDollar Protocol V4, which involves deploying a new GoodDollar Reserve on the Celo Blockchain in collaboration with Mento Labs. Following this upgrade, all mint and burn of original G$ issuance will occur on the Celo Blockchain. As part of this upgrade, the GoodDollar protocol contracts on Ethereum will be disabled, effectively transitioning GoodDollar Protocol into a native protocol on Celo. However, it’s important to note that the G$ token will continue to be deployed on Ethereum, Celo and Fuse, with G$ UBI distribution still occurring on Celo.

The G$ distribution on Fuse will still take place, but the new Celo Reserve will not allocate G$ to it. Currently, Fuse has a mechanism where a portion of the rewards from Fuse staking is sold for G$ and then used for UBI distribution.

All proposed changes are designed to:

Enhance and activate the core GoodDollar protocol to reinstate the minting of G$ UBI in accordance with the original protocol model. Enhance accessibility of the GoodDollar Reserve by migrating the from Ethereum to Celo, an L2 solution where G$ UBI is distributed. Update the protocol model to enable a new, more sustainable, and potentially scalable yield source to fund the GoodDollar Reserve. Proposed Protocol Changes

GoodDollar V3 GoodDollar V4 Core protocol contracts Ethereum Celo Mint / Burn G$ Ethereum Celo Yield Source 3rd party staking protocols on Mainnet such as Compound and Aave Options for yield will be evaluated and approved by the DAO in the future. Reserve Currency cDAI cUSD Bridging Infrastructure Locked tokens on Ethereum Locked tokens on Celo Exit Fee 3% with exception to GDX holders 10% no exception (to be gradually decreased to 5%) 1G$ initial price Paused .0001$ Mint / Burn G$: Celo will become the blockchain for minting and burning G$ tokens via a GoodDollar Celo based Reserve (herein referred to as the “GoodDollar Celo Reserve”). The protocol will maintain its original structure of the issuance and burning of G$ based on the Bancor formula. The new Celo-native Reserve smart contracts will be based on contracts developed by the Mento Labs team.

Reserve Currency:

The new USD stablecoin in the GoodDollar Celo Reserve will be cUSD The Celo Reserve will be funded with 200k cUSD The G$ token will be launched with its initial launch price: 1 G$ = 0.0001$ Trading Limits: To protect the Reserve from depletion, a 40K cUSD net outflow per week and 80K cUSD net outflow per month limit will be enforced Bridging Infrastructure: Updating GoodDollar Bridging Infrastructure

The GoodDollar bridging infrastructure needs to be upgraded to make Celo the primary source of G$ tokens and circulating supply. Since the Celo Blockchain will now be the source for all new G$ minting, the direction of the bridges needs to be reversed. The following changes are designed to easily and effectively move G$ across Ethereum, Celo, and Fuse.

Technical Description Of Proposed Contract Updates & Changes

The following is a description of the technical changes that will need to be ratified by the GoodDollar Guardians as part of this proposed change:

Give G$ minting rights to mento broker

MentoBroker is the contract that works with the reserve and allows to buy/sell G$s. When buying G$s new G$s are created that’s why it needs the minting permissions. Give G$ minting rights to mento expansion controller

Mento Expansion Controller is the contract that replaces the reserve UBI minting process. Create the mento G$/CUSD exchange

Contract: GoodDollarBancorExchange This is the core contract that replaces the reserve. Creating the exchange sets the initial virtual AMM parameters. G$ Supply, Reserve Supply (cusd),reserve ratio and exit contribution. Set the expansion rate

Contract: MentoExpansionController Sets the expansion rate for creating UBI Shut down Legacy Fuse<> Ethereum bridge operated by Fuse.

Required actions: Burn tokens locked on the Ethereum bridge Pause bridge contracts on both Ethereum and Fuse. Fuse contract: ForeignBridge, Ethereum Contract: HomeBridge Note: Fuse has moved to a new Layer Zero based bridge architecture.

Upgrade native G$ Axelar/Layer Zero Bridge The bridge services from Axelar support Ethereum and Celo, while LayerZero supports Fuse, Celo, and Ethereum.

Required actions: Upgrade contracts to reverse lock/burn direction.

Contract: MessagePassingBridge / Contract GoodDollarMintBurnWrapper Changes: Give minting/burn rights of G$ to the bridge on Ethereum instead of lock on Ethereum. Remove bridge minting rights on Celo Give minting/burn rights to the bridge on Fuse Burn locked tokens on Ethereum bridge side

Since the Ethereum bridge will transition to a burn/mint mechanism, G$ tokens currently locked in the current Ethereum bridge should be burned. Subsequently, G$ tokens should be minted on the Celo bridge to ensure sufficient exit liquidity for transfers from Ethereum and Fuse. Mint Current Ethereum and Fuse Supply (Minus Hacked Locked Funds) to the Celo Bridge:

Ensure the Celo bridge has sufficient exit liquidity. Mint the current supply from Ethereum and Fuse, excluding hacked locked funds, to the Celo bridge. Since Celo is now the primary chain, all G$ tokens should be redeemable via the new GoodDollar Celo Reserve. The bridge should have sufficient exit liquidity on Celo, equal to the combined supply on Ethereum and Fuse, minus any locked funds (such as hacker funds and locked funds on the defunct Multichain Bridge). Deploy CeloDistributionHelper

To transfer G$ minted on the GoodDollar Celo Reserve to the UBI Pool on Celo or to the UBI pool on Fuse via the bridge.

(Check discourse to see the full proposal: https://discourse.gooddollar.org/t/gip-24-gooddollar-v4-celo-reserve-and-protocol-enhancements/7233